Individuals
Goods and Service Tax
Fringe Benefit Tax
Family Assistance Tax Credits
Rebates
Companies
Trustees
Resident Withholding Tax
Withholding Payment Tax Rates
TAX RATES FOR 2002/3 INCOME YEAR
(Acknowledgement- the summary of these rates was obtained from "New Zealand Master Tax Guide 2004" as sold by CCH New Zealand Ltd)
Rates of Tax we will discuss are:
| Individuals |
| Goods and Service Tax |
| Fringe Benefit Tax |
| Family Assistance Tax Credits |
| Rebates |
| Companies |
| Trustees |
| Resident Withholding Tax |
| Withholding Payment Tax Rates |
INDIVIDUALS
TAX RATES AND LOW INCOME REBATES FOR 2002/2003 INCOME YEAR
The basic rates of tax for individuals for the 2002/2003 income year, and the low income rebate and abatement rates are as follows:
| INCOME BRACKET | TAX RATE PER DOLLAR | LOW INCOME REBATE/ (ABATEMENT) |
| $0- $9,500 | 19.5% | 4.5% |
| $9,501- $38,000 | 19.5% | (1.5%) |
| $38,001- $60,000 | 33% | - |
| $60,001 and over | 39% | - |
The extra emolument rate is either 21% (on annualised incomes of $38,000 or less), 33% (on annualised incomes between $38,001 and $60,000) and 39% ( if annual income exceeds $60,000). ACC earners' account levy must be added to these rates where applicable. An employee may elect to have tax deducted from any extra emoluments at either 33% or 39%.
GOODS AND SERVICE TAX
Goods and Service Tax (GST) on taxable supplies in New Zealand is 12.5%.
FRINGE BENEFIT TAX
The flat rate of fringe benefit (FBT) on benefits to employees is 64% (deductible for income tax purposes, therefore giving rise to an effective tax rate of 39%).
The FBT rates for atttributed fringe benefits are as follows:
| FRINGE BENEFIT- INCLUSIVE CASH REMUNERATION | FBT RATE PER DOLLAR OF FRINGE BENEFIT- INCLUSIVE CASH REMUNERATION |
| $0-$8.075 | 17.65 |
| $8,076-$30,590 | 26.58 |
| $30,591-$45,330 | 49.25 |
| $45,331 and over | 63.93 |
Employers who provide FBT to shareholder-employees on an income-year basis will apply either the flat rate or the multi-rates on the annual value of the fringe benefit provided or granted in the 2002/2003 or the 2003/2004 income year.
FAMILY ASSISTANCE TAX CREDITS
For the 2003/2004 income tax year, family assistance is available to low- and middle-income earning families with dependent children. The family assistance available comes in the form of tax credits, called "Part KD credits" and a family tax credit which (until 1 October 1999 was better known as the guaranteed minimum family income or GMFI credit).
PART KD CREDITS
For the 2003/2004 income year the available Part KD Credit for an eligible period is calculated under the following formula:
Family Support Credit + Child Tax Credit + Parental Tax Credit - Family Credit Abatement
These credits may be paid either fortnightly into the principal caregivers' bank account, or applied as a tax credit at year end.
