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May 04, 2016

Living There


New Zealand lifestyle

INDIVIDUAL TAXATION

Tax residents are taxed on their worldwide income. Married couples are separately assessed and taxed on their income.

The tax period in New Zealand is from 01 April of the current year up to 31 March of the succeeding year. The tax year 2015-2016 is from 01 April 2015 to 31 March 2016. The tax year 2016-2017 is from 01 April 2016 to 31 March 2017.

INCOME TAX

There are several categories of income: (1) salary and wages, (2) business and self-employed income, (3) most social security benefits, (4) rental income, and (5) 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.

The tax period in New Zealand is from 01 April of the current year up to 31 March of the succeeding year. The tax year 2012-2013 is from 01 April 2012 to 31 March 2013. The tax year 2013-2014 is from 01 April 2013 to 31 March 2014.

INCOME TAX (APRIL 2015 – MARCH 2016)

TAXABLE INCOME, NZD (US$)
TAX RATE
Up to 14,000 (US$9,333) 10.50%
14,000 - 48,000 (US$32,000) 17.50% on band over US$9,333
48,000 – 70,000 (US$46,667) 30% on band over US$32,000
Over 70,000 (US$46,667) 33% on all income over US$46,667
Source: Global Property Guide

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 the property 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.

CORPORATE TAXATION

INCOME TAX

Income and capital gains earned by companies is subject to corporate income tax at a flat rate of 28%. Income-generating expenses are deductible when calculating taxable income.






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