Tax stats 2016/17

A guide to key New Zealand tax stats and facts

Main

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Income Tax

INDIVIDUALS
$0 - $14,000 10.5%
$14,001 - $48,000 17.5%
$48,001 - $70,000 30%
Over $70,000 33%
Companies: 28%
Complying Trusts:
Trustees 33%
Beneficiaries Individual rates apply (see above)
- except for minors 33%
(<16 years on the balance date of the trust, where a guardian or relative (or associate of these) has made a qualifying settlement on the trust and the beneficiary income amount is > $1,000).

Maori Authorities: 17.5%
Resident Withholding Tax (RWT):
Dividends 33%
Dividends paid by a QC, a LTC, and dividends within the same company group (≥ 66% common shareholding) are exempt from RWT.

Interest:
Individuals 10.5%, 17.5%, 30% or 33%
Companies 28% or 33%
Rate depends on certain criteria and whether rate election made.

Interest paid within the same company group (≥ 66% common shareholding) is exempt from RWT.

Interest RWT return and payment dates:
EXPECTED TOTAL RWT DUE DATE
More than $500 per month 20th of the following month
$500 or less per month 1 April to 30 September - due 20 October
1 October to 31 March - due 20 April
For a 6-monthly filer, if interest RWT deductions exceed $500 per month for a 2-month period, the RWT must be paid to the IRD by the 20th of the following month.

Non-Resident Withholding Tax:
Interest 15%*
Dividends
- fully imputed 15% (0% in certain circumstances)
- not fully imputed 30%
Royalties 15%
*0% (in relation to some corporate bonds), or 2% if loan is subject to approved issuer levy
Where a double tax treaty exists, the rate of non-resident withholding tax may be reduced. A company paying an imputed dividend and supplementary dividend to a foreign shareholder may be entitled to claim a foreign investor tax credit.

NRWT return and payment dates:
EXPECTED TOTAL NRWT DUE DATE
$500 or more per year 20th of the following month
Less than $500 per year 1 April to 30 September - due 20 October
1 October to 31 March - due 20 April
For a 6-monthly filer, if NRWT deductions reach $500 during a tax year, the NRWT must be paid to the IRD by the 20th of the following month. Monthly returns are then required for the remainder of the year.

Income Tax Payment Due Dates

Month of Balance:
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Mar 28 Jul 28 Nov
TERMINAL TAX
7 Nov
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
7 May 28 Aug 15 Jan
TERMINAL TAX
7 Dec
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 May 28 Sep 28 Jan
TERMINAL TAX
15 Jan
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Jun 28 Oct 28 Feb
TERMINAL TAX
7 Feb
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Jul 28 Nov 28 Mar
TERMINAL TAX
7 Mar
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Aug 15 Jan 7 May
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Sep 28 Jan 28 May
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Oct 28 Feb 28 Jun
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Nov 28 Mar 28 Jul
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
15 Jan 7 May 28 Aug
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Jan 28 May 28 Sep
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.
PROVISIONAL INSTALMENTS
1st 2nd 3rd
28 Feb 28 Jun 28 Oct
TERMINAL TAX
7 Apr
The above terminal tax dates assume the taxpayer is linked to a tax agent.

Provisional Tax

Taxpayers who have a year-end tax liability exceeding $2,500 are generally required to pay instalments of provisional tax during the year in question. Provisional tax payment dates can be aligned with GST payment dates, depending on GST status and method used. Generally, most taxpayers pay provisional tax in three instalments, with a payment cycle of five, nine, and 13 months after the start of the income year. An exception to this is six monthly GST payers, who pay in two instalments. Another method of calculating provisional tax, the GST ratio method, is available to some taxpayers. These GST ratio method payers pay in six instalments.

