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Business valuations
We offer expert valuation advice in transactions, regulatory and administrative matters, and matters subject to dispute – valuing businesses, shares and intangible assets in a wide range of industries.
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Capital markets
You need corporate finance specialists experienced in international capital markets on your side if you’re buying or selling financial securities.
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Complex and international services
Our experience of multi-jurisdictional insolvencies coupled with our international reputation allows us to deliver the best possible outcome for all stakeholders.
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Corporate insolvency
Our corporate investigation and recovery teams can help you manage insolvency situations and facilitate the best outcome.
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Debt advisory
An optimal funding structure for your organisation presents unprecedented opportunities, but achieving this can be difficult without a trusted advisor.
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Expert witness
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We provide investigative accounting and litigation support services for commercial, matrimonial, criminal, business valuation and insurance disputes.
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Effective ESI analysis is integral to the success of your business. Our IT forensics experts have the technical expertise to identify, preserve and interrogate electronic data.
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Raising finance
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Relationship property services
Grant Thornton offers high quality independent advice on the many financial issues associated with relationship property from considering an individual financial issue to all aspects of a complex settlement.
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Grant Thornton’s restructuring and turnaround service capabilities include cash flow, liquidity management and forecasting; crisis and interim management; financial advisory services to companies and parties in transition and distress
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Transaction advisory
Our depth of market knowledge will steer you through the transaction process. Grant Thornton’s dynamic teams offer range of financial, commercial and operational expertise.
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Corporate tax
Grant Thornton can identify tax issues, risks and opportunities in your organisation and implement strategies to improve your bottom line.
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Employment tax
Grant Thornton’s advisers can help you with PAYE (payroll tax), Kiwisaver, fringe benefits tax (FBT), student loans, global mobility services, international tax
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Global mobility services
Our team can help expatriates and their employers deal with tax and employment matters both in New Zealand and overseas. With the correct planning advice, employee allowances and benefits may be structured to avoid double taxation and achieve tax savings.
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GST
GST has the potential to become a minefield and can be expensive when it goes wrong. Our technical knowledge can help you minimise the negative impact of GST
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International tax
International tax rules are undergoing their biggest change in a generation. Tax authorities around the world are increasingly vigilant, especially when it comes to global operations.
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Research and Development
R&D tax incentives are often underused and misunderstood – is your business maximising opportunities for making claims?
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Tax compliance
Our advisers help clients manage the critical issue of compliance across accountancy regulations, corporation law and tax. We also offer business and wealth advisory services, which means we can provide a seamless and tax-effective offering to our clients.
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Transfer pricing
Tax authorities are demanding transparency in international arrangements. We businesses comply with regulations and use transfer pricing as a strategic planning tool.
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Audit methodology
Our five step audit methodology offers a high quality service wherever you are in the world and includes planning, risk assessment, testing internal controls, substantive testing, and concluding and reporting
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Audit technology
We apply our audit methodology with an integrated set of software tools known as the Voyager suite. Our technology has been developed to produce quality audits that are effective and efficient.
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Financial reporting advisory
Our financial reporting advisers have the expertise to help you deal with the constantly evolving regulatory environment.
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Business architecture
Our business architects help businesses with disruptive conditions, business expansion and competitive challenges; the deployment of your strategy is critical to success.
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Cloud services
Our team is led by cloud business experts who tailor services to the needs of your organisation, from strategy and implementation to ongoing services assurance.
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Internal audit
Our internal audits deliver independent assurance over key controls within your riskiest processes, proving what works and what doesn’t and recommending improvements.
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IT advisory
Our hands on product experience, extensive functional knowledge and industry insights help clients solve complex IT and technology issues
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IT privacy and security
IT privacy and security should support your business strategy. Our pragmatic approach focuses on reducing cyber security risks specific to your organisation
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Organisational & cultural change
The key to sustainable and future growth is a unified organisation operating within a strong cultural context, where transparency and communication are the priority for Kaimahi, and where visible leadership means walking the talk – but where does that journey begin?
