Last modified: 16/01/2025 22:51

Corporate taxation

	Rate
Corporate Tax	28%
Branch Tax	28%
Capital Gains Tax	0%

Residence: Company is resident in New Zealand if the following is met: Incorporated in New Zealand Head Office is in New Zealand Centre of Management is in New Zealand Directors exercising control in New Zealand

Basis: New Zealand resident companies are taxed on their worldwide income and non-resident companies (including branches) are taxed on their New Zealand-sourced income, subject to DTA, if applicable.

Taxable income: Income tax is imposed on a company’s taxable income which is broadly a company’s assessable income less allowable deductions. Tax adjustments are made in accordance with New Zealand’s Income Tax Act 2007 before deriving at final taxable income.

Significant local taxes on income: N/A

Alternative minimum tax: N/A

Taxation of dividends: In New Zealand, dividends are deducted at 33% tax before distribution. This is first offset by the tax already paid at 28% by a company (imputation credits) and the remaining tax is required for payment to IRD, Dividend Withholding Tax (DWT). This is usually 5% if a company is only passing on the accumulated income it has paid its tax for, and the dividend is therefore attached with imputation credits at 28% – such dividend is called fully imputed dividends. The company is responsible for paying the DWT and it will be attached to the dividends. There are two scenarios where no DWT is required on the basis that the dividend is fully imputed: 1. Dividends paid to another company of the wholly owned group. 2. Dividends paid to non-resident. Dividend, that is not fully imputed, paid to non-residents are subject to Non-Resident Withholding Tax (NRWT) at a rate up to 15% depending on DTA or 30% if no DTA.

Capital gains: Unless a company commits business of buying and selling, capital gain tax generally does not apply. New Zealand has special rules for land dealing business covered by Income Tax Act 2007.

Losses: New Zealand companies are allowed to carry forward taxable loss to future years, subject to the following tests. 1. Shareholder Continuity Test – A company can carry forward its taxable losses if at least 49% of the company’s voting shares has not changed during the year the loss was made, as well as the year it offsets income. 2. Business Continuity Test – Unless there is a major change in the business within five years following a change in ownership, taxable losses are allowed to be carried forward.

Foreign tax relief: Tax paid on worldwide income may be available as foreign tax credits for New Zealand company if the source country has limited or unlimited right to tax on that income, as covered by DTA.

Participation exemption: N/A

Holding-company regime: N/A

Tax-based incentives: Research and Development (R&D) tax credit at 15% may be available for taxpayers that spend from $50,000 to $120 million level of eligible R&D expenditure per year. To claim R&D tax credits, the taxpayers must have: 1. eligible R&D activities 2. eligible expenditure 3. status as an eligible entity 4. submitted supplementary return and income tax return by deadlines.

Group relief/fiscal unity: Groups of New Zealand resident companies that have 100% common ownership may elect to become a consolidated group where they are treated as a single entity for tax purpose. This means the group will file a single tax return and each member is responsible for their share of any tax liability while a member of the group. Where the group of companies does not have 100% common ownership but more than 66%, the companies can offset losses against another’s profit by way of election or subvention payment. A subvention payment is a payment by a profit company to a loss company where reduces taxable income of the profit company and taxable loss of the loss company by the same amount. The payment cannot be greater than the loss company’s loss.

Small company/alternative tax regimes: N/A

Corporate taxation: compliance

Tax year: 1 April – 31 March (Substituted periods may be allowed where a company chooses to align its tax year with its accounting year).

Consolidated returns: Available for group of companies with 100% common ownership.

Filing and payment: Tax returns must be filed by 7 July each year or 31 March of the following year if prepared and filed by a tax agent. Payment is due by 7 February of the following year or 7 April of the following year if prepared and filed by a tax agent.

Penalties: Late Filing and Late Payment Penalties apply

Rulings: Public rulings are available from IRD to provide greater certainty and assist with the taxpayer’s understanding.

Taxation of individuals

New Zealand currently has tax brackets as per below for the tax year ending 31 March 2025 to reflect the changes made to individual tax rates, effective from 31 July 2024.

Taxable Income – New Zealand residents	Tax rate
$0 – $14,000	10.5%
$14,001 – $15,600	12.82%
$15,601 – $48,000	17.5%
$48,001 – $53,500	21.64%
$53,501 – $70,000	30%
$70,001 – $78,100	30.99%
$78,101 – $180,000	33%
$180,000 and above	39%

The tax rates for the tax year beginning 1 April 2025 are shown as per below.