FAMILY SUPPORT RATES
The rates of family support for the 2003/2004 income year are as follows:
| For the eldest dependent child | $2,444 if under 16 |
| $3,120 if 16 or over | |
| For additional dependent children | $1,664 if under 13 |
| $2,080 if 13, 14 or 15 | |
| $3,120 if 16 or over |
CHILD TAX CREDIT (FORMERLY INDEPENDENT FAMILY TAX CREDIT)
The child tax credit is calculated under the following formula:
$780 x ( number of dependent children for days in eligible period divided by 365)
PARENTAL TAX CREDIT
The parental tax credit is calculated as follows:
$1,200 per dependent child x (number of days in eligible period (no more than 56) divided by 56
FAMILY CREDIT ABATEMENT
The credits referred to above abate when specified income reaches a certain level. The formula for the abatement is as follows:
Abatement rate x (number of days in eligible period divided by 365)
The abatement rates are:
| SPECIFIED INCOME | ABATEMENT RATE |
| Not over $20,000 | Nil |
| Over $20,000 but not over $27,000 | 18c for each $ of the excess |
| Over $27,000 | $1,260 plus 30c for each $ of excess |
The abatement is applied in the following order:
|
first, to reduce the amount of family tax credit |
|
secondly, to reduce the child tax credit, and |
|
thirdly, to reduce the parental tax credit |
FAMILY CREDIT CREDIT (FORMER GMFI TAX CREDIT)
The family tax credit (formerly known as the guaranteed minimum family income tax credit) applies to ensure a minimum after tax family income which then abates once prescribed levels of income are reached. The formula for calculating the family tax credit for working families in the 2003/2004 income year as follows:
($15,080 - net specified income) x number of weeks in eligible period worked full time
REBATES
LOW INCOME REBATE
A rebate is available to all "low income" earners. Taxpayers will get a 4.5% rebate on the 19.5% tax rate when net income is $9,500 or under. The amount of the rebate is therefore at the maximum when net income exceeds $9,500. The rebate abates at the rate of 1. 5% on net income between $9,501 and $38,000, giving an effective rate of 21% on net income at that level.
Gross income derived from interest, dividends, royalties, rents, or as a beneficiary under a trust is excluded from the net income of taxpayers, other than New Zealand superannuitants or those in receipt of a veteran's pension, for the purposes of calculating this rebate. The rebate for New Zealand superannuitants and people receiving veteran's pension is calculated on gross income derived from all sources.
TRANSITIONAL TAX ALLOWANCE
The transitional tax allowance is available to a full-time earner (a person engaging in at least 20 hours' remunerative work per week) without dependent children. The full years' maximum allowance of $728 phases out at the rate of 20c for each dollar of net income in excess of $6,240. The allowance terminates when income reaches $9,800.
CHILD TAXPAYER
Lesser of $156 and 15% of net income less interest and dividend income.
DONATIONS
As long as you have a receipt for them, you can claim a rebate for donations of $5 or more. In any one year the maximum you can receive is $630 for donations totalling $1,890 or more. Your partner may also claim a rebate of up to $630 for donations you made over $1,890 as long as he or she fits the criteria above.
A rebate can be claimed for each receipted donation of $5 or more to:
|
an approved charitable organisation |
|
an approved New Zealand religious organisation |
|
medical research schools and universities |
|
approved overseas aid funds |
|
state schools, school boards of trustees and parent teacher associations. To qualify, the school must be a state school (this includes integrated schools) or be approved as a charity for tax purposes. These payments must be donations, not payment of school fees. |
HOUSEKEEPER/ CHILD CARE
Lesser of $310 and 33% of qualifying payments. If you have a partner who is eligible to claim a rebate, you can each claim a portion of the rebate- for example, you can claim half.
A Housekeeper Rebate can be claimed if you (if your partner, if you're married) were disabled or physically unable to do housework, and paid for a housekeeper.
A Childcare Rebate can be claimed if:
|
You were a single parent, and your child was under 18 or unable to work because of a disability. |
|
You and your partner were both working (this does not apply to couples who are separated). |
|
You and your partner were disabled or physically unable to care for the child) |
A Childcare Rebate cannot be claimed if you live in a communal home, such as a rest home or hospice.
WAR PENSION
Rebate for World War 1 pensioners of 7. 5% of income that is not income from employment or New Zealand superannuation.
ABSENTEE
Variable according to time spent working in New Zealand.
COMPANIES
A flat rate of 33c for every $ of income.
