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% |
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%.
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.
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.
How to Calculate GST?
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
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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