Taxable Income – New Zealand residents	Tax rate
$0 – $15,600	10.5%
$15,601 – $53,500	17.5%
$53,501 – $78,100	30%
$78,101 – $180,000	33%
$180,000 and above	39%

Individuals in New Zealand are taxed at marginal tax rate for each income bracket per above.

Residence: Individuals will be tax resident in New Zealand if they meet any of the following. 1. The individual has been in New Zealand for more than 183 days in any 12-month period and haven’t become a non-resident, or 2. The individual has a permanent place of abode in New Zealand, or 3. The individual is only away from New Zealand in the service of the New Zealand government.

Basis: New Zealand tax residents are taxed on worldwide income. Non-residents taxpayers are generally required to pay tax only on income earned from New Zealand sources. The same tax rates will generally apply, however there are some exceptions as per below examples. 1. A non-resident may be from a country that has a double tax agreement (DTA) with New Zealand, and this may affect how the taxpayer is taxed. For example, there are specific non-resident withholding tax rates for passive income such as interest, dividends and royalties depending on the country. 2. A prescribed investor rate (PIR) of 28% will generally apply to income earned from portfolio investment entities (PIE). 3. Some special rules exist for certain non-resident taxpayers. The individuals will need to apply for IRD number which is a tax identification number in New Zealand, otherwise the tax rate will be fixed at 45% for all income levels.

Taxable income: Income tax is calculated at marginal rate as per table above from “Taxation of individuals table”. Income includes, but not limited to, business income, wages and salary, passive income. Wages and salary are paid net of tax, ACC and Kiwisaver through PAYE (Pay-As-You-Earn). Taxpayers generally are not required to file tax returns with IRD if this is the only source of income. Passive income such interest, dividends and royalties need to be included in the taxpayer’s income tax return if the tax rate the withholding tax deducted at is lower than the rate required based on the taxpayer’s tax brackets. Business income always needs to be included in a taxpayer’s income tax return.

Capital gains: There is no tax on capital gains in New Zealand, unless the sale is captured by the bright-line test. The bright-line test rule was first introduced in 2015 and there have been quite a few changes to the test over the years. Under the current rule, a taxpayer may have to pay income tax on any gain on the sale of a residential property owned for less than 2 years if sold after 1 July 2024 unless one of IRD’s exclusions apply.

Deductions and allowances: A taxpayer is generally eligible to claim expenses that have been incurred in connection with generating taxable income. However, no expenses are allowed for deduction against wages and salary or passive income except for the following. 1. Fees paid to complete the taxpayer’s income tax return. 2. Income protection insurance policy premium. The payout will be taxable income. 3. Commission charged on passive income, except bank fees. 4. Interest expenses on money borrowed to buy shares or to invest and such investment produces taxable income. 5. Interest charged by IRD for late payment of tax.

Foreign tax relief: Worldwide income is taxed in New Zealand. Where income from another country has already been deducted for tax, a taxpayer may be allowed to claim that tax credits as foreign tax credits in New Zealand, subject to provisions outlined in DTA with that country. The amount claimable is limited to the lowest of the following: 1. Tax paid in the other country. 2. Tax that would have been paid in New Zealand on the same income. 3. Amount allowed in the DTA. Credits attached to the income instead of having been withheld after deduction are not claimable (Australian franking credits for example).

Taxation of individuals: compliance

Tax year: 1 April – 31 March

Filing and payment: If required, tax returns must be filed by 7 July each year or 31 March of the following year if prepared and filed by a tax agent. Payment is due by 7 February of the following year or 7 April of the following year if prepared and filed by a tax agent.

Penalties: Late filing and late payment penalties apply.

Rulings: Public rulings are available from IRD to provide greater certainty and assist with the taxpayer’s understanding.

Withholding taxes

Type of Payment	Resident		Non-residents
	Company	Individual	Company	Individual
Dividends	33%	33%	subject to DTA	subject to DTA
Interest	28%	10.5%, 17.5%, 30%, 33%, 39%	subject to DTA	subject to DTA
Schedular payments	subject to type of activity	subject to type of activity	subject to type of activity	subject to type of activity
Gain on sale of residential property*	subject to RLWT	subject to RWLT	subject to RLWT	subject RLWT

 *Conditions apply.