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Payroll assurance
Our specialist payroll assurance team can conduct a review of your payroll system configuration and processes, and then help you and your team to implement any necessary recalculations.
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PCI DSS
Our information security specialists are approved Qualified Security Assessors (QSAs) that have been qualified by the PCI Security Standards Council to independently assess merchants and service providers.
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Process improvement
As your organisation grows in size and complexity, processes that were once enabling often become cumbersome and inefficient. To maintain growth, your business must remain flexible, agile and profitable
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Procurement/supply chain
Procurement and supply chain inputs will often dominate your balance sheet and constantly evolve for organisations to remain competitive and meet changing customer requirements
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Project assurance
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Risk management
We understand that growing companies need to establish robust internal controls, and use information technology to effectively mitigate risk.
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Robotic process automation (RPA)
RPA is emerging as the most sophisticated form of automation used to help businesses become more agile and remain competitive in the face of today’s ongoing digital disruption.
Why the company tax rate doesn’t matter
Back in the 1980s, New Zealand had a company tax rate of 48%. At the end of that decade two things occurred. Firstly, the company tax rate was reduced to 33% - where it remained until just a few years ago. Secondly, a system of imputation was introduced.
As part of moving to a policy of a “broad base low rate” tax system, the company tax rate was reduced to 30% with effect from the 2009 tax year. More recently, the rate has been reduced to 28% - lower than the comparable Australian rate.
Such reductions are often accompanied by cries of contempt for the tax cuts afforded to “big corporates”. However, the reality for companies owned by New Zealand resident shareholders is that, ultimately, any change to the company tax rate makes no long term difference. Our system of imputation means that for Kiwi shareholders, company tax is effectively only an intermediate withholding tax.
A simplified example shows how this works. Say a company makes a profit before tax of $1,000. When the company tax rate was 33%, the company would pay tax of $330, leaving $670 to pay to the shareholder as a dividend. Without imputation, the shareholder would pay tax on the net amount received. At a 33% personal rate, that's another $221 of tax, bringing the total tax paid on the original $1,000 of income to just over 55%.
With imputation, the shareholder is taxed on the gross income earned by the company, and then given a credit for the tax paid by the company. In the above example, the shareholder is taxed on $1,000 ($330 at 33%). With imputation credits for the company tax, the shareholder has nothing further to pay.
With the company tax rate now at 28%, a shareholder who is on a personal rate of 33% will have to top up the tax payable but, overall, the effect is still the same; the company’s profits are taxed at whatever the shareholder’s personal tax rate is.
The rate at which companies can pass on tax credits to their shareholders is tied to the company tax rate. With the reduction in the company tax rate, it means that companies can only pass on credits as if they had paid tax at 28% - even if the company tax was actually paid at a higher rate. There is a transitional period during which credits can be passed on at a level reflecting the rate it was paid at. For company tax paid at 30%, this period ends on 31 March 2013. Companies should be reviewing their imputation accounts before then to ensure that credits are used at their full value.
For resident shareholders, the main advantage of the lower company tax rate is one of timing. For so long as the company profits are retained in the company, the effective rate is that of the company - 28%. It is not until the profits are distributed as dividends that any “top up” for the shareholder's personal tax has to be paid.
Despite all of that, the company tax rate is not totally irrelevant. It also drives the rate of tax for Portfolio Investment Entities (PIEs) where 28% can be the effective final rate of tax, even for wealthy investors. And the company tax rate is also the final effective rate for non-resident investors.
New Zealand and Australia are amongst the last countries in the OECD to continue with an imputation system. How long that will be the case remains to be seen.
Further enquiries, please contact:
Geordie Hooft
Partner, Tax
Grant Thornton New Zealand Ltd
T +64 (0)3 379 9580
E geordie.hooft@nz.gt.com