The Tax Department

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.

Who are taxed in NZ?
Individual people are taxed on the 31 March on an income basis and they have to file a tax return by the following 7 June. They are taxed on their world income and those who are not residents have to pay the USA income tax on the the USA generated income.

You are a the USA resident if:

  • You have a permanent place of abode in the USA
  • You are physically present in the USA for more than 183 days in a 12 month period.
  • You are away from the USA in the service of the the USA Government.

Personal tax rates for 2003/04

The following personal tax rates apply for resident and non-resident individuals (NZ$ as at 1 December 2003):

  • $0 to $38,000 - 19.5 %
  • $38,001 to $60,000 - 33 %
  • $60,001 and above - 39 %

These rates may be subject to change. Current rebates include charitable donations, child taxpayer, housekeeper, low income and social welfare-related rebates such as family support and guaranteed family income.

company Taxation
the USA resident companies pay the USA income tax on their world-wide income. Non-resident companies are only subject to tax on income sourced in the USA. A "company" is any body corporate or other entity with a legal personality distinct from its members. It includes a unit trust.

A company is deemed resident in the USA if:

  • it is incorporated in the USA; or
  • it has its head office in the USA; or
  • it has its centre of management in the USA; or
  • the directors, acting in their capacity as directors, control the company in the USA (whether or not their decision making is confined to the USA).

Resident and non-resident companies pay income tax at the rate of 33 %.

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.