Facts on Tax


ACC Premiums

The Accident Compensation Corporation (ACC) has responsibility for insuring and collecting ACC premiums for employers, the self-employed and private domestic workers.

ACC premiums are calculated at a rate based upon the risk of accident for an industry category.

Depreciation Allowances

Economic rates apply to the purchase of assets. An additional 20% loading applied to new assets (excluding buildings) up until 20 May 2010. There is an option to use either straight line or diminishing value for all assets. The following assets are examples only.

 

Economic Rate (DV)

+ 20% Loading

Building (acquired before 19/05/05 to 31/03/2011) 4% N/A
Building (after 19/05/05 to 31/03/2011) 3% N/A
Building (acquired after 01/04/11) 0% N/A
Computer (acquired before 01/04/05) 40% 48%
Computer (acquired after 01/04/05) 50% 60%
Office Furniture 12% 14.4%
Vehicle 26% 31.2%

Low value assets ($500 or less excluding GST) can be written off.  ($200 or less excluding GST before 19/05/05)

Donations

If you made financial donations to a charity, or paid for childcare or a housekeeper (in certain situations) during the last tax year, you can claim part of it back as a rebate.

Donation rebates for individuals (minimum $5) are made on form IR526. The limits on donations claimable for individuals, companies and Maori Authorities have been removed as of the 2008/2009 tax year.

Entertainment

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

  1. Corporate Boxes
  2. Holiday Accommodation
  3. Pleasure Craft
  4. Food & Beverages consumed at any of the above or in other specific circumstances eg. Business Lunches.

There are a number of exemptions from these rules, please talk to us if you are unsure.

Working for Families Tax Credits

For 1 April 2007 to 31 March 2008: The calculations shown below are based on the eldest child being under 16 and all other  children being under 13 years of age. For more information on Working for Families Tax Credits (previously called family assistance) please visit www.ird.govt.nz/wff-tax-credits.

Families Tax Credits and In-Work Payment
Family Tax Credits are paid regardless of your source of income. In-work tax credits are for families who normally work a minimum number of hours each week.

Family Income (before Tax)

Number of Children

FTC (Family Tax Credits)

IWTC (In-Work Tax Credits)

35,000 1 4264 3120
  2 7228 3120
  3 10192 3120
  4 13156 3900
  5 16120 4680
  6 19084 5460
45,501 1 1872 3120
  2 4836 3120
  3 7800 3120
  4 10764 3900
  5 13728 4680
  6 16692 5460
56,001 1 0 2886
  2 2730 3120
  3 5694 3120
  4 8658 3900
  5 11622 4680
  6 14586 5460
66,501 1 0 780
  2 0624 3120
  3 3588 3120
  4 6552 3900
  5 9516 4680
  6 12480 5460
75,501 1 0 0
  2 0 1950
  3 1794 3120
  4 4758 3900
  5 7722 4680
  6 10686 5460
86,001 1 0 0
  2 0 0
  3 0 2808
  4 2652 3900
  5 5616 4680
  6 8580 5460
95,501 1 0 0
  2 0 0
  3 0 702
  4 546 3900
  5 3510 4680
  6 6474 5460
105,501 1 0 0
  2 0 0
  3 0 0
  4 0 2652
  5 1716 4680
  6 4680 5460
119,001 1 0 0
  2 0 0
  3 0 0
  4 0 0
  5 0 3692
  6 1976 5460

Minimum Family Tax Credit
If your family income (before tax) is below $22,119 a year before tax you may also be entitled to a family tax credit.

Parental Tax Credit
You can receive up to $1200 (in total) for each newborn child, depending on your family income. The amount will depend on:

  • Family Income (before tax)
  • The number of days your baby was in your care (as the principal child carer) during the first eight weeks. If your baby is in a neonatal unit, it is still in your care.
Fringe Benefit Tax
  • FBT Rate 64% (or 49% for certain employees) of FBT value (income tax deductible)
  • Return Period Quarterly or Annually

FBT Value of Motor Vehicles:
When calculating the taxable value for motor vehicles, you will need to use either the actual cost price, or the tax book value.

From 1 April 2006 the FBT value of the benefit when using cost price reduced from 24% to 20% (or from 6% to 5% if FBT is paid quarterly).

Low or Interest Free Loans:

  • Benchmark Interest Rate (from 1 July 2007)
  • 10.57% p.a (reviewable quarterly)
  • For the most recent rates, check the IRD website
Gift Duty
Value of Gift Duty Payable
0 to $27,000 NIL
$27,001 to $36,000 5% of value over $27,000
$36,001 to $54,000 $450 plus 10% of value over $36,000
$54,001 to $72,000 $2,250 plus 20% of value over $54,000
Over $72,000 $5,850 plus 25% of value over $72,000
Goods & Services Tax

GST Rates

  1. On supplies in NZ 15.0%
  2. Zero rated supplies (eg exports) 0%

Exemptions:

  1. Financial Services
  2. Domestic Rentals
  3. Wages/Salaries and most Directors Fees

Registration threshold - $60,000 turnover pa

Filing frequency threshold - Turnover exceeding $500,000 pa: 1 or 2 monthly

Filing basis threshold - Turnover exceeding $2,000,000 pa. must use invoice basis

PAYE on Salaries & Wages

If PAYE deductions exceed $100,000 pa, deductions from 1st to 15th month- due 20th of the same month and balance of monthly deductions are due the 5th of the following month. For deductions of less than $100,000 pa, PAYE is due 20th of the month following deduction.

Employee ACC Earner Premiums, Student Loan repayments and Child Support deductions payable follow the same rules.

Provisional Tax

Provisional Tax is payable in 3 installments unless a taxpayer qualifies as a new provisional taxpayer. Provisional tax is calculated at 105% of the previous years residual income tax (RIT). Provisional tax for companies is calculated at 95% of the 2008 RIT.

For non-individuals, use of money interest is payable on shortfall of terminal tax from the 1st installment date until the terminal tax is paid.

For individuals, use of money interest is payable from the 1st installment date where their RIT exceeds $35,000 or the taxpayer has estimated their provisional tax.

Return Due Dates and Extensions of Time

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

Taxpayers with balance dates from 1 April to 30 September must file their return by the due date for the preceding 31 March year.

Taxpayers with balance dates from 1 October to 31 March must file their returns by the due date for the following 31 March year.

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.

Taxpayer Penalties

Reassessed tax may incur the following penalties:

Lack of Reasonable Care 20%
Unacceptable Tax Position 20%
Gross Carelessness 40%
Abusive Tax Position 100%
Evasion 150%

The above penalties may be reduced for disclosure before an audit by 75% or during an audit by 40%. Above penalties may be increased by 25% for obstruction.

Late Payment
If you don’t pay your taxes or duties on time, you will face standard penalties for late payment.

  • All initial late payment penalties imposed on and after 1 April 2002 are staggered in two phases.
  • An initial 1% late payment penalty will be charged on the day after the due date.
  • A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date.
  • Every month the amount owing remains unpaid a further 1% incremental penalty will be added.

Late payment penalties may be remitted in limited circumstances. These penalties apply to all taxes and duties, but not to student loan or child support payments.

More information can be found on the IRD Web site


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