TRUSTEES
Tax rates in relation to trusts depend on the tax status of the person deriving the income and the nature of the trust from which the distribution is made. Tax rates applicable to trustee income, beneficiary income and non-qualifying trusts are set out below:
| INCOME CATEGORY | TAX RATE |
| Trustee Income | 33% |
| Beneficiaries Income | Taxpayer's marginal rate (39% maximum) |
| Distribution from a non-qualifying trust | 45% |
| Undistributed rents, interest and royalties derived by the Maori Trustee | 25% |
| Income of Maori authorities | 25% |
RESIDENT WITHHOLDING TAX
Resident Withholding Tax on payments of interest and dividends is as follows:
| Interest ( if IRD Number supplied) | 19.5% |
| Interest (if no IRD number supplied) | 39% |
| Dividends (to extent not fully imputed) | 33% |
WITHHOLDING PAYMENT TAX DEDUCTION RATES
Withholding Tax should be taken off persons in business at the following rates, unless they have obtained a Certificate of Exemption from the Inland Revenue Department and provided this to the business to which they are contracted or employed by. Withholding tax on payments made on or after 1 April 1988 must be calculated on a GST exclusive basis when the payment is made to a person who is registered for GST and the payer holds a tax invoice issued by the payee. The rates are:
| Agricultural contracts for maintenance, development, or other work on farming or agricultural land | 15% |
| Agricultural work involving firewood cutting, post splitting etc, grass or seed cutting, hedgecutting, planting trees, planting or cutting flax, threshing, chaff cutting, hay making etc. or gathering crops | 15% |
| Board of Trustees/ Community Board Members | 33% |
| Caretaking or acting as Watchman | 15% |
| Cleaning office, business, institution, or other premises (except residential) or cleaning or laundering plant, vehicles, furniture etc | 20% |
| Commissions to insurance agents and sub-agents, and salespeople | 20% |
| Company Directors' Fees | 33% |
| Contracts wholly or substantially for labour only in the building industry | 20% |
| Demonstrating goods or appliances | 25% |
| Droving | 15% |
| Fees payable to examiners | 33% |
| Forestry or bush work of all kinds or flax planting or cutting | 15% |
| Freelance contributions to newspapers, journals etc. (articles, photographs, cartoons etc.) or for radio, television or stage productions | 25% |
| Gardening, grass or hedge cutting, or weed or vermin destruction (other than agricultural or agricultural premises) | 20% |
| Honoraria | 33% |
| Jockeys' or drivers' riding or driving fees paid to New Zealand residents (Apprentices normal rate 15%) | 20% |
| Mail contracting, transport of school children, milk delivery, or refuse removal | 15% |
| Modelling | 20% |
Non Resident
Contractors:
(Applications for exemption should be applied for to Inland Revenue Department) |
15% | ||||||||
| Non Resident
Entertainers visiting New Zealand
(Please note that Non Resident Entertainers taking part in a cultural programme sponsored by a government or promoted by an overseas non-profit cultural organisation, and Non Resident Sportspeople officially representing an overseas national sports body may be entitled to exemption from tax- applications for exemption should be applied for to Inland Revenue Department) |
20% | ||||||||
| Participation by New Zealand residents in professional sporting events (other than horse racing or trotting) | 20% | ||||||||
| Participation by
non residents in professional sporting events of any nature
(see not above re exempt sportspeople) |
20% | ||||||||
| Planting, sowing, or gathering potatoes or vegetables | 15% | ||||||||
Proceeds from sales
of:
|
25% | ||||||||
| Shearing Contracts | 15% | ||||||||
| Share fishers on contract for the supply of labour only | 20% | ||||||||
| Sphagnum moss (not retail sales) | 25% | ||||||||
| Street Road Cleaning | 15% | ||||||||
| Theatrical, musical, stage, concert, radio or television performances by entertainers resident in New Zealand | 20% |
If we can assist further, please email TotalAccounting as follows:
BACK TO KNOWLEDGE AND INFORMATION CENTRE HOME PAGE