New Zealand

Credits for taxes withheld or paid

Tax credits are available for the following:

• PAYE tax deducted by employers from employee wages. 
• Instalments (provisional tax) paid by business taxpayers. 
• Resident withholding tax (RWT) deductions on interest and dividends paid to residents. RWT rates of 10.5%, 17.5%, 30%, 33%, and 39% apply to interest derived by residents. The default rate for people who do not notify their bank of the correct RWT rate is 33% (or 17.5% for bank accounts opened prior to 1 April 2010). The default rate for people who do not supply their tax file number to the interest payer is 45%. Interest payers are required to remind taxpayers of the RWT rate they are on at least once a year to ensure that it is consistent with their PIT rate. 
• RWT on interest, dividends, and royalties where the NRWT is not a final tax. 
• WHT deducted from payments made to contractors. 
• Charitable donations. 

See the Foreign tax relief and tax treaties section for a description of foreign tax credits.

Imputation credits

The imputation system was designed to eliminate double taxation on company profits. Under the imputation system, a company effectively attaches imputation credits (representing tax paid at the company level) to cash and non-cash dividends and taxable bonus issues distributed to shareholders. The shareholders then use those imputation credits to reduce their own tax liability in respect of the company’s dividends. The shareholder includes both the dividends and the imputation credits as assessable income, with a credit being allowed against the shareholder’s income tax liability for an amount equal to the attached imputation credits. Imputation credits cannot be utilised by non-resident shareholders.

Personal tax credits

Individuals with annual income between NZD 24,000 and NZD 70,000 and who meet certain requirements are entitled to an 'independent earner' tax credit of up to NZD 520 per week. For eligible individuals who earn over NZD 66,000, the annual entitlement decreases by 13 cents each additional dollar earned up to NZD 70,000, at which point the credit is fully abated.

Credit for charitable donations

An individual can claim a 33.3% tax credit for eligible charitable donations, up to their taxable income.

‘Working for Families’ tax credit

Individuals may also be eligible for ‘Working for Families’ tax credits, which provide an in-work payment for families with dependent children. These credits are aimed at low and middle income families. They are generally paid in fortnightly instalments with any under or overpayment being calculated annually. Amounts received are not taxable. The definition of family scheme income means the amount, based on a person’s net income and adjusted as provided by section MB 1 of the Income Tax Act 2007, on which an entitlement and tax credit under the family scheme is based.

‘FamilyBoost’ tax credit

The FamilyBoost tax credit was introduced in 2024 to alleviate the financial pressures faced by low to middle income families in meeting the costs of childcare. The credit is available from 1 July 2024.

The tax credit results in a refund for the applicant and is based on actual early childhood education (ECE) fees incurred, subject to eligibility requirements. A New Zealand tax resident caregiver of one or more children enrolled with a licensed early childhood service for which ECE fees are incurred may be entitled.

The amount of the credit for a quarter is equal to 25% of the licensed ECE fees payable for that quarter, up to a maximum of NZD 975, however, the amount of the credit will abate at the rate of 9.75 cents in the dollar when quarterly household income is greater than NZD 35,000. The amount of the credit is zero when quarterly household income is NZD 45,000 or more.