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.
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.
From 1 December 2019, offshore sellers have been 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.
Customs duty is levied on some imported goods at rates generally ranging from 1% to 10%.
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.
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 where the land was acquired on or after 1 October 2015 through 28 March 2018 and owned for less than two years before being sold, or where the land was acquired on or after 29 March 2018 and owned for less than five years before being sold.
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; 33% for individuals, all other non-individuals, and companies acting as trustees of a trust), or
- the sale price less outstanding local authority rates or less security discharged amount, depending on which party is withholding the tax.
There are no taxes on the transfer of property in New Zealand.
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)
Employers are subject to a tax-deductible FBT on the value of non-cash fringe benefits provided to their employees. Employers can elect to pay FBT at flat rates (for the 2019/20 income year, 49.25% on attributed benefits and 42.86% on pool benefits, i.e. those benefits that cannot be attributed to a particular employee) applied against the value of the benefit or can attribute fringe benefits to individual employees and pay FBT based on each employee’s marginal tax rate.
Under the attribution option, the applicable FBT rate depends on the net remuneration (including fringe benefits) paid to the employee. The attribution calculation treats the fringe benefit as if it was paid in cash and calculates FBT as the notional increase in income that otherwise would have arisen.
The current multi-rates are:
|Net remuneration (NZD)||FBT rate (%)|
|12,530 or less||11.73|
|12,531 to 40,580||21.21|
|40,581 to 55,980||42.86|
|Greater than 55,980||49.25|
Fringe benefits include motor vehicles available for private use, loans at below prescribed interest rates, contributions to medical insurance schemes, and non-monetary employer contributions to superannuation schemes.
In relation to motor vehicles, employers can value a vehicle on an annual basis either using 20% of the cost price or market value (GST inclusive) of the vehicle (depending on whether the vehicle is owned or leased by the employer) or 36% of the vehicle’s tax written down value (GST inclusive). In each case, the FBT value must be reduced proportionately for whole days when the vehicle is not available for private use at any time.
FBT is also applicable to benefits received by an employee from a third party where there is an arrangement between the employer and the third party and where the benefit would be subject to FBT if it had been provided by the employer.
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.
|Salary or wages plus superannuation contributions (NZD)||ESCT rate (%)|
|Up to 16,800||10.5|
|16,801 to 57,600||17.5|
|57,601 to 84,000||30.0|
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 a certificate of exemption or a reduced rate certificate.
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).