Doing business in New Zealand - Grant Thornton

Individuals
Individuals are taxed in accordance
with the general principles outlined (see
calculation of taxable income, p18). The
most significant exception to the general
position arises for employees, who
are not permitted any tax deductions
and are assessed in respect of any
allowances, including accommodation,
provided in relation to employment.
However, employers may reimburse
employees tax-free for work-related
expenditure that would otherwise meet
general deductibility tests.
Residence criteria: individuals
An individual is tax resident in New
Zealand if:
• their permanent place of abode is in
New Zealand, irrespective of whether
the taxpayer has a permanent place of
abode outside New Zealand
• they are personally present in New
Zealand for more than 183 days in
total in any 12 month period.
A taxpayer who is resident may only
subsequently become a non-resident if
they:
• are absent for more than 325 days in
any 12 month period
• do not maintain a permanent place of
abode in New Zealand.
Resident individuals: tax rates
Individuals are taxed at progressive
rates according to total taxable income.
Rates for the 2011/2012 income tax year
are:
Total income (NZD)
Marginal rate
Income to $14,000 10.5%
$14,001 - $48,000 17.5%
$48,001 - 70,000 30.0%
$70,001 and over 33.0%
Tax returns are filed on an individual
basis. There is no provision for the
amalgamation of household incomes
meaning that, for example, a married
couple file separate tax returns and each
is taxed accordingly.
Non-resident individuals: tax rates
Non-resident individuals are taxed at
the same marginal tax rates as resident
individuals, except in relation to
income that is subject to non-resident
withholding tax (see non-resident
withholding taxes, p21).
Non-resident employees: exemption
Non-resident employees may be
exempt under domestic law from
New Zealand tax in relation to the
performance of employment duties in
New Zealand provided that:
• the visits to New Zealand do not
exceed 92 days in total in any tax
year
• the employee is subject to tax
elsewhere on that income
• the work is performed for a nonresident.
This exemption is distinct from the
employee tax exemption that may apply
under New Zealand’s tax treaties (see
non-resident employees: treaty tax
exemption, p22).
Transitional resident
New Zealand has transitional resident
rules which apply to new New Zealand
tax residents or returning residents who
have been non-resident for at least 10
years. These rules provide an exemption
from income tax for foreign income
(other than employment income or
income from the provision of services
performed offshore) derived by anyone
meeting the criteria.
Doing business in New Zealand 25