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Taxation in New Zealand

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Taxation in New Zealand

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Taxation in New Zealand

Income Tax

Taxation for New Zealand (in NZ $):

$0 – $17,500 12.5%
$17,501 – $40,000 21%
$40,001 – $75,000 33%
$75,001 and over 39%

 

Do I need to pay tax in New Zealand?

If you are away from New Zealand for more than 325 days in the year you are a 'non-resident'. This means that you only pay tax on income from New Zealand.
If you stay in NZ for most of the year you will have to pay tax in New Zealand. Luckily New Zealand has what they call a 'Double Tax Agreement' with the UK. So if you're a resident in both countries this agreement means that you won't be taxed twice.

Corporate Tax

30%

What do I have to do register for tax in New Zealand?


First of all you will have to decide what sort of 'structure' your business is:

  • Sole Trader; if you're controlling, managing, owning the business. You get all profits. If this is you - you personally pay all taxes and debts

  • Partnership; if two of more of you are running the business together, sharing profit etc. In this case, as far as tax is concerned, it's not the 'partnership' paying tax. The individual partners pay tax on their own share of the income

  • Limited Partnerships; This means that the 'partnership' is a separate legal entity. It's separate from the partners who run it - so it's the 'partnership' paying tax. You will have to register your 'limited partnership with the 'companies office'

  • Companies; This is a separate legal entity - separate from the owners of shareholders. Again, you'll need to contact the 'Companies office' to register your company and you'll have to pay a fee

What sort of registrations will I have to complete for tax?

You'll have to register for GST and IRD numbers, and if you don't want to do the work all yourself, you'll have to register as an employer.

What's an IRD number?

An Inland Revenue Number (the IRD being the guys in charge of tax). It's a bit like your NI number. You need this number to work in New Zealand. It usually takes about 2 weeks to get one of these.
If you're a business, partnership, trust/estate you will need an IRD number for that entity. You need an IRD number application - non-individual. If you're a company you can apply for this at the same time as you register your company. If you're a partnership you also need to apply for your own individual personal number. If you're a sole trader you need to apply for a personal IRD number.

What's GST?

Goods and Services Tax - a bit like VAT in the UK. It's 12.5 % added to the selling price / market value. Your customers pay this - but then you have to pay it to the IRD. But if you buy goods / services, you are also paying GST, and you can claim this back (great when you're starting up).
You have to register for GST if you are expecting to earn over NZ$40,000 in a year. Or you can register voluntarily.
There are three different ways of accounting for GST:

  • Invoice basis - you claim / pay whenever you send / receive an invoice

  • Payments basis (the most common) - you claim / pay when you receive / pay the money. Businesses with turnover of over NZ$ 1.3 million can't always use this method

  • Hybrid basis - a combination of the other two

When do I pay / file my GST returns?

To a certain extent it depends on what you prefer. You have the choice between every month, every two months, or every six months (six months only if you earn less than NZ$ 250,000).

What if I am employing people?

When you employ staff, you will need to fill in a form which you can down-load from the IRD website. This registers you as an employer. You then need to deduct PAYE (the tax your employees pay), from your employees wages and send it directly to the IRD every month. When you register as an employer, you will also be automatically registered for ACC. This is a tax paid by all employers to cover workplace accidents (a certain amount also comes out of the employees PAYE to cover non-workplace accidents).
For further information on taxes in New Zealand visit the Inland Revenue Department website.

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