Provisional tax for the 2016 & 2017 years is calculated as follows:
2016 2016 2017
2015 tax return filed 2015 tax return not filed 2016 tax return filed 2016 tax return not filed
Companies/PIEs 105% 2015 RIT 110% 2014 RIT 105% 2016 RIT 110% 2015 RIT
Trust &Estates 105% 2015 RIT 110% 2014 RIT 105% 2016 RIT 110% 2015 RIT
Individuals 105% 2015 RIT 110% 2014 RIT 105% 2016 RIT 110% 2015 RIT
2017
2016 tax return filed 2016 tax return not filed
Companies/PIEs 105% 2016 RIT 110% 2015 RIT
Trust &Estates 105% 2016 RIT 110% 2015 RIT
Individuals 105% 2016 RIT 110% 2015 RIT

Use of money interest is payable on shortfall of terminal tax for:
Non-individuals: from 1st instalment date until the tax is paid.
Individuals: same, where any of the following apply:
  • residual income tax is at least $50,000
  • provisional tax is estimated
  • hold an RWT exemption certificate.

Use of Money Interest (UOMI)

The UOMI rates are: (from 08/05/2016)
Payable to the IRD8.27% on underpayments
Payable by the IRD1.62% on overpayments (See section on tax pooling)

Tax Pooling

Taxpayers are able to use a tax pooling system to manage their provisional tax payments. Tax payments can be purchased or sold at pre-determined dates through an intermediary. Using a tax intermediary gives the seller a better interest rate return. It reduces UOMI charges and, in certain circumstances, late payment penalties for the purchaser.

Tax pooling can also be used to purchase other types of tax in certain circumstances.

Goods & Services Tax (GST)

On all supplies in NZ:
From 1 October 2010 15%
Except for zero-rated supplies, including:
Exports 0%
Duty-free goods 0%
Sale of taxable activities as a going concern 0%
Sale of land to GST-registered purchasers (from 1 April 2011, conditions apply) 0%
International transport 0%
Some business-to-business financial services 0%
Exempt supplies:
Financial services (except some business-to-business) N/A
Domestic rental accommodation N/A
Salaries / wages N/A


From 1 April 2009, if the annual turnover of a business exceeds:
$60,000 Compulsory GST registration
$500,000 Can’t use six monthly periods
$2,000,000 Must use invoice basis (not payments basis), unless non-profit body or non-resident

GST return and payment due dates:
The due date for GST returns and payments is the 28th of the month following the end of the taxable period, except for these periods:
- period ending on 30 November - the due date is 15 January
- period ending on 31 March - the due date is 7 May

Fringe Benefit Tax (FBT)

On most fringe benefits 49.25%
FBT Value on Low or Interest Free Loans:
Benchmark Interest Rate (Interest rate is reviewed quarterly)
From 1 January 2016 5.77%
FBT Value of Motor Vehicles:
Either 5% per quarter of original cost of vehicle (incl. GST),
Or 9% per quarter of tax value of vehicle (incl. GST)*
*Minimum tax value of $8,333
The option of using tax value instead of original cost aligns the treatment of purchased vehicles with that of leased vehicles.

FBT Threshold for Annual Return Filing:
Total of annual PAYE and employer superannuation contributions is $500,000 or less.

FBT Exemption Thresholds for “unclassified benefits”:
The value of minor fringe benefits (such as chocolates and flowers) that can be provided to employees without attracting FBT is $300 per quarter per employee, and $22,500 a year per employer.

Donations

Individuals
A tax credit is available on qualifying donations not exceeding the taxpayer’s taxable income for that year:
Donation tax credit minimum $5
Donation tax credit 1/3 of the qualifying donations

Companies
All qualifying donations are deductible, to the extent that the donations do not exceed the company’s net income for that year.

Tax Return Due Dates

Balance Date Return Due Date
If “linked” to tax agent * -
31 March the following 31 March
From 1 Apr to 30 Sep 31 March after the end of the income year
From 1 Oct to 30 Mar 31 March after the end of the next income year
If not “linked” to tax agent -
From 1 Apr to 30 Sep 7th day of the 4th month after the end of the income year
From 1 Oct to 31 Mar 7 July after the end of the income year
*Under extension of time arrangements. Taxpayers 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.

