New Zealand

Goods and services tax (GST)

GST is a form of value-added tax (VAT) that applies to most supplies of goods and services, including low-value imported goods, services, and intangibles supplied remotely by an offshore supplier to New Zealand resident consumers. The narrow category of exempt supplies includes financial services. The rate applied to taxable supplies is currently 15% or 0%.

The 0% rate applies to a few supplies only, including exports and financial services supplied to other registered businesses. The 0% rate also applies to a supply that includes an interest in land between two GST-registered parties if the purchaser acquires the land with the intention of using it to make taxable supplies and the land is not intended to be used as a principal place of residence for the purchaser or an associate, or in relation to the sale of a business as a going concern.

There is also a ‘reverse charge’ mechanism that requires the self-assessment of GST on the value of certain services imported by GST-registered persons.

GST is also imposed on remote services provided by non-residents to New Zealand private consumers. The concept of 'remote services' is wide and includes streamed and downloaded digital products (e.g. music, movie, and game downloads, e-books, e-magazines) as well as remotely provided webinars, software, web design and publishing, insurance, gambling, consulting, IT, and professional services. Offshore sellers are also required to register and account for GST at 15% on supplies of low-value imported goods (LVIGs) if sales to New Zealand private consumers in a 12-month period exceed NZD 60,000. The NZD 60,000 threshold is the same GST registration threshold that applies to domestic businesses and offshore suppliers of cross-border remote services.

Non-residents who do not make taxable supplies in New Zealand can register for GST, provided they meet certain criteria, allowing them to claim a refund for their input GST costs.

Customs duties

Customs duty is levied on some imported goods at rates generally ranging from 1% to 10%.

Excise duty

Excise duty is levied, in addition to GST, on alcoholic beverages (e.g. wines, beers, spirits), tobacco products, and certain fuels (e.g. compressed natural gas, gasoline). The excise duties are levied item-by-item at rates that vary considerably.

Property taxes

Local authorities levy tax known as 'rates' on land within their territorial boundaries. Rates are levied on properties based on the properties’ rateable value.

Residential land withholding tax (RLWT)

RLWT applies to the sale of residential land in New Zealand by an 'RLWT offshore person'. RLWT applies in relation to land that was:

• owned for less than five years and acquired between 29 March 2018 and 27 March 2021
• owned for less than ten years and acquired on or after 27 March 2021, or 
• a 'new build' owned for less than five years and acquired on or after 27 March 2021. 

An 'RLWT offshore person' includes all non-New Zealand citizens and non-permanent residents. It also includes a New Zealand citizen who is living overseas if they have been overseas for the last three years. A holder of a New Zealand residence class visa may be an offshore person if they are outside New Zealand and have not been in New Zealand within the last 12 months. New Zealand trusts and companies may also be 'offshore persons' if there are significant offshore interests in them.

The amount of RLWT to be deducted is the lesser of:

• 10% of the sale
• the gain on sale x the RLWT rate (28% for companies, incorporated clubs, and societies), or
• the sale price less outstanding local authority rates or less security discharged amount, depending on which party is withholding the tax.

Transfer taxes

There are no taxes on the transfer of property in New Zealand.

Stamp duty

Stamp duty has been abolished in respect of instruments executed after 20 May 1999.

Accident compensation levy

A statutory-based scheme of accident insurance is funded in part by premiums payable by employers and employees.

Premiums paid by employers (including the self-employed) fund insurance for work-related accidents. Employers are liable to pay a residual claims levy and an employer levy. The employer levy payable is determined according to the industry or risk classification of the employer and the level of earnings of employees.

Fringe benefit tax (FBT)

FBT is payable by employers when a fringe benefit (non-cash benefit) is provided to an employee or an associated person of the employee as a result of their employment relationship with the employer. The value of fringe benefits provided is not included in the gross income of employees.

The FBT quarters end with the last day of June, September, December, and March. Returns are due within 20 days of the end of the relevant quarter, except for the fourth quarter return (March), which is due 31 May. Any employer who has provided a fringe benefit is required to file a return setting out the fringe benefits received or enjoyed by employees in the quarter and a calculation of the amount of FBT payable on those benefits. 

Employers with pay-as-you-earn (PAYE) and employer superannuation contribution tax deductions not exceeding NZD 1 million per annum for the previous tax year can pay FBT on an annual basis, as can an employer that was not an employer in the previous tax year. An income year basis is also available for a company that provides fringe benefits to shareholder-employees.

