Quick tax facts
The 2010 tax rates and dates from Grant Thornton, the firm that brings you fresh tax ideas...
- Income Tax Rates
- Goods & Services Tax (GST)
- Tax Penalties & Interest
- KiwiSaver - Voluntary Savings Initiative
- Fringe Benefit Tax (FBT)
- Donations & Housekeeper/Childcare Rebate
- Motor Vehicle Reimbursement Allowances
- Depreciation
- Gift Duty
- Non-Resident Withholding Tax Rates
- Income Tax Payment Dates
- PAYE Deductions
- PAYE Electronic Filing
- ACC Earner's Levy
- Thin capitalisation
Income Tax Rates
As a result composite rates will apply for the 2010/11 tax year.
Companies
- Resident and non-resident company income tax rate for 2010/11: 30%
- Resident and non-resident company income tax rate for 2011/12: 28%
Trusts
- Trustee income taxed at 33%
- Beneficiary income taxed at beneficiary’s marginal tax rate, except distributions to a minor over $1,000 per Trust (under age 16 at the balance date of the Trust) which are taxed at trustee rate of 33%
*The terminal tax dates apply to taxpayers linked to a tax agent.
If you are GST registered on a six monthly basis, you will only have 2 provisional tax dates. A GST ratio method is also available for certain taxpayers who elect before the beginning of the tax year: provisional tax is paid as a percentage of the GST return.
Redundancy tax credit
As of 1 October 2010 tax credits for redundancy payments will no longer be available. Redundancy payments made prior to 1 October 2010 may be eligible to a tax credit of 6% (up to $3,600).
Goods & services tax (GST)
- Standard rate to 30/09/2010: 12.5%
- Standard rate from 01/10/2010: 15%
- Exported goods and services: 0%
Supplies exempt from GST include: certain financial services, residential rental accommodation, wages/salaries and most directors’ fees. The GST return filing and payment due dates are:
- The 28th day of the month following the end of the taxable period for those months other than March and November
- The 15th day of January for the taxable period that ends in November; and
- The 7th day of May, for the taxable period that ends in March.
If the due date falls on a weekend or a public holiday, Inland Revenue will accept GST payments (as for other tax types) made on the next business day.
Tax penalties & interest
Tax shortfall penalties
The following penalties may apply to tax shortfalls (applied to the shortfall):
A penalty may be reduced by up to 100% if disclosure is made to the Inland Revenue before an audit, by 40% if disclosure is made before the first meeting, or by 75% if the shortfall is temporary. A 50% good behaviour discount may also apply. A penalty may be increased by 25% for obstruction.
Late payment penalties
- Initial late payment penalty: 1%, plus 4% of tax unpaid after 7 days
- Monthly incremental penalties: 1%
Compliant taxpayers will generally be warned prior to the first time any late payment penalties being imposed.
Late filing penalties
Late filing penalties will apply to the following returns:
- Income tax returns (from $50 to $500 depending on income)
- Employer monthly schedules ($250)
- ACC reconciliation statements ($250)
- GST returns ($250 invoice/hybrid, $50 payments basis only if filed late after warning for initial breach)
Use of money interest
Use of money interest is generally paid by the Inland Revenue on overpayments of tax and is charged by the Inland Revenue on underpayments of tax. The rates (from 29 June 2009) are:
- 8.91% on underpayments of tax (potentially deductible)
- 1.82% on overpayments of tax (assessable)
KiwiSaver - voluntary savings initiative
Employees contribute 2%, 4% or 8% of their gross pay.
Members are entitled to:
- a $1,000 “kickstart” contribution
- the Government will contribute up to $20 per week per employee
- compulsory employer contributions are capped at 2%
Fringe benefit tax (FBT)
FBT rates
Employers normally pay fringe benefit tax if they provide benefits to employees other than salary and wages.
