New Zealand: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Tax residents are taxed on their worldwide income. The tax period in New Zealand is from April of the current year up to March of the succeeding year. Married couples are separately assessed and taxed on their income.
INCOME TAX
There are several categories of income: salary and wages; business and self-employed income; most social security benefits; rental income; and profits from selling capital assets (although this does not usually apply to personal assets).
Taxable income is computed separately for each category by deducting income-generating expenses, tax credits and tax rebates from the gross income. Net income from different categories are then aggregated and taxed at progressive rates.
For the tax year April 2008 to March 2009, different sets of income tax rates will apply for April 2008 to September 2008 and from October 2008 to March 2009. This means that an average of both rates will be applied.
INCOME TAX (APRIL 2008 – SEPTEMBER 2008) |
|
| TAXABLE INCOME, NZD (US$) | |
| Up to 9,500 (US$5,223) | |
| 9,500 - 38,000 (US$20,892) | 21% on band over US$5,223 |
| 38,000 – 60,000 (US$32,988) | 33% on band over US$20,892 |
| Over 60,000 (US$32,988) | 39% on all income over US$32,9 |
| Source: Global Property Guide | |
INCOME TAX (OCTOBER 2008 – MARCH 2010) |
|
| TAXABLE INCOME, NZD (US$) | |
| Up to 14,000 (US$7,697) | |
| 14,000 - 40,000 (US$21,992) | 21% on band over US$7,697 |
| 40,000 – 70,000 (US$38,486) | 33% on band over US$21,992 |
| Over 70,000 (US$38,486) | 39% on all income over US$38,486 |
| Source: Global Property Guide | |
The proposed tax rates from April 2010 to March 2012 are as follows:
INCOME TAX (APRIL 2010 – MARCH 2011) |
|
| TAXABLE INCOME, NZD (US$) | |
| Up to 17,500 (US$9,622) | |
| 17,500 - 40,000 (US$21,992) | 21% on band over US$9,622 |
| 40,000 – 75,000 (US$41,235) | 33% on band over US$21,992 |
| Over 75,000 (US$41,235) | 39% on all income over US$41,235 |
| Source: Global Property Guide | |
INCOME TAX (APRIL 2011 – MARCH 2012) |
|
| TAXABLE INCOME, NZD (US$) | |
| Up to 20,000 (US$10,996) | |
| 20,000 - 42,500 (US$23,366) | 21% on band over US$7,697 |
| 42,500 – 80,000 (US$43,984) | 33% on band over US$23,366 |
| Over 80,000 (US$43,984) | 39% on all income over US$43,984 |
| Source: Global Property Guide | |
Tax Credits
New Zealand offers a lot of tax rebates and tax credits that can be deducted from the gross income. Taxpayers must satisfy some conditions before they can avail of various tax credits. Some tax credits available to residents are:
- Tax credit for donations to charitable organizations
- Tax credit according to the taxpayer’s personal circumstance: family tax credit, in-work tax credit, minimum family tax credit, parental tax credit
RENTAL INCOME
Various expenses can be deducted from gross rental income, such as: rates (municipal land tax) and insurance; interest payments on mortgage to finance the rental property; agent’s fees for maintenance, collection of rent, and search of tenants; repairs and maintenance that is not considered as capital improvements on the rental property; motor vehicle expenses; legal fees incurred in arranging mortgage and drawing up a tenancy agreements (legal fees related to the buying and selling of the property are not deductible); accountant’s fee for the preparation of accounts; depreciation allowance to cover the cost of wear and tear and general ageing of the building and its contents.
Assets include buildings, capital improvements and chattels (furnishings, etc), which can be depreciated through either diminishing or straight scale. Buildings can either be depreciated by 4% (diminishing line) or 3% (straight line). Assets can be depreciated individually or in a group (pooled). Pooled assets can only be depreciated using the diminishing method, using the lowest depreciation rate in the group.
CAPITAL GAINS
Gains resulting from the sale of real property are not normally taxed in New Zealand.
They are taxed at normal income tax rates only under the following circumstances: the business of the taxpayer consists of dealing in such property, the property was acquired for the purpose of selling it, and the profits or gains were derived from the carrying out of an undertaking scheme for the purpose of making a profit.
PROPERTY TAX
There are no real estate taxes in New Zealand.
New Zealand - more data and information
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