FBT rates

Employers can pay FBT at either a single rate of 63.93% or use an alternate rate method (whereby benefits are attributed to employees). If the 63.93% single rate is used in all of the first three quarters, the employer may use an alternate rate calculation in the fourth quarter or continue to pay FBT at 63.93%. 

There are currently three alternate rate methods: the full alternate rate, the short-form alternate rate, and the new pooled alternate rate.

Under the full alternate rate method, the applicable FBT rate depends on the net remuneration (including fringe benefits) paid to the employee. For employees who received attributed fringe benefits in any quarter during the year, the employer must calculate the employee’s fringe benefit inclusive of cash remuneration. The attribution calculation, which is performed in the fourth quarter, treats the fringe benefit as if it was paid in cash and calculates FBT as the notional increase in income tax that would otherwise have arisen.

The short-form alternate rate applies at a rate of 49.25% to all non-attributed benefits and a rate of 63.93% to all attributed benefits. In general, a benefit is attributable to an individual if it is principally assigned to, used, or available for use by that employee. However, there are other specific attribution rules to consider, such as the attribution rules for unclassified benefits.

The new pooled alternate rate calculation method has been introduced effective for the FBT year beginning 1 April 2021. The calculation of FBT to pay under this method is determined as follows:

• Attributed benefits are returned at:
  • 49.25% for employees who receive less than NZD 160,000 in gross cash pay and less than NZD 13,400 in attributed benefits.
  • 49.25% for employees who receive more than NZD 160,000 in gross cash pay or more that NZD 13,400 in attributed benefits but have 'all-inclusive pay' of under NZD 129,681.
  • 63.93% for all other employees.
• Non-attributed benefits are returned at 49.25% (or 63.93% for shareholder employees).

A de minimis exemption may apply to exempt unclassified benefits from FBT. The thresholds for exempting unclassified benefits under the de minimis exemption is two-fold: 

• NZD 300 per employee per quarter.  
• NZD 22,500 per employer per annum.

Where the NZD 22,500 threshold is breached, FBT must be returned on all unclassified benefits. Where only the NZD 300 threshold is breached, FBT needs to be returned only on those amounts. 

Examples of benefits subject to FBT are as follows: 

• Motor vehicles.
• Employment-related loans.
• Employer contributions to medical insurance.
• Employer contributions to employee superannuation funds.
• Employer contributions to certain superannuation schemes (including foreign schemes).

FBT also applies to benefits received by an employee from a third party where there is a special arrangement between the employer and the third party. Generally, FBT does not apply to discounted goods or services received by an employee from a third party if the price paid by the employee is not less than the price that would be charged to other groups of people.

Benefits that are not subject to FBT include specified superannuation contributions (which are separately taxed), the provision of accommodation by an employer (which is subject to PAYE), and the use of a business tool, such as a mobile telephone or laptop (provided the tool is used primarily for business purposes and the cost of the tool does not exceed NZD 5,000, GST inclusive). 

FBT is generally a tax-deductible expense. The effective FBT cost is intended to align with the receiving employee’s marginal tax rate.

Employer superannuation contribution tax (ESCT)

Employers’ contributions to an approved superannuation fund (excluding foreign schemes) are subject to ESCT. This includes employer contributions to KiwiSaver (or other qualifying registered superannuation schemes).

ESCT is generally deducted at the employee’s relevant progressive rate based on the total salary or wages and employer superannuation cash contributions paid to the employee in the previous year.

Non-resident contractor’s tax (NRCT)

New Zealand imposes an obligation to deduct NRCT on those making contract payments to non-residents in relation to certain contract activities undertaken in New Zealand. Contract activities generally relate to services but also include the granting of a right to use property in New Zealand. The NRCT rate is generally 15% (or 45% for individuals and 20% for companies if the relevant paperwork is not provided). Some contractors are eligible to apply for an exemption or a reduced rate.

NRCT is not required to be withheld if the non-resident has full relief from tax under a DTA and is present in New Zealand for less than 92 days in a 12-month period.

Payments for contract work amounting to less than NZD 15,000 in a 12-month period are also exempt from NRCT. In such cases, contractors themselves are responsible for paying any New Zealand tax owed at the end of the year (provided there is no relief from tax under a DTA).