New Zealand: Taxation

Doing Business in NZ

"Haere mai" is Māori for welcome and New Zealand is one of the most open economies in the world. But there are rules and regulations that will apply, and we are familiar with them.

This "Doing Business in NZ" publication is designed to provide the prospective investor with an introductory guide to the New Zealand legal framework as it applies to business. The information provided was accurate at the time of publication, and will be updated regularly. But it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

We recommend that you seek advice specific to your needs before making any decisions and will be happy to assist.

New Zealand has a broad-based tax system consisting principally of:

  • income tax and fringe benefit tax
  • resident and non-resident withholding tax (RWT and NRWT)
  • goods and services tax (GST)
  • Accident Compensation levies
  • import tariffs and miscellaneous excise duties
  • a local authority rates on property, and
  • gift duty.

Tax advice provided by lawyers enjoys legal privilege.

Income tax

Residency and rates of tax

For individuals and companies defined as "resident" in New Zealand, income tax is imposed on all worldwide income. Non-resident individuals and companies, on the other hand, are taxed only on income derived from New Zealand, and their tax liability may be reduced by the provisions of an applicable double tax agreement.

Individuals are regarded as resident in New Zealand for income tax purposes if they have a permanent place of abode in New Zealand or are present in New Zealand for more than 183 days within a 12-month period.

A company is regarded as resident in New Zealand if:

  • it is incorporated in New Zealand
  • it has its head office in New Zealand, or
  • it has its centre of management in New Zealand or control in New Zealand.

Companies (both resident and non-resident) are taxed at 28%. Individuals (both resident and non-resident) are taxed incrementally at between 10.5% and 33%. As noted above, non-residents are taxed only on their New Zealand-sourced income.

For individuals, assessable income includes (among other items) salary and wages, bonuses, other employment benefits or remuneration, partnership income and investment income. For salary and wage earners, tax is deducted at source through the Pay As You Earn (PAYE) system. Non-cash benefits provided to employees are subject to fringe benefit tax which is payable by the employer.

For companies, net income generally corresponds with accounting profit or loss. However, adjustments are commonly required in relation to:

  • the timing of income and expenditure recognition
  • bad debts, and
  • various provisions and reserves.

New Zealand does not generally levy tax on capital gains. In certain circumstances, however, the proceeds from the sale of real or personal property (including shares) may be subject to income tax (for example, where the dominant purpose of the initial purchase was to resell the property at a profit).

Double tax agreements

New Zealand has entered into double tax agreements (or tax treaties) with certain countries to reduce the incidence of double taxation and to provide more certainty for taxpayers operating in foreign jurisdictions. Foreign tax credits are generally available to New Zealand residents for foreign income tax imposed on income derived from countries or territories outside New Zealand. The availability and quantum of the foreign tax credit is subject to certain limitations, but does not depend on New Zealand having entered into a double tax agreement with the particular country or territory concerned.

Treatment of tax losses

If a resident company or a New Zealand branch of a non-resident company incurs a tax loss, that loss can generally be carried forward (indefinitely) to offset future New Zealand net income and shared between group companies, provided a certain level of shareholder continuity (or in the case of group companies, common ownership) is maintained. Individuals and trusts can also carry forward tax losses, but these losses are effectively "trapped" and cannot be shared with other entities.

Taxation of dividends paid by resident companies to residents

Dividends paid by resident companies to residents are, in most instances, taxable to the recipient. However, dividends paid between New Zealand resident companies that are part of the same wholly-owned group are generally exempt (subject to certain other requirements).

To avoid the double payment of tax on the same income (i.e. by the company and the shareholder when the company's income is distributed as a dividend) imputation credits, and certain other types of credits (for example, foreign dividend payment credits), may be attached to dividends paid by resident companies (to both residents and non-residents). An imputation credit represents a portion of the tax paid by the company (for every $1 of tax paid, a company receives a $1 imputation credit which it can attach to dividends). Imputation credits received by resident shareholders (companies and individuals) are offset against any tax payable on their income, including dividends received.

Subject to certain exceptions, a dividend paid by a resident company to a resident is subject to a 33% withholding tax, although the withholding tax liability is reduced by any imputation credits attached to the dividend. In the event that the dividend is fully imputed (i.e. imputation credits are attached at the maximum rate) only a residual 3% withholding tax will be imposed on the dividend.

Portfolio Investments Entities (PIEs)

Certain investment entities can take advantage of New Zealand's PIE tax regime.

New Zealand resident companies (including unit trusts), superannuation funds and group investment funds can all elect to become PIEs, if they satisfy a number of requirements. Broadly speaking, to qualify as a PIE, they must be widely held (or owned by widely held vehicles) and cannot hold more than 20% of any company or unit trust they invest into (subject to some exceptions).

A PIE is exempt from tax on gains from the sale of shares in New Zealand resident companies, and in Australian companies that are listed on an approved Australian Securities Exchange index.

There are three different kinds of PIE — multi-rate portfolio investment entities (MRPIEs), portfolio listed companies, and portfolio defined benefit funds. MRPIEs are the most common vehicle as they benefit most from the PIE regime. The primary benefit of MRPIE5 is that investors — which through the MRPIE pay income tax on distributions or redemptions at their "portfolio investor rate" — can benefit from a lower tax rate than they would be subject to if they invested in a non-PIE entity, provided their taxable income is below a certain threshold, And because tax is paid by the MRPIE, not individual investors, no RWT or NRWT is deducted from distributions or redemptions.

