Income Tax:

Individuals

New Zealand’s individual income tax rates are calculated on a progressive tax basis. The tax rates increase as income increases.

Taxable Income

Tax Rate

Up to $14,000

10.5%

Over $14,000 and up to $48,000

17.5%

Over $48,000 and up to $70,000

30%

Remaining income over $70,000

33%

https://www.ird.govt.nz/income-tax/income-tax-for-individuals/tax-codes-and-tax-rates-for-individuals/tax-rates-for-individuals

Businesses

New Zealand’s corporate tax rate varies depending on the business structure you have. The company tax rate is 28% – a flat rate. If a company makes $100 profit or $100,000 profit, the tax rate remains at 28%. Trusts also have a flat rate, but of 33%.

https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/tax-rates-for-businesses

GST:

New Zealand has one of the simplest value-added tax systems in the world, where we charge only a flat rate of 15% on taxable supplies. The term New Zealand uses is Goods and Services Tax (GST). Businesses are only required to pay GST once they are above the $60,000 turnover threshold. Zit is optional for businesses having turnover below this amount.

https://www.ird.govt.nz/gst

Supplies of GST

New Zealand provide 4 types of supplies. Supplies will include income your earn as well as the corresponding expenses/purchases to earn that income:

– Taxable Supplies – charge GST of 15% on all Goods and Services provided in NZ
– Zero-rated Supplies – charge GST of 0% on certain types of supplies (e.g. exports)
– Exempt Supplies – not subjected to GST
– Special Supplies – supplies different from normal business sales/purchases.

https://www.ird.govt.nz/gst/charging-gst

How to Calculate GST?

It is very important to calculate GST correctly. As an accountant or bookkeeper, you will be handling a lot of transactions that include GST. But not all invoices show the complete calculation of GST, so it is very important to make sure the GST content matches the source documents (i.e. tax invoice).

Step 1: GST Exclusive or GST Inclusive
The first step is to make sure you understand the difference between GST Inclusive and GST Exclusive Values:

GST Inclusive
When the term ‘GST Inclusive’ is used, the price includes GST. This is normally the price you paid for the good or service. Usually, retailers find advertising GST inclusive prices attractive to the end private consumer.

GST Exclusive
When the term ‘GST Exclusive’ is used, the price excludes GST. This is normally the price before any GST is added to the good or service. Usually, wholesalers advertise at GST exclusive prices as they tend to market to GST Registered Entities.
You also have GST Content, which is the GST amount charged for the particular good or service.

Step 2: Calculate GST Content
The following table shows you how to calculate GST Inclusive, GST Exclusive and GST Content values.
It will also be using examples to show you how this is done.

Instruction

Calculation

Example

GST Exclusive Price to:

GST Content

GST Exclusive Amount x 15%

$100 x 15% = $15

GST Inclusive Price

GST Exclusive Amount + GST Content

$100 + $15 = $115

GST Exclusive Amount x 1.15 (or 115%)

$100 x 1.15 = $115

GST Inclusive Price to:

GST Content

GST Inclusive Amount x 3/23

$115 x 3/23 = $15

GST Exclusive Price

GST Inclusive Amount – GST Content

$115 – $15 = $100

GST Inclusive Price / 1.15 (or 115%)

$115 / 1.15 = $100

GST Content to:

GST Inclusive Price

GST Content x 23/3

$15 x 23/3 = $115

GST Exclusive Price

GST Inclusive – GST Content

$115 – $15 = $100

Documentation
All GST registered entities must have Adequate documentation of originals or copies of invoices/receipts to ensure this doesn’t happen again. You should always remember the requirements for a tax invoice.

https://www.ird.govt.nz/gst/tax-invoices-for-gst/how-tax-invoices-for-gst-work

GST Basis
There are three bases to choose from:
– Invoice Basis – Pay GST earlier of Invoice or Payment
– Payments Basis – Pay GST at time of payment
– Hybrid Basis – Pay GST on Sales earlier of Invoice or Payment and get GST on purchases/expenses at time of payment.
Options do vary depending on turnover thresholds and other factors.

https://www.ird.govt.nz/gst/registering-for-gst/choosing-your-gst-accounting-basis

GST Filing Frequencies
There are three filing frequencies to choose from:
– Monthly
– Two Monthly
– Six Monthly
Your options do vary depending on turnover thresholds.

https://www.ird.govt.nz/gst/registering-for-gst/choosing-your-gst-filing-frequency

FBT

FBT is payable by employers on any benefits provided to or enjoyed by employees by virtue of their employment. Fringe benefits are excluded income of the employee. https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax

Fringe Benefits
There are four main categories of fringe benefits that employers can provide to employees and shareholder/employees.
These fringe benefit categories are:
– Motor vehicles.
– Free, subsidised or discounted goods and services.
– Low-interest loans.
– Employer contributions to funds, insurance and superannuation schemes.

https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax/types-of-fringe-benefits

FBT Filing Frequencies
There are three filing frequencies to choose from:
– Quarterly
– Annual
– Income Year
Your options do vary depending on the Gross PAYE and ESCT.
https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax/filing-frequency-for-fringe-benefit-tax

FBT Tax Rates
The three FBT rates available are:
– Single rate.
– Short form alternate rate.
– Full alternate rate.
The use of alternate rates requires the distinction between Attributed and Non-Attributed Benefits (I.e. benefits that can be tracked to an employee).
https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax/fringe-benefit-tax-rates

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