New Zealand Tax Facts

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Tax facts

Income Tax Rates

Individuals

Income Rate
0 - 14,000   10.5%
14,001 - 48,000 17.5%
48,001 - 70,000 30%
Over 70,000 33%

 

Companies

Rate
(including branches or permanent establishments of non-resident companies & unit trusts) 28%

 

Trusts

Rate
Trustees 33%
Beneficiary income (excluding minor beneficiaries) Individual rates (see above)
Minor beneficiaries (under age 16) with beneficiary income over $1,000 per trust 33%
Distributions from non-complying trusts 45%

 

Flow-through entities

Rate
Limited partnerships (LP) & look-through companies (LTC) Partner’s or owner’s rates (see above)
KiwiSaver Contributions
  Rate
Employee contribution 3, 4, 6, 8 or 10%
Employer contribution 3%

Member tax credit

50c for each $1 contributed by a member, to a maximum of $521.43

Employer Superannuation Contribution Tax (ESCT)

ESCT is deductible from employer contributions to superannuation schemes, including employer contributions to KiwiSaver.

Income plus Superannuation Contributions Rate
0 - 16,800 10.5%
16,801 - 57,600

17.5%

57,601 - 84,000 30%
Over 84,000 33%
Fringe Benefit Tax (FBT) Rates
Quarters 1 to 3

Quarter 4

49.25% (single rate) 49.25% (single rate) or the alternate rate calculation (see below)
43% (alternate rate)

alternate rate calculation (see below)

 

The alternate rate calculation applies the following rates.

 

Income plus Fringe Benefits Rate
0 - 12,530 11.73%
12,531 - 40,580 21.21%
40,581 - 55,980 42.86%
Over 55,980 49.25%
Goods & Services Tax (GST)

GST is charged at the rate of 15% on all taxable supplies made in New Zealand. To find the GST component of a GST inclusive amount, multiply by 3, then divide by 23. Non-resident businesses can be refunded GST paid on New Zealand purchases, in some cases.

Donations

Companies

Allowed a deduction for approved charitable donations up to their taxable income.

Individuals

Cash refund for one-third of donations of $5 or more to approved charitable organisations (provided the value of gifts made do not exceed their taxable income).

Student Loans

The repayment threshold has increased to $19,760, with the repayment rate at 12%. Repayment holidays are one year in length for borrowers who go overseas and apply for one. Losses cannot be used against income to reduce a liability for student loan repayments.

Research & Development Tax Credit

Subject to legislation passing, a mostly non-refundable tax credit of 15% is available on specified research and development spending from 2019/20.

Approved Issuer Levy (AIL)

NRWT is deducted at 0% from interest paid by a New Zealand borrower to an overseas lender where the parties are not associated (or the funds originate from an associate), the borrower is an approved issuer and the debt instrument is approved by Inland Revenue. Instead AIL equal to 2% or 0% (for certain securities) of the interest payments is payable.

Depreciation

Straight line or diminishing value can be applied on an asset by asset basis. Depreciation rates vary depending on estimated useful life. Assets costing $500 or less (subject to certain criteria) are deductible in the year acquired.

Buildings

Buildings with an estimated life of longer than 50 years are not depreciable.


Fit-Outs

Commercial fit-outs are depreciable. Residential fit-outs are nondepreciable, but chattels can be depreciated.

Residential Land Withholding Tax (RLWT)

RLWT must be deducted from the proceeds of property sales where:

  • The property being sold is residential;
  • The vendor acquired the property on or after 1 October 2015 and has owned the property for less than two years; or
  • The vendor acquired the property on or after 29 March 2018 and has owned the property for less than five years; and
  • The vendor is an offshore person Where all three criteria apply, the lesser of the following amounts will need to be withheld by the vendor’s conveyancing agent:
  • 33% (or 28% where the vendor is a company) of the sale price less acquisition cost
  • 10% of the sale price The vendor can file a return to recover any overpayment.
Portfolio Investment Entities (PIEs)

Resident Individual Investors

 

Income (worldwide) Income plus PIE Income/Loss Rate
0 - 14,000 0 - 48,000 10.5%
0 - 48,000 0 - 70,000 17.5%
All others   28%

 

Both thresholds must be met for the rate to apply. Row 2 applies if Row 1 thresholds not met. Income is measured for either of the last 2 years.

 

Other Investors

  Rate
Non-resident investor 0%, 1.44%, 15%, 28% or 30%
Company, incorporated society or PIE 0%
Super fund and trustees 0%, 17.5% or 28%
Registered charitable trust 0% 
Joint investment, partnership, or unincorporated society 0%, 10.5%, 17.5% or 28%
Motor Vehicles Kilometre Rate

Available options are:

  • The Inland Revenue kilometre rate for motor vehicles
  • Other published kilometre rates (e.g. AA rates)
  • Actual costs

Inland Revenue kilometre rates are:

Vehicle Type First 14,000 kms After 14,000 kms
Petrol or diesel 76 cents 26 cents
Petrol hybrid 76 cents 18 cents
Electric 76 cents 9 cents
Controlled Foreign Company (CFC) & Foreign Investment Fund (FIF)
  CFC Non-portfolio FIF Portfolio FIF
Definition A foreign company controlled by New Zealand residents (either >40% by one resident, or >50% by two to five residents) A foreign company not controlled by New Zealand residents, a foreign superannuation scheme or life insurance policy A foreign company not controlled by New Zealand residents, a foreign superannuation scheme or life insurance policy
Ownership Interest 10% or above 10% or above Less than 10%
Key exemptions Active business exemption Companies resident and subject to tax in Australia Active business exemption Companies resident and subject to tax in Australia and some Australian unit trusts Foreign superannuation schemes Most ASX-listed companies Some Australian unit trusts Foreign superannuation schemes Certain ASX-listed companies For individuals and certain trusts: total cost does not exceed $50,000
Key taxing methods Passive income is attributed if equal to or more than 5% of total income Passive income is attributed if equal to or more than 5% of total income Fair dividend rate (FDR) Cost Comparative value (CV) Deemed rate of return (DRR) Fair dividend rate (FDR) Cost Comparative value (CV) Deemed rate of return (DRR)

 

A foreign superannuation scheme entered into by a non-resident is subject to separate rules where lump sum withdrawals are made from the scheme. Regular pensions and commutation payments are taxed as income.