Branch remittance tax: N/A

Anti-avoidance legislation

Transfer pricing: New Zealand has transfer pricing rules which require cross-border associated party transactions to be conducted on an arm’s-length basis to ensure the taxable profits reported by a member of multinational enterprise reflect the economic activity.

Interest restriction: Taxpayers are generally allowed a deduction for interest costs on loans/debts related to income-generating purposes. However, New Zealand has thin capitalisation rules which limits deductibility where the taxpayers are owned/controlled by a non-resident or New Zealand residents have offshore investments. New Zealand currently has interest deductibility limitation rules around residential rental activity. A taxpayer can claim 80% of the Interest from 1 April 2024 and 100% from 1 April 2025.

Controlled foreign companies: A non-resident company is treated as Controlled Foreign Companies (CFC) in New Zealand if controlled by: – 5 or fewer New Zealand residents have a control interest of more than 50% – 5 or fewer New Zealand residents control the shareholder decision rights – a single New Zealand resident has a control interest of 40% or more, and no non-associated non-resident owns a larger control interest. Where a company is considered CFC, the taxpayers who have income interest of 10% or more in CFC are taxed on the on their share of passive income and losses if the CFC is deemed to have ‘active business’ or maybe taxed on providing personal services if the CFC is deemed to have ‘non-active business’. The ‘active business test’ is assessed by testing whether the CFC’s passive income is greater than or less than 5% of the total income.

Hybrid mismatches: New Zealand has hybrid mismatch rules that are governed by subpart ‘FH’ of Income Tax Act 2007 which implement the OECD reports.

Disclosure requirements: New Zealand resident taxpayers who have income interest of 10% or more in CFC must disclose to IRD of the information for each CFC. Taxpayers are also required to submit base erosion and profit shifting (BEPS) disclosure if hybrid mismatch rules or interest limitation rules apply to them.

Exit taxes: N/A

General anti-avoidance rule: New Zealand has a general anti-avoidance rule (GAAR) and specific anti-avoidance rules (SAARs). GAAR overrides other provisions of the tax legislation to deny the tax benefits of an arrangement when a more than incidental purpose of the arrangement is to obtain a tax benefit. SAARs override other provisions of the tax legislation in specific avoidance situations.

Digital services tax and Other significant anti-avoidance legislation: Digital Service Tax (DST) of 3% on New Zealand users of the services is proposed as an interim solution to OECD Pillar One which has not yet been finalised. However, DST has now been deferred.

Value-added tax/Goods and services tax

Type of tax: Goods and services tax (GST) applies to supplies of goods and services, including imports. Some items are exempt for GST.

Standard rate: 15%

Reduced rates: Zero-rated for special transactions, such as sale of business as a going concern.

Registration: Businesses with turnover of $60,000 or more in the last 12 months or is expected in the next 12 months must register for GST.

Filing and payment: GST returns are required on monthly, two-monthly, or six-monthly. Either payment, invoice or hybrid method is available depending on the level of sales $ amount. Filing and payment is generally due by 28th of the following month of the return period.

Social security contributions

New Zealand has Kiwisaver which is a voluntary, work-based retirement savings scheme. An employee will choose contribution from their gross wages at one of five rates (3%, 4%, 6%, 8%, 10%). Where an employee makes contribution, the employer is required to make contribution for the employee at least at 3%. The employee may elect to not contribute.

Self-employed

Self-employed individuals will deal directly with their Kiwisaver scheme provider. The amount and timing of contribution are flexible.

Other taxes

Capital duty: N/A

Immovable property taxes: There is levy (rates) taxed on land by regional authorities (councils).

Transfer tax: There are no taxes on the transfer of property in New Zealand.

Stamp duty: There is no stamp duty – it has been abolished in respect of instruments executed after 20 May 1999.

Net wealth/worth tax: New Zealand does not have a wealth tax.

Inheritance/gift taxes: There is no inheritance/gift tax in New Zealand.

Other: Fringe Benefit Tax (FBT) is payable by employers when a fringe benefit (non-cash benefit) is provided to employees or their associated persons in the due course of their employment with the employer. Such benefits are not part of the employees’ income, but the employer is responsible for calculating, filing and paying tax on such benefits provided.

Tax treaties

New Zealand: – has a network of 41 DTAs in force with its main trading and investment partner countries to reduce tax impediments to cross-border trade and investment and assist tax administration. – has a small number of tax information exchange agreements (TIEA) in place. – is a party to OECD’s Convention on mutual administrative assistance in tax matters and multilateral convention to implement tax treaty related measures to prevent BEPS.