Doing business in New Zealand - Grant Thornton

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Employee taxes: PAYE Employers are required to register with New Zealand Inland Revenue and deduct ‘pay as you earn’ (PAYE) tax for wages, salaries and taxable allowances paid to employees who are subject to New Zealand tax. Consequently, nonresident employers with employees working in New Zealand must register and deduct PAYE unless the employee is exempt from New Zealand tax in accordance with domestic law (see non-resident employees: exemption, p25) or a tax treaty (see non-resident employees: treaty tax exemption, p22). Tax returns of individuals are filed in accordance with the general position previously outlined (see tax year end, p19; annual tax return and assessment, p20; tax payment obligations and timing p20; use of money interest (UMOI), p20). There is a notable exception in the case of salary and wage earners having minimal investment income, in which case no returns need to be filed. Compulsory accident insurance (ACC) Employees are subject to a compulsory levy on earnings from employment that is capped at a fixed level of earnings. The levy applicable to the 2012/13 tax year is 1.70% (inclusive of GST) and is capped at earnings of NZD$113,768 for that year (or $111,669 for self-employed earners). The levy provides personal accident insurance cover for loss of earnings as a result of workplace and recreational injury and disability. KiwiSaver KiwiSaver is a voluntary, work-based, superannuation scheme which requires a minimum 2% contribution from employees with a range of benefits also provided to members, including: • A one-off $1,000 kick-start for entering the scheme • Compulsory employer contribution of 2% • Tax credit available to members from the Government of up to $521.43 per year • First home deposit subsidies • Savings withdrawals for first homes The minimum employee contribution is proposed to increase to 3% from 1 April 2013, matched by an increase in the employer contribution to 3%. Goods and services tax (GST) GST tax base GST is a consumption tax imposed on the supply of goods and services in New Zealand with limited exemptions, notably financial services (such as the issue and sale of debt instruments and equities), salaries and wages and the provision of residential rental accommodation. GST is also levied by Customs on goods imported into New Zealand. GST is borne by the final private consumer. It is imposed throughout the chain of production and therefore applies to business-to-business transactions, but businesses registered for GST receive credit for the GST paid on goods and services they purchase. GST is levied at the rate of 15% (increasing from 12.5% on 1 October 2010). Some supplies are zero-rated (GST at 0%), including exported goods and services. Zero-rated supplies are treated as taxable supplies and not exempt supplies, so GST registered taxpayers can still recover the GST paid on related purchases. There is a limited regime for the zero-rating of financial services to businesses, which allows financial service suppliers to recover some of their GST costs. Compulsory zero-rating also applies to supplies that include land and that are made between registered parties where the purchaser acquires the goods with the intention of using them for making taxable supplies and is not intending to use the land as a principal place of residence. Registration Registration for GST is mandatory if supplies of taxable goods or services exceed NZD$60,000 in any 12 month period, or are expected to. Voluntary registration is permitted, enabling businesses making annual taxable supplies below this threshold to obtain GST refunds for supplies received from other GST-registered businesses. Doing business in New Zealand 26
Returns GST returns are filed on a one-monthly, two-monthly, or six-monthly basis according to taxpayer requirements and annual turnover. A one-month return basis is mandatory where annual taxable supplies exceed NZD$24 million. A sixmonth return basis can only be elected where annual taxable supplies do not exceed NZD$500,000. Taxpayers may also file on either an invoice (accruals) or payments (cash) basis. The invoice basis is mandatory where the annual value of taxable supplies exceeds NZD$2 million. Other taxes Workplace accident compensation (ACC) The Accident Compensation Act 1982 removed the right to sue in the New Zealand Courts for damages in respect of death or injury by accident in New Zealand. In place of such prior rights, the legislation introduced a comprehensive no-fault accident insurance scheme covering all personal injury by way of accident and occupational disease. The compensation scheme is funded by payroll levies imposed on employers and employees. No levy is payable for earnings exceeding NZD$113,768 per employee. Employer levies are calculated according to the risk classification of the employer’s business, modified in some cases by actual claims experience. The employee earner premium is fixed at 1.70% (inclusive of GST) for the 2012/13 year, irrespective of the employee’s occupation. Property taxes Local authorities (local government) raise funds through the imposition of levies and rates on owners of residential and commercial property. Rates vary according to the relevant local authority and are based upon the unimproved value of the property and range from (very approximately) 0.25% for residential properties to 1.5% for commercial property. Stamp duty New Zealand abolished stamp duty in 1999. Capital gains tax New Zealand does not have a comprehensive capital gains tax regime, but some capital receipts are taxable in certain circumstances (including profits from certain real property disposals and profits arising from the disposal of financial instruments). Estate taxes New Zealand does not impose inheritance, estate or death duties. Gift duty New Zealand abolished gift duty with effect from 1 October 2011. Doing business in New Zealand 27
Page 1 and 2: Grant Thornton New Zealand 2012 Doi
Page 3 and 4: Foreword If you are planning on doi
Page 5 and 6: • Queen’s Birthday - 1st Monday
Page 7 and 8: • The Credit Contracts and Consum
Page 9 and 10: Imports Import restrictions There a
Page 11 and 12: Branch in New Zealand Registration
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Page 19 and 20: Attributed foreign income New Zeala
Page 21 and 22: Non-residents Non-resident withhold
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