Tax Reference

A quick reference to facts on tax

On this page...

1. ACC Premiums
2. Depreciation Allowances
3. Donations
4. Entertainment
5. Family Tax Credits
6. Fringe Benefit Tax
7. Gift Duty
8. GST - Goods & Services Tax
9. PAYE on Salaries & Wages
10. Personal Income Tax Rates & Threshold Changes
11. Provisional Tax
12. Use of Money Interest Rates
13. Return Due Dates and Extensions of Time
14. Taxpayer Penalties

1. 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.

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2. Depreciation Allowances

Economic rates apply to the purchase of assets. An additional 20% loading applies to new assets (excluding buildings). 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	3%	N/A
Computer	50%	60%
Office Furniture	15%	18%
Vehicle	30%	36%

Low value assets ($200 or less excluding GST) can be written off.

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3. Donations

For individuals, a rebate of 1/3 of qualifying donations and voluntary school fees up to a maximum of $1,890 p.a. may be claimed in any income year. Donation rebates for individuals (minimum $5) are now made on form IR526.

Companies (other than closely held companies) are entitled to a deduction for donations made in an income year up to either 1% of the companies net income or $4000. There are maximum limits available, please talk to us.

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4. 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, e.g. business Lunches.

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

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5. Family Tax Credits

The table below shows the existing Working for Families Tax Credit annual rates and the new annual rates that apply for the 2008/09 income year and the annual rate that will apply for the 2009/10 year:

Age/number of children	Current 1-Apr 2008	New rate from 1-Oct 2008	Annual rate for 2009
First child if under 16	$4,264	$4,487	$4,376
First child if 16 or over	$4,940	$5,198	$5,069
Subsequent child if under 13	$2,964	$3,119	$3,042
Subsequent child if 13-15	$3,380	$3,557	$3,469
Subsequent child if 16 or over	$4,420	$4,651	$4,536
Abatement threshold	$35,000	$36,827	$35,914

Note: The annual rate for 2009/10 shows the full-year effect of the new thresholds and rates whereas the annual rate for 2008/09 is calculated using the rates that applied in the period 1 April 2008 to 30 September 2008 and 1 October 2008 to 31 March 2009, reflecting that the rate change is mid-year.

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6. FBT - Fringe Benefit Tax

As from 1/4/2001:

* FBT Rate 64% (or 49% for certain employees) of FBT value
  (income tax deductible)
* Return Period Quarterly or Annually

FBT Value of Motor Vehicles:
5% per quarter of original cost of vehicle (incl GST)

Low or Interest Free Loans:
Benchmark Interest Rate (from 1 April 2009)
8.05% p.a. (reviewable quarterly)
For the most recent rates, check the IRD web site

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7. 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

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8. GST - Goods & Services Tax

GST Rates:

1. On supplies in NZ: 12.5%
2. Zero rated supplies (e.g. exports): 0%

Exemptions:

1. Financial services
2. Domestic rentals
3. Wages/salaries and most directors fees

Registration threshold: $60,000 turnover p.a.

Filing frequency threshold: Turnover exceeding $500,000 p.a. - 1 or 2 monthly

Filing basis threshold: Turnover exceeding $2,000,000 p.a. must use invoice basis

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9. PAYE on Salaries & Wages

If PAYE deductions exceed $500,000 p.a., deductions from 1st to 15th month are due 20th of the same month and balance of monthly deductions are due the 5th of the following month. For deductions of less than $500,000 p.a., 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.

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10. Personal Income Tax Rates & Threshold Changes

Current PAYE rates and thresholds:

Income Thresholds	Rates
Income to $14,000	12.5%
$14,001 - $40,000	21%
$40,001 - $70,000	33%
$70,001 and over	39%

New rates and thresholds from 1 April 2009:

Income Thresholds	Rates
Income to $14,000	12.5%
$14,001 - $48,000	21%
$48,001 - $70,000	33%
$70,001 and over	38%

New rates and thresholds from 1 April 2010:

Income Thresholds	Rates
Income to $14,000	12.5%
$14,001 - $50,000	21%
$50,001 - $70,000	33%
$70,001 and over	37%

New rates and thresholds from 1 April 2011:

Income Thresholds	Rates
Income to $14,000	12.5%
$14,001 - $50,000	20%
$50,001 - $70,000	33%
$70,001 and over	37%

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11. Provisional Tax

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

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

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

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12. Use of Money Interest Rates

Use-of-money interest rates on underpayments and overpayments of tax will change from 1 March 2009. The new rates are:

Underpayment rate	9.73% (down from 14.24%)
Overpayment rate	4.23% (down from 6.66%)

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13. 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.

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14. Taxpayer Penalties

Reassessed tax may incur the following penalties:

Lack of reasonable care	20%
Unacceptable interpretation	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.

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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.

Initial late payment penalties imposed prior to 1 April 2002 were applied on the day after the due date at the rate of 5%.

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.