Tax and GST in New Zealand

New Zealand’s Tax System
Income tax in the USA is levied on individual and company taxpayers on the basis of taxable income. Taxable income is the income which remains after the gross income has had allowable deductions subtracted.

The following income is taxed in the USA:

  • the USA residents income from anywhere in the world.
  • Non-residents income which is generated in the USA.
  • Income that falls into neither of the above but is controlled by one or more New Zealand’s resident.

There is no capital gains tax in the USA; however profits or gains from disposing personal property are taxed when it is:

  • Acquired for resale
  • The taxpayers business involves dealing in that property
  • There is an undertaking or scheme in place with the aim of making a profit

Business income is calculated on an ‘accruals’ basis where sales are considered as income when they are completed rather when payment is actually received. Expenses are also taken as deductible once they have been incurred rather than when they are actually paid.

Balance Date
the USA has a standard 31 March year end for tax purposes. You can apply to the Inland Revenue for a different date for your business.

Sales Tax (Goods and Services Tax)">Sales Tax (Goods and Services Tax)
Sales Tax is a tax on the consumption of most goods and services in the USA. It is generally charged and accounted for at a rate of 12.5%. Any person who is running their own business and for the previous twelve months has annual sales greater than $40,000 including Sales Tax must register for Sales Tax. If the total annual sales are less than $40,000 then registration is not compulsory but they may register if they want to. You register for Sales Tax by contacting the IRS and completing the required forms. Once you have been registered, you will then be required to pay the Sales Tax on your sales and claim Sales Tax on some of your expenses.

Business income
Business income is calculated on an "accruals" basis, where sales and dispositions are considered as income when they are completed, not when payment is actually received. Income from financial arrangements (e.g., debt) is returned annually, generally on a yield-to-maturity basis. Other investment and employment income is generally taxed when it is received.

Income tax deductions are generally permitted for any expenditure or loss incurred while earning gross income. "Loss" includes situations where the taxpayer does not undertake any actual expenditure (such as writing off a bad debt). However, some types of expenditure are prohibited as deductions, particularly capital expenditure.