All About Tax

Our handy A-Z reference guide

The information tabled below constitutes a brief overview only - if you require further details please contact us by phone, e-mail or book an appointment to meet with one of our advisers.

ACC premiums

Income tax payment dates

Provisional tax

Depreciation allowances

Income tax rates

Resident withholding tax (RWT)

Donations

Kiwisaver

Return due dates and extensions of time

Entertainment

Minimum wage rates

Student loans

Fringe benefit tax (FBT)

PAYE on salaries and wages

Working for families

Goods and services tax (GST)

PIE investor rates

 

Disclaimer: Please note that the information contained herein is based on legislation as at 31 January 2017.  Although every effort is made to keep this information updated, legislation frequently changes and accordingly we strongly recommend consulting your tax adviser and not rely on this information alone.

ACC premiums

From 1 April 2017:

Minimum liable earnings:

$30,680

Maximum liable earnings:
Earners levy (including GST) $1.21 per $100.00 of earnings.

$120,070

From 1 April 2016:

Minimum liable earnings:

$29,640

Maximum liable earnings:
Earners levy (including GST) $1.21 per $100.00 of earnings.

$118,191


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Depreciation allowances

Economic rates apply to the purchase of assets.

There is an option to use either straight line or equivalent diminishing value (DV) for all assets.

Assets can be divided into two groups:

  • Low value assets of $500 or less can be claimed as an income tax deduction (subject to normal deductibility criteria) in the year they are acquired.

  • Assets of $500 or more must be depreciated over time using Inland Revenue's specified rates. A sample of these are:

Economic rate (DV)
Vehicle (car) 30.00%
Computer 50.00%
Desk 13.00%

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Donations

For individuals, a rebate of 33.33% for voluntary school fees and qualifying donations of $5.00 or more may be claimed.

For companies, instead of a rebate, qualifying donations are treated as expenses with no GST, limited to the company's net income for the year.

Some important points to note:

  • If you are getting something in return, it is not a donation. This includes raffles.
  • Some donation receipts are part donation, part something else - you can only include the donation portion in your calculation.
  • You must retain your donation receipts in order to claim for them.
  • Not all charitable organisations are eligible for donation rebates; refer to the Charities Services Register if in doubt.
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Entertainment

Entertainment expenditure is limited to a 50% deduction if it falls within the following:

  • Corporate boxes
  • Holiday accommodation
  • Pleasure craft
  • Food and beverages consumed at any of the above, or in other specific circumstances (eg business lunches, social functions)
  • Friday drinks for staff

There are a number of exemptions from these rules allowing a full deduction, such as entertainment outside New Zealand, promotions to the public, samples, morning and afternoon teas, food and beverages consumed while travelling in the course of business (exceptions apply).

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Fringe benefit tax

Any benefit provided to employees (including shareholder employees) not taxed as wages is usually subject to FBT if over specified thresholds.

The general FBT rate reduced to 49.25% from 1 October 2010 of the value of benefits provided but lower rates may apply in certain circumstances.

Returns are filed quarterly unless the tax payer is eligible to make an election to file on an income year or annual basis.

FBT value of motor vehicles: 5% per quarter of the original cost (including GST) or, in certain circumstances, 9% of the book value.

Low or interest-free loans: the interest rate applicable for FBT purposes is:

Quarter ended 30 June 2015 6.70%
Quarter ended 30 September 2015 6.22%
Quarter ended 31 December 2015 5.99%
From 1 January 2016 5.77%

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Goods and services tax
GST rates on supplies in NZ 15%
GST rates on exports 0%

Exemptions:

  • Financial services
  • Domestic rentals
  • Wages
  • Salaries

Threshold for registration is $60,000 turnover per annum.

If turnover exceeds $500,000 you cannot file six-monthly periods.

If turnover exceeds $2,000,000 you must use invoice basis.

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Income tax payment dates

GST - 1 or 2 monthly returns or not GST registered:

Balance date Provisional instalments Terminal tax
1st 2nd 3rd
31 December 28 May 28 Sep 28 Jan 15 Jan
31 March 28 Aug 15 Jan 7 May 7 Apr
31 May 28 Oct 28 Feb 28 Jun 7 Apr
30 June 28 Nov 28 Mar 28 Jul 7 Apr

GST - 6 monthly returns:

Balance date Provisional instalments Terminal tax
1st 2nd
31 December 28 Jun 28 Jan 15 Jan
31 March 28 Oct 7 May 7 Apr
31 May 15 Jan 28 Jun 7 Apr
30 June 28 Jan 28 Jul 7 Apr

Note: the above terminal tax dates assume the tax payer is linked to a tax agent.

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Income tax rates
Individuals
0 - $14,000 10.50%
$14,001 - $48,000 17.50%
$48,001 - $70,000 30.00%
Over $70,000 33.00%
Trusts
Trustee income and minor beneficiary income 33%
Beneficiary income
(Excluding minor taxpayers beneficiary income)
own rate
Companies
Companies 28%

A standard penalty applies to income tax returns that are filed late. Penalties and use of money interest apply to all taxes paid late. The initial late payment penalty is 1% for the first week, increasing to 5% after 1 week, with a 1% monthly incremental penalty thereafter.

Use of money interest: the rate applying from 8 May 2016 is 8.27%.

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Kiwisaver

Employee contribution options are 3%, 4% or 8%.

Compulsory employer contribution of 3% of employee's gross salary or wage.

Government pays an annual member tax credit capped to a maximum of $521.43 per annum.

The Government contributes a $1,000 tax-free kick-start payment to members who joined the scheme before 21 May 2015. If you joined after this date you are not eligible for the payment.

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Minimum wage rates

The minimum wage rates applicable from 1 April 2017 are:

Adult $15.75 per hour
Starting-out $12.60 per hour
Training $12.60 per hour

Refer to Employment NZ's website for definitions of the three rates.

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PAYE on salaries and wages

Deductions from 1st to 15th of the month are due on the 20th of the same month.

Deductions from 16th to the last day of the month are due on the 5th of the following month.

Relief: if the total PAYE deductions are less than $500,000 for the previous year, PAYE payments will be due monthly on the 20th of the following month.

Employee ACC earner premiums, student loan repayments and child support deductions are payable in the same manner.

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PIE investor rates

Resident individuals:

Taxable income - $14,000 or less
If, in either of the previous two income years your taxable income was $14,000 or less, and when combined with your PIE income or loss was ... and ... your PIR is ...
$48,000 or less in the income year  -  10.5%
$48,001 to $70,000 in the income year you don't already qualify for 10.5% 17.5%
$70,001 or more in both of the previous two income years  -  28%

Taxable income - $14,001 to $48,000
If, in either of the previous two income years, your taxable income plus your PIE income or loss was ... your PIR is ...
$70,000 or less in the income year 17.5%
$70,001 or more in both of the previous two income years 28%

Taxable income more than $48,000 - if your taxable income was more than $48,000 in both of the previous two income years, your PIR is 28%.

Note: if for the two previous income years you qualify for two rates, your PIR is the lower rate.

Other investors:

If you are a ... your PIR is ...
Non-resident investor 28%
Company, incorporated society, PIE or PIE investor proxy (PIP) 0%
Trustee (excl charitable trusts) and Super funds either 28%, 17.5%, 10.5% or 0%. You can choose one to best suit your beneficiaries

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Provisional tax

Provisional tax is generally payable in three instalments and is calculated based on the previous year's residual income tax (RIT).

For companies and trusts, use of money interest is payable on the shortfall of terminal tax from the 1st instalment date until the tax is paid.

For individuals, use of money interest is payable from the 1st instalment where the RIT is greater than $50,000 or provisional tax has been estimated.

* From 1 April 2017 safe harbour thresholds increase to $60,000.00 for all tax payers.

The changes mean only tax payers with an RIT of $60,000.00 or higher will attract use of money interest charges. In this case, interest will be charged on any under or short payments of the provisional instalments due, and on the shortfall of terminal tax from the 3rd instalment date until the tax is paid.

If your RIT is less than $60,000.00 and you use the standard method of calculating your provisional amount, you won't be charged use of money interest as long as you make your provisional tax payments on time.

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Resident withholding tax

Resident withholding tax (RWT) on payments of interest and dividends for individuals is as follows:

0 - $14,000 10.50%
$14,001 - $48,000 17.50%
$48,001 - $70,000 30.00%
Over $70,000 33.00%

The default rate for individuals when no IRD number is supplied is 33%.

Provided a company supplies their IRD number, their RWT rate will be 28%. If no IRD number is supplied RWT is deducted at the rate of 33%.

The trust RWT rate is 33%.

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Return due dates and extensions of time

Standard balance date tax payers linked to a tax agent have until 31 March the following year to file their income tax returns under the extension of time arrangements.

Tax payers failing to file returns by the due date may lose their extension of time, resulting in earlier return and terminal tax payment dates for subsequent income years.

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Student loans

Repayment of student loans begins once a student's assessable income exceeds the specified repayment threshold.

These thresholds are:

1 April 2016 $19,084
1 April 2017 $19,136

The repayment amount is 12% for each dollar above the threshold.

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Working for Families Tax Credits

If your family income before tax is less than the amounts shown in the table, you may qualify for payment.

The below income limits are based on the eldest child being aged 15 or under, and all other children being 12 years or under.

Pre-tax annual family income  - 1 April 2017 to 31 March 2018
No. of children Family tax credit (FTC) In-work tax credit (IWTC) Parental tax credit (PTC)
1 $57,781 $74,537 $84,314
2 $72,674 $89,430 $99,208
3 $87,568 $104,323 $114,101
4 $102,461 $122,683 $132,461
5 $117,354 $141,043 $150,821
6 $132,248 $159,403 $169,181

The parental tax credit (PTC) is a payment for up to 10 weeks after a new baby arrives. Depending on your family income you could receive up to $2,200.

Minimum family tax credit (MFTC) tops up a family's after-tax income to $23,816 a year.

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Administration
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Administration
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