PAYE on Salaries & Wages

Deductions from Due date
1st to 15th of month 20th the same month.
16th to last day of month 5th the following month
Any day in December 15 January

Exception from 1 April 2009:
PAYE < $500k previous year: 20th the following month, every month Employee ACC Earner Premiums, Student Loan repayments, Kiwisaver deductions, Kiwisaver employer contributions and Child Support deductions are all payable in the same manner.

Employee Accommodation & Allowances

New rules apply from 1 April 2015. These rules clarify the tax treatment of employer-provided accommodation, accommodation payments and other allowances or payments made by employers to cover employee expenditure. In some scenarios the taxpayer can elect to apply the rules retrospectively. Please contact your BDO tax adviser for further information.

ACC Levies

ACC employer levies are determined based on the risk of accident in a particular industry.

ACC employee levy details for the 2016/2017 year:
Maximum Liable Earnings   $122,063 (aged 18 or over)
Earners Levy (incl. GST)   $1.39 per $100 earnings (aged 18 or over)

Entertainment Deductions

Entertainment expenses are limited to a 50% deduction for certain:
Venue off-premises (eg corporate box, holiday home, boat)
Food/drink off-premises (eg social event, business lunch)
Food/drink on-premises (eg party or in area not open to all employees)
Full deduction (100%) is available for:
Food/drink on-premises (eg subsidised staff cafeteria open to all staff)
Food/drink - business trip
Entertainment outside NZ
Promotional samples

Where employees enjoy the benefit of the entertainment outside of their employment duties, FBT may apply. The entertainment add back is subject to GST.

Gift Duty

Gift duty was abolished from 1 October 2011.

Depreciation Allowances

Certain assets can be depreciated for tax purposes.
Examples: Economic Rate (DV)
Vehicle 30%
Computer 50%
Desk 13%
Building 0%
The 20% loading rate on new assets was removed from 20 May 2010. Depreciation deductions ceased to be available for buildings with a useful life of 50 years or more from the 2012 income year.

There is an option to use either straight line or equivalent diminishing value for all assets. Low value assets ($500 or less) can be claimed as an income tax deduction (subject to normal deductibility criteria) in the year incurred. (All items acquired at the same time from the same supplier, and subject to the same depreciation rate, are treated as one purchase.)

Mixed-Use Assets

A new tax regime deals with mixed-use assets, but only for specific types of assets which are used partly for earning income and partly for private use, and for which there is a period of non-use during the year (generally at least 62 days).

Application dates for land and improvements (including buildings):
Income tax returns 2014/15 income year
GST returns 17 July 2014

Application dates for boats & aircraft:
Income tax returns 2015/16 income year
GST returns 1 April 2015
Key points about the new regime:
  • There are special definitions and exclusions
  • These rules can take precendence over the entertainment and FBT regimes
  • Expenditure deductions are subject to new apportionment rules
  • A net loss for an asset might be quarantined until there is net income from the same asset
  • A taxpayer can possibly opt out of the regime, but no expenditure deductions would be allowed

KiwiSaver

New employees Automatically enrolled, unless they opt out
Existing employees Can elect to join
Self-employed Can voluntarily join
Not employed Can voluntarily join

Members/employees:
Employee contributions Minimum default 3% of gross earnings (from 1 April 2013)
Member tax credit Matches 50 cents for every dollar of contribution paid into scheme
Maximum tax credit $521.43 p.a. from 1 July 2011 ($10 per week)

Employers:
Employer contributions (CEC) 3% of gross earnings (from 1 April 2013)
Employer tax credit None
Employers deduct the employee’s contribution from their earnings, add their employer contribution, and pass this on via the IRD to an approved scheme provider for investment on the employee’s behalf.

