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

Depreciation allowances

Donations

Entertainment

Fringe benefit tax (FBT)

Goods and services tax (GST)

Income tax payment dates

Income tax rates

Kiwisaver

Minimum wage rates

PAYE on salaries and wages

PIE investor rates

Provisional tax

Resident withholding tax (RWT)

Return due dates and extensions of time

Student loans

Working for families

 

Disclaimer: Please note that the information contained herein is based on legislation as at 1 April 2018. Although every effort is made to keep this information current, legislation frequently changes and accordingly we strongly recommend consulting your tax adviser and not rely on this information alone.

ACC premiums

From 1 April 2018:

Minimum liable earnings:

$31,720

Maximum liable earnings:
Earners levy (including GST) $1.39 per $100.00 of earnings.

$126,286

From 1 April 2017:

Minimum liable earnings:

$31,720

Maximum liable earnings:
Earners levy (including GST) $1.39 per $100.00 of earnings.

$124,053


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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

Benefits provided to employees outside of their wage or salary earnings are "Fringe Benefits", and are subject to FBT.

Employees include wage and salary earners, as well as shareholder employees. Low value benefits of up to $300 per employee per quarter may be exempted.

Common Fringe Benefits and their values:

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

Low/zero interest loans: FBT is charged on any loans from the company where the interest rate is under 5.77%. This rate is reviewed by Inland Revenue and can be changed during the year.

Employee insurances and others: The cost of the insurance is generally the value for FBT purposes, and has GST if the benefit included GST.

Fringe Benefit Tax has a number of special rules and exemptions - please contact us for more details.


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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 interest applies to all taxes paid late. The initial late payment penalty is 1% for the first week, increasing to 5% after 1 week. A further 1% monthly incremental penalty is incurred on any income tax outstanding for 2017 income year and earlier. This penalty has been removed on any income tax or Working for Families Tax Credits from 2018 year onwards.

Use of money interest: the rate applying from May 2017 is 8.22%.

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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.

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Minimum wage rates

The minimum wage rates applicable from 1 April 2018 are:

Adult $16.50 per hour
Starting-out $13.20 per hour
Training $13.20 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

If you have a residual income tax (RIT) of $2,500.00 or more in one year, you are required to pay provisional tax towards the following year's tax liability.

Under the standard (and most common) method of calculating your provisional tax, the amount you are required to pay is calculated by taking your RIT plus 5%.

Provisional tax is due in 2 or 3 instalments throughout the year. Instalment dates are dependent on GST registration and balance date. The most common instalment dates are 28 August, 15 January and 7 May.

On 1 April 2017 safe harbour thresholds increased to $60,000.00 RIT for all tax payers. Tax payers with an RIT of $60,000 or higher will attract use of money interest on any under- or short-paid provisional instalments. We encourage taxpayers with an RIT of $60,000.00 or more to talk to us about mitigating interest charges by using tax pooling.

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 pay the right amount at the right time.

Tax payers who use the accounting income method (AIM) method of paying provisional tax will not be subject to use of money interest – assuming they make their AIM payments on time.

Tax payers who estimate their provisional tax, whose RIT is $2,500.00 or more will be subject to interest from the day after their 1st instalment date on any under-payments of the tax due. Tax payers who estimate their provisional tax also lose the safe harbour threshold benefit for any associated tax payers. We encourage tax payers who wish to estimate their tax with Inland Revenue to talk to one of our advisors before taking this step.

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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
1 April 2018 $19,448

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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Ean Brown
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Administration
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