A branch may also use utilize branch losses to offset foreign income. New Zealand operates an imputation system under which the payment of company tax is imputed to shareholders. Imputation credits can be attached pursuant to a ratio of 28/72 to cash dividends paid (or taxable bonus shares issued). Imputation credits reduce tax payable on a dividend (or taxable bonus shares) received by a shareholder. There are rules in relation to limits on carrying forward and the use of imputation credits in future years, which attempts to prevent streaming of imputation credits. There is a requirement for a continuity of shareholding of at least 66% to carry imputation credits forward.
Our handy online tool will help you decide on the records you need to keep when you buy or sell goods or services. Otherwise you have to file GST103 Report, if you’re liable for provisional tax. You are Joe’s regular customer, and you have purchased a pair of sneakers at $74.75 in total (the price is GST-inclusive). Having your own business is great as you are your boss; you have complete control of your time, you’re the decision-maker of your company, and most importantly, you’ll have greater satisfaction from your work.
- For employees who received attributed fringe benefits in any quarter during the year, the employer must calculate the employee’s fringe benefit inclusive of cash remuneration.
- In order for overseas buyers to apply for an IRD Number they must have a fully functioning New Zealand bank account.
- If you’re a non-resident business and you supply remote services such as digital content from outside New Zealand to customers who are resident in New Zealand, you may be required to register for, collect and return GST on these supplies.
- On 1 October 2016, the taxation of digital (‘remote’) services supplied by offshore companies (non-New Zealand) to consumers based in New Zealand changed.
He has lived, worked and travelled across 16 different countries before calling New Zealand home. He has now spent over a decade in the New Zealand tourism industry, clocking in more than 600 activities across the country. He is passionate about sharing those experiences and advice on NZ Pocket Guide and its YouTube channel. Robin is also the co-founder of several other South Pacific travel guides.
New Zealand: Update on bill including GST measures and dual-resident company tax changes
For some special supplies, such as secondhand goods, you may still be able to claim a GST adjustment. Your GST return and payment due will be on the 28th of the following month, on 28th August. For example, Jenny owns a boutique and her taxable recurring bills period ends on 30th June. Jenny has at least a month to prepare her GST return and file her tax return. Some rare services are exempt from GST and duty-free will offer items tax-free when landing in New Zealand from an international flight.
- These requirements do not apply to companies that have been incorporated overseas but are registered in New Zealand.
- ESCT is generally deducted at the employee’s relevant marginal rate based on the employee’s total salary or wages and employer superannuation cash contributions paid to the employee in the previous year.
- This includes employer contributions to KiwiSaver (or other qualifying registered superannuation schemes).
- Once a business has received its GST number, it is able to start charging tax on its invoices.
- If you regularly sell goods or services you might need to charge GST to your customers.
- Double-taxation treaties (DTTs) with various countries may create an exemption from full tax liability within New Zealand.
FBT applies to benefits provided by employers to employees such as motor vehicles, low interest loans and subsidized goods or services. It is levied on employers according to the taxable value of the fringe benefit provided. The tax rate varies with the tax rate of the employee receiving the benefit. If operated by a non-resident, the branch will be treated as a non-resident company for New Zealand tax purposes. Branch profits are subject to ordinary corporate rates of taxation, and there is no withholding tax on repatriated profits.
business.govt.nz
Individuals are able to undertake business in their own name as a sole trader. All income earned from operating as a sole trader is taxable to the individual. Sole traders can also register for GST in their own names in respect of their business activities. Companies in New Zealand typically have limited liability (although it is possible for a company to have unlimited liability). A limited company is liable in full for all obligations that it incurs but the shareholders are only liable for any unpaid money owing on their shares.
How to register for GST
This can be particularly desirable where one or more of the investors is or are resident abroad because it can obviate withholding tax requirements and reliance on double tax treaties. New Zealand companies must have at least one director who resides in New Zealand, or who resides in Australia and is a director of a company that is registered in Australia. These requirements do not apply to companies that have been incorporated overseas but are registered in New Zealand. Most business activity is carried out through limited liability companies. A limited liability company’s legal status limits the liability its shareholders have in the business to the value of their shares in accordance with English common law principles.
Withholding tax on service fees
All GST returns have to be submitted by the 28th day of the following month, together with any payment. The exceptions to this rule are where the period ends 30 November, or 31 March. Returns and payments for these periods are due 15 January and 7 May respectively.
How we calculate taxes
Generally, most transactions are taxable in the jurisdiction where your customer is. Stripe assumes the sale of most goods or services to be taxable unless specifically exempted. After you’ve registered to collect tax in New Zealand, add your registrations to Stripe in the Registrations tab in the Dashboard. This turns on tax calculation and collection in Stripe for your transactions in New Zealand. Once GST registered, businesses will receive a unique GST number, to be added to all tax invoices. GST registrations can be submitted online or via paper applications.
However, if a registered person makes taxable supplies of less than $500,000, they may apply to the Commissioner to return GST six-monthly. Conversely, if a registered person makes taxable supplies of over $24 million in a 12-month period, they are required to return GST on a monthly basis. Prior to 1 December 2019, Customs did not collect duty and GST where the total amount payable on any one importation was less than $60 (gross value of good of $400) . From 1 December 2019, New Zealand Customs does not charge GST on items purchased offshore for $1,000 or less. This is because offshore suppliers (as well as market places and re-deliverers) supplying goods valued at or below NZ$1,000 to New Zealand-resident consumers are required to register and return GST on these supplies.
Once you have your account set-up, you can make payment anytime, anywhere. One important thing you must not forget is the payee code, which shows the type of tax the payment is for. This rule does not apply to you if your taxable period ends on 31st March and 30th November.
Digital services supplied by offshore companies
GST is usually payable on goods and services held at the time you cancel your registration. That new piece of GST legislation mirrors similar rules governing the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods. Because businesses claim back their input GST, the GST inclusive price is usually irrelevant for business purchasing decisions, other than in relation to cash flow issues.