Employer’s Superannuation Contribution Tax (ESCT)

ESCT is deducted from employer superannuation contributions.* The ESCT rate is based on the total amount calculated by adding the employer contribution to the employee’s salary/wage (for the previous year if employed for all of the previous year):

From 1 April 2012:
$0 - $16,800 10.5% on all contributions
$16,801 – $57,600 17.5% on all contributions
$57,601 - $84,000 30% on all contributions
Over $84,000 33% on all contributions
*Prior to 1 April 2012 the first 2% of the employer’s contribution was exempt from ESCT. Alternatively, the employer contributions can be taxed as salary and wages under the PAYE rules if the employee agrees.

Fair Dividend Rate (FDR)

FDR applies to share/equity investments of less than 10% in most overseas companies if the holder is subject to the FIF regime. Those using FDR rules are no longer taxed on their dividend income or the increase/ decrease in the value of their share portfolio. FDR can also be used for some investments where the ownership percentage is between 10% and 50%.

Individuals and most trusts can opt to be taxed at the lesser of:
5% of the opening value of their share portfolio*
(as at 1 April each year for standard balance date taxpayers)

or, their actual return calculated under one of the FIF calculation methods (normally comparative value but losses are not allowed).

Companies and other non individuals use:
5% of the opening value of their share portfolio*.
*Quick sale adjustments must be made when a FIF has been bought and sold in the same income year.

There are exceptions to the above rules when the FDR method is not allowed.

The FDR rules do not apply to most shareholdings in companies tax resident in Australia and listed on an ASX index.

For individuals, the FIF rules generally only apply if the total cost (as defined) of the individual’s FIF interests is more than $50,000. This threshold exemption also applies to a very limited range of trusts. A taxpayer can voluntarily opt into the FIF regime if they are below the threshold (special rules apply).

Tax Penalties

A tax shortfall may incur the following penalties:
Lack of Reasonable Care 20% penalty
Unacceptable Tax Position* 20% penalty
Gross Carelessness 40% penalty
Abusive Tax Position 100% penalty
Evasion 150% penalty
 
Penalties may be increased for:
Obstruction 25% penalty increase
 
Penalties may be reduced if shortfall is:
Disclosed before audit 100% penalty reduction for lack of
reasonable care or taking an unacceptable
tax position
Disclosed before audit 75% penalty reduction in all other cases
Disclosed during audit 40% penalty reduction
Temporary shortfall 75% penalty reduction
*Shortfall penalty for taking an unacceptable tax position only applies to income tax (not GST or withholding tax).
 
Penalties may be further reduced if the taxpayer satisfies the criteria for:
‘Previous good behaviour’ 50% further penalty reduction
Late filing penalties
 
Income Tax Returns:
Net income (before losses) Penalty
Under $100,000 $50
$100,000 – $1,000,000 $250
Over $1,000,000 $500
 
GST Returns:
Payment Basis $50
Hybrid $250
Invoice Basis $250
 
Other:
ICA Returns $250
Reconciliation statements $250
Employer monthly schedules $250
 
Late payment penalties:
Initial late payment penalty 1% (the day after due date)
Then, after a week 4% (seven days after due date)
Then, after each month 1% incremental increase
 
Non-payment penalties on employer monthly schedules:
Non-payment penalty 10%
A further 10% will be added each month an amount remains outstanding up to a maximum of 150%.

Residential Land "Bright-Line Test"

NZ does not generally tax a capital gain made on the sale of private residential land (i.e. not otherwise subject to tax).

Effective 1 October 2015 for residential land acquired on or after that date, a sale within 2 years of acquisition could be taxed.

Key points about the new regime :
  • There are special definitions
  • There is a "main home exclusion" (special rules apply)
  • The test does not apply to property acquired through an inheritance
  • There is a "rollover relief" for property transferred in a relationship property agreement
  • A loss will be "ring-fenced"
  • Special anti-avoidance rules prevent companies and trusts being used to avoid the test

Contact our Tax specialists at your nearest office on

0800 379 528

www.bdo.nz

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