CPA New Zealand Taxation cheat sheet

New Zealand taxes residents on worldwide income under the Income Tax Act 2007; non-residents are taxed only on New Zealand-sourced income.

Residence tests (s YD 1): permanent place of abode, or 183 days in any 12-month period (with the 325-day rule for transitional residents); non-residence after 325 days absent.

Individual marginal rates: 10.5% to $15,600; 17.5% to $53,500; 30% to $78,100; 33% to $180,000; 39% above $180,000 (from 1 April 2024).

Company tax rate is 28%; a company's net income is taxed as a flat rate with imputation credits attached to dividends at 28/72 of the cash dividend.

GST is 15% on the supply of goods and services in New Zealand by a registered person; GST-registered threshold is $60,000 of taxable supplies in any 12-month period.

Taxable income = assessable income minus allowable deductions; deductions under s DA 1 require a nexus with income and must not be of a capital nature (s DA 2).

Trading stock is valued at the lower of cost or market value (s EB 2), or at cost using a permitted cost-flow method; closing stock is required for accrual income.

Provisional tax applies where residual income tax exceeds $5,000; standard uplift method uses 105% of prior year RIT or 100% of the year before that.

Working for Families tax credits are abated at 27% of family income above the relevant threshold, with the in-work tax credit requiring qualifying employment hours.

KiwiSaver employer contributions are taxed as employer superannuation contributions (ESCT) at rates from 10.5% to 39% depending on the employee's income band.

ACC levies are deductible for employers as a business expense; employee ACC earners' levy is not deductible against employment income.

Fringe benefit tax applies to benefits like motor vehicles; the motor vehicle benefit uses 5% of the vehicle's cost per quarter, or a 25% of cost annual equivalent, with a days-available apportionment.

Use-of-money interest (UOMI) is charged on underpaid tax at the IRD rate plus a margin, and paid on overpaid tax at a lower rate; UOMI is not deductible.

The 10-year brightline test taxes residential land sold within 10 years of acquisition, subject to the main home exclusion and other rollover reliefs.

The 5-year brightline test applies to residential land acquired before 1 July 2024, with the main home exclusion applying for the full period.

Non-resident withholding tax (NRWT) on dividends is 30% (or 15% under a double tax agreement); approved issuer levy (AIL) can apply at 2% to interest instead of NRWT.

Charitable organisations registered with Charities Services are income tax exempt and can claim a 15% GST credit on certain donations.

Depreciation: assets are depreciated using the diminishing value (DV) or straight-line (SL) method; DV rate = SL rate x 2, and buildings have 0% depreciation since 2011 (with exceptions for earthquake-prone buildings).

Low-value asset threshold is $1,000 (from 17 March 2021); assets at or below this can be expensed immediately rather than capitalised.

Entertainment expenditure is only 50% deductible (s DD 1), except for certain items such as entertainment that is part of a business's core activity or provided to staff.

Fines and penalties are not deductible (s DB 2); legal expenses are generally deductible if incurred in deriving income or in the course of a business.

The personal allowance for a business use of a home is calculated using a square-metre floor area method, or the square-metre rate set by Inland Revenue.

Trustee tax rate is 39% on trustee income (from 1 April 2024); beneficiary income is taxed at the beneficiary's marginal rate if vested.

Look-through company (LTC) income is taxed to the owners in proportion to their effective look-through interests, and losses are limited to the owner's basis.

Dividends from a New Zealand company carry imputation credits; a shareholder can use credits to offset tax on the dividend, with a refund only for certain taxpayers (e.g., charitable organisations).

Tax returns: individuals with only salary or wages and no other income can use the automatic assessment process; otherwise an IR3 is required.