Provisional & Terminal Tax Payment Dates

The number of times provisional tax is payable depends on the option used to calculate provisional tax and how many times GST (if registered) is paid. Examples of payment dates for the most common balance dates are below. If the due date is not a working day, then it moves to the next working day. Terminal tax dates shown apply to taxpayers linked to a tax agent.

  31 March   30 June   31 Dec  
 

2019

2020 2019 2020 2019 2020
1st instalment 28 Aug 2018 28 Aug 2019 28 Nov 2018 28 Nov 2019 28 May 2019 28 May 2020
2nd instalment 15 Jan 2019 15 Jan 2020 28 Mar 2019 28 Mar 2020 28 Sep 2019 28 Sep 2020
3rd instalment 7 May 2019 7 May 2020 28 Jul 2019 28 Jul 2020 28 Jan 2020 28 Jan 2021
Terminal tax 7 Apr 2020 7 Apr 2021 7 Apr 2020 7 Apr 2021 15 Jan 2021 15 Jan 2022
Calculation of Provisional Tax
Taxpayer & Provisional Tax Year Year of RIT Used Standard Uplift
2019 2017,2018 110% of RIT, 105% of RIT
2020 2018, 2019  110% of RIT, 105% of RIT

 

Provisional tax can also be calculated using the estimation option, the GST ratio method (subject to certain criteria being met) or the accounting income method (subject to certain criteria being met). The year used in calculating the uplift is the year of the most recent filed income tax return.

Use of Money Interest on Provisional Tax

Use of money interest on provisional tax will arise at times outlined below provided payment is made on time based on the standard uplift for the taxpayer and associates. Special rules apply in the first year of business.

 

  Standard Uplift   Estimate
  Actual RIT <$60,000 Actual RIT >$60,000  
1st instalment n/a n/a yes
2nd instalment n/a n/a yes
3rd instalment n/a yes yes
Use of Money Interest Rates
  Rate
Underpayments 8.22%
Overpayments 1.02%
Withholding Tax on Schedular Payments & Payments to Non Resident Contractors
  Rate
Minimum rate for residents 10%
Minimum rate for non-residents 15%
Non-resident entertainers 20%
IRD number not supplied (Company) 20%
IRD number not supplied (Individual) 45%

 

Schedular payments are payments for specific activities such as directorships, labour hire firm contractors, actors and commission sellers. Recipients are able to choose their rate on the filing of an IR330C provided it is greater than the minimum rates above. Default rates apply where a rate is not chosen. Rates for non-residents can apply to non-resident contractors performing services of any kind. Exemptions are available in some situations.

 

Imputation credits

The maximum imputation ratio is 28:72. Dividends are subject to resident withholding tax (RWT) at the rate of 33% to the extent the dividend is unimputed. Generally, an additional 5% RWT must be withheld where dividends are imputed at 28%, but this is not compulsory where the recipient is a company. The imputation credit account must have a credit balance at 31 March, or a 10% penalty will apply to the debit balance.

Thin Capitalisation Ratios

Interest deductions can be restricted if both the New Zealand and worldwide group debt percentages are exceeded.

  Inbound Outbound
New Zealand group debt exceeds 60% 75%
Worldwide group debt exceeds 110% 110%
Resident Withholding Tax (RWT)
Individual Income Bands Rate
0 - 14,000 10.5%
14,001 - 48,000 17.5%
48,001 - 70,000 30%
Over 70,000 33%
Companies 28%
Trusts 17.5%, 30% or 33%
Default 33%
Non Resident Withholding Tax (NRWT)
  Interest Dividends Royalties
Default 0%, 15% 0%, 15% or 30% 15%
Australia 0%, 10% 0%, 5%, 15% 5%
Canada 0%, 10% 0%, 5%, 15% 10%
China 0%, 10% 0%, 15% 10%
France 0%, 10% 0%, 15% 10%

 

Germany 0%, 10% 0%, 15% 10%
Hong Kong 0%, 10% 0%, 5%, 15% 5%
Japan 0%, 10% 0%, 15% 5%
Singapore 0%, 10% 0%, 5%, 15% 5%
UK 0%, 10% 0%, 15% 10%
USA 0%, 10% 0%, 5%, 15% 5%

 

Where a double tax agreement exists, the default NRWT rates may be reduced. Above are examples of rates for some common treaty partners (also including reduced rates where New Zealand rules permit). New Zealand’s extensive treaty network means specific rates are dependent on individual circumstances (please seek professional advice)

Tax Penalties

Tax Shortfall

Lack of

Reasonable Care

Unacceptable

Tax Position

Gross

Carelessness

Abusive Tax

Position

Evasion
20% 20% 40% 100% 150%

 

 

These penalties may be reduced where a voluntary disclosure is made or the shortfall is temporary as well as for previous good behaviour.

 

Late Filing

 

Return Type Penalty
Income tax $50 to $500
Employer monthly schedule $250
GST $50 or $250

 

Late Payment

 

Date Penalty
Day following due date 1%
Seven days following due date 4%
Each month following due date 1%

 

 

The 1% incremental late payment penalty is not charged in relation to GST from 1 April 2017 or income tax from the 2018 income year.

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