Many property taxes are highly distortive and add significant complexity to the life of a taxpayer or business. Estate and inheritance taxes create disincentives against additional work and saving, which damages productivity and output. Financial transaction taxes increase the cost of capital, which limits the flow of investment capital to its most efficient allocations. Taxes on wealth limit the capital available in the economy, which damages long-term economic growth and innovation. Almost all of the time, businesses will include GST in the price displayed.
For example, a non-resident who only exports goods to a New Zealand wholesaler would not be able to register for GST if the goods are outside of the country when an invoice is issued or any payment is received. However, the ability for a non-resident to GST register has been expanded (further information can be found below). With the exception of taxes on land, most property taxes increase economic distortions and have long-term negative effects on an economy and its productivity. Capital gains and dividend income—if not included in the individual income tax—are typically taxed at a flat rate.
State Tax Changes Taking Effect January 1, 2024
If John has a monthly GST return filing frequency, then that value would be the GST collected total. Yes, although non-resident businesses are only able to register for GST in New Zealand if their taxable supplies are generated when the time of supply occurs within New Zealand. Exceptions to this are noted elsewhere in this summary (eg remote sellers of goods and services). acid-test ratio definition importance calculation and example To minimize distortions, all final consumption should be taxed at the same standard rate. However, countries often exempt too many goods and services from taxation or tax them at reduced rates, which requires them to levy higher standard rates to raise sufficient revenue. For example, states in the United States often levy sales taxes on machinery and equipment.
- You pay a 15% goods and services tax (GST) on most of your purchases in New Zealand.
- Below, we have highlighted a number of tax rates, ranks, and measures detailing the income tax, business tax, consumption tax, property tax, and international tax systems.
- If you don’t think you’ll turn over that much, it’s up to you whether or not to register.
- In any 12-month period, if you’re in business and earn more than $60,000 in turnover from taxable activities, you’ll need to register for GST.
This type of employee has no fixed schedule and generally only work at short notice to cover busy periods or absences of permanent staff. Taxes are deducted as PAYE but you are not entitled to sick leave or holidays and so an extra 8% is added to each pay to pay-out your holiday entitlement as you earn it. If you are working in a salaried position, a portion of your income will be deducted as a part of your PAYE taxes and paid to the IRD by your employer.
Digital services supplied by offshore companies
No one wants to hear about the extra fees or taxes they might have to pay anywhere in the world. Unfortunately for tourists, there are quite a few taxes to juggle for visiting New Zealand. As many taxes are included in the price, however, you’ll hardly notice that you’re paying the extra percentage.
Goods and Services Tax
Countries with more generous capital allowances have tax systems that are more supportive to business investment, which underpins economic growth. If you have worked in New Zealand as part of a working holiday visa, student visa, work visa or for whatever reason, you are entitled to a tax return (tax refund) on some of the taxes that were deducted from your wages. A limited number of duty-free stores outside of the airports do this, which we outline in our complete guide to Duty-Free Shopping in New Zealand. Because GST is a tax on all goods and services, it will be applied to almost everything you purchase in New Zealand. That includes food, medication, equipment, going to the hairdressers, the doctors and even the activities you are likely to do as a traveller in New Zealand. We also go over whether it is necessary to tip in New Zealand, as well as advice for international travellers paying taxes for working in New Zealand.
Shopping Duty-Free: How to Avoid Paying GST in New Zealand
Most products or services sold in New Zealand incur GST at a rate of 15%. The main exceptions are financial services (e.g. banking and life insurance) and the export of goods and services overseas. At the end of each tax year, individuals who may not have paid the correct amount of income tax are required to submit a personal tax summary, to allow the IRD to calculate any under or overpayment of tax made during the year. In addition, banks and other financial institutions deduct the relevant amount of income tax on interest and dividends as these are earned. This withholding tax is known as either resident withholding tax[24] (RWT) or non-resident withholding tax[25] (NRWT), depending on the status of the lender; NRWT is at a higher rate.
Most small businesses choose to file two-monthly or six-monthly GST returns.
This is because offshore suppliers (as well as market places and re-deliverers) supplying goods valued at or below NZ$1,000 to New Zealand-resident consumers are required to register and return GST on these supplies. The supplier is only required to register if they meet the registration requirements, that is, sales or expected sales of $60,000 to New Zealand customers in any 12-month period. Therefore, GST is not collected on imports below $1,000 where a remote seller falls below the threshold and does not voluntarily register.
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Let’s take a look back and see how country ranks have changed over time. Your indirect tax function must be in control of every stage of transactional reporting in every part of your business. You need consistent processes and dashboards to manage your indirect tax profile and respond to shifting regulatory requirements and inquiries. But your efforts do not just need to be defensive — with smarter processes, you can also identify efficiencies, save money, improve working capital and even be better positioned to predict the impact of business decisions. Tipping is not mandatory or expected in New Zealand, but it will be appreciated if you tip to reward exceptional service.
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