Types of benefits:
- Motor vehicles available for private use
- Free, subsidised or discounted goods and services
- Low-interest loans
- Employer contributions to sick, accident or death benefit funds, superannuation schemes, and specified insurance policies
Non-attributed basis to 30/09/2010: 61%
Non-attributed basis from 01/10/2010: 49.25%
Attributed basis: between 12.99% and 55.04% depending on the net remuneration of the employee (including benefits).
NB: The FBT threshold under which an employer can file an annual return, upon application to the Inland Revenue, is $500,000 of annual tax deductions.
Fringe benefit value of motor vehicles
- Quarterly return 5% of original cost (GST inclusive) of vehicle or 9% of the tax written down value of vehicle (GST inclusive)
- Annual return 20% of cost (GST inclusive) or 36% of the tax written down value (GST inclusive)
Low or Interest Free Loans
Benchmark interest rate from 1 April 2010 is 6.00% p.a. (reviewed quarterly).
Exemptions
No FBT is payable if:
- the total taxable value of unclassified benefits provided in the quarter to each employee does not exceed $300, or
- the total taxable value in the last four quarters, including the current quarter, of all “unclassified benefits” provided to all employees does not exceed $22,500.
Types of benefits to which this exemption may apply include subsidised or free goods and services provided to employees.
Donations & housekeeper/childcare rebates
Individual donors can claim 1/3 of charitable donations and voluntary school fees (up to a maximum of their annual net income). Each donation must exceed $5 to qualify. The housekeeper/childcare rebate is limited to the lesser of $310, 33% of amounts paid per family, or 33% of the taxable income.
Companies and Maori Authorities can claim an income tax deduction for donations made, up to their annual net income.
Motor vehicle reimbursement allowances
- 1 to 5,000 km 70c per km.
- Self employed people can use the rates up to a maximum of 5,000 km of work related travel per year. Alternatively, or when in excess of 5,000 km, actual expenses can be reimbursed. An individual special rate can also be determined based on cc rating and estimated travel. An alternative reimbursement rate (e.g. AA) is now also permitted which is generally higher than the above.
Depreciation, gift duty, withholding tax, PAYE deductions & ACC earners’ levy
Depreciation is calculated using Inland Revenue approved rates. The additional depreciation loading of 20% on new assets has now been removed for assets aquired from 21/05/2010.
For a complete list of depreciation rates go to: www.ird.govt.nz/calculators/keyword/depreciation.
Either the straight line or diminishing value method can be used.
Low value assets (costing $500 or less, GST exclusive) can generally be written off in the year acquired.
From the 2011/12 year the depreciation rate for buildings with a useful economic life of 50 years or more will be reduced to 0%.
Gift duty
Gift duty is a charge on any dutiable gifts made over $27,000 in any 12 months that one person makes to another person or entity.
The rates vary from 5% for gifts of value between $27,001 and $36,000 to 25% for gifts over $72,000.
- The rate of NRWT on interest is zero if the Approved Issuer Levy of 2% has been paid.
- The rate of NRWT is 5% if the beneficial owner of those dividends is a company that holds at least 10% of the voting power in the company paying the dividends.
- The rate of NRWT is 0% if the beneficial owner of the dividends is an Australian company that has owned directly or indirectly (through one or more residents of New Zealand or Australia) 80% of the voting power of the company paying the dividends for the 12 months to the date the dividend was declared.
- The rate is 15% if fully imputed dividends are paid.
- Not a final tax if paid to associates.
Lower NRWT rates are due for the US following the announcement of changes to the double taxation agreement between the US and New Zealand (not yet in force).
PAYE electronic filing
Employers whose annual PAYE deductions are $500,000 or more must file their Employer Monthly Schedule (IR348) electronically. Employers with fewer than 50 employees may apply for an exemption.
Thin capitalisation
From 2011/12 the safe harbour threshold will reduce from 75% to 60%.
The 110% world wide debt threshold and outbound thin capitalisation rules remain unchanged.
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