Taxation of investments by New Zealand residents in non-resident entities

New Zealand has recently amended its rules for the taxation of foreign equity investment by NZ residents. Generally, income from 10% or greater stakes in NZ controlled foreign companies (CFCs) is not subject to NZ tax either as earned or when distributed, unless it is passive income. Income from FIFs is generally calculated either using a "fair dividend rate" or a comparative value method. The fair dividend rate method taxes the shareholder on deemed income of 5% of the value of the investment. The comparative value method taxes appreciation during the year plus distributions. There are significant exemptions from both regimes for investment in Australian companies.

Taxation of payments to non-residents

Payments of dividends, interest and royalties to individuals or companies not resident in New Zealand are generally subject to NRWT. The rate of NRWT imposed depends upon the type of payment and whether a double tax agreement is in place:

  Double tax agreement countries Other countries
Dividends 15% 15%*
Interest 10-15% 15%**
Royalties 10-15% 15%

* This rate generally applies if the dividends carry full imputation credits, foreign dividend payment credits or conduit tax relief credits. To the extent that they do not, the rate is generally 30%.

** Where interest is paid to a non-resident and a resident (jointly) the applicable rate of NRWT will be higher than 15%.

In the case of dividends, certain royalty payments, and interest paid to non-associated persons, NRWT is generally a final tax for New Zealand tax purposes.

Under the Foreign Investor Tax Credit (FITC) regime, when a resident company pays fully imputed dividends, the combined tax burden on the income derived by the New Zealand resident company and the payment of that income as a dividend to a non-resident shareholder is limited to a maximum of 30%. The FITC regime achieves this by providing a tax credit to the New Zealand resident company, which the resident company must use to fund an additional "supplementary dividend" to the non-resident (which is equal to the NRWT payable where the dividend is fully imputed). This ensures that the non-resident shareholder is in a no less beneficial position than a New Zealand resident shareholder receiving the same dividend.

In respect of interest payments made by an approved borrower to a non-associated non resident lender, the applicable NRWT rate can be reduced to 0%, provided certain conditions and registration formalities are satisfied. For example, a payment to the IRD of an "approved issuer levy" equal to 2% of the interest payment may be required.

Withholding payments are deducted at the rate of 15% from non-resident contractors for certain work or services performed in New Zealand (this rate increases to 30% for individuals and 20% for companies where the non-resident contractor does not provide a prescribed withholding declaration to the payer prior to the payment being made). An exemption certificate removing the need for the withholding deduction can be granted by the IRD in certain circumstances.

Transfer pricing and thin capitalisation

New Zealand's transfer pricing regime seeks to protect the New Zealand tax base by ensuring that cross-border transactions are priced (at least for tax purposes) on an arm's length basis. New Zealand also has thin capitalisation rules which, broadly speaking, disallow certain interest deductions for a foreign owned New Zealand group (depending on their debt to equity ratio) or for New Zealand residents with an income interest in a CFC or who control a resident company with such an interest.

Goods and Services Tax

GST is a consumption tax charged at 15% on the supply of most goods and services in New Zealand. GST-registered taxpayers must charge GST on the goods and services they supply and can obtain a credit for any GST they pay in the course of their business. In this way, the burden of GST is passed along a chain of registered suppliers until it reaches the final consumer.

Those making supplies in New Zealand are required to register for GST if they carry on a taxable activity (which is similar in concept to a business, but wider in scope) through which they will make taxable supplies of more than NZ$60,000 per year. A person carrying on a taxable activity (whether in New Zealand or outside New Zealand) can voluntarily register for GST even if they are under this threshold.

Certain supplies of goods and services can be either exempt from GST or zero-rated (e.g. the supply of financial services, services performed as an employee, some services supplied to non- residents and residential rental accommodation).

Accident Compensation Levies

New Zealand operates a no-fault accident compensation scheme whereby persons suffering from accidental injuries need not prove fault before receiving compensation. The scheme provides for some financial assistance for medical expenses, loss of earnings, and compensation for dependants in the case of death. All compensation is paid by the Accident Compensation Corporation (ACC), which is funded by:

  • levies paid by all employers, self-employed persons and private domestic workers for work- related accidents. The levy for the self-employed and private domestic workers is set by regulation, whereas the levy for employers is determined by the industry risk class applying to the employer, and may be adjusted up or down depending on the individual employer's safety management practices
  • levies paid by self-employed persons, private domestic workers and employees for non-work related accidents
  • a residual claims levy paid by employers, private domestic workers and the self-employed to cover claims outstanding prior to the introduction of the Accident Insurance Act 1998, and
  • funds set aside by Parliament to fund compensation for injuries to non-earners.

Another option is the ACC's accredited employer programme under which employers can elect to pay no levy, or a reduced levy, in return for funding all or a share of any compensation entitlements incurred at their workplace. To be accepted for the programme, the employer must satisfy a number of criteria, including a minimum level of safety expertise and financial solvency.

Import duties

Import licensing, once a common means of sheltering New Zealand producers, no longer exists in New Zealand, with tariffs now the principal form of protection.

Over recent years, there has been a steady reduction of tariff rates for goods imported into New Zealand. Tariff rates vary from item to item and depend upon the country of origin, with preferential rates being applied to Australia, Canada, "least-developed countries", "less-developed countries" and Pacific Forum countries. Items that are outside the scope of local manufacturing are generally duty free, or may qualify for a duty concession.

Where New Zealand is party to a free trade agreement (FTA), the FTA will address in detail the tariffs applicable between the two countries (for further information, refer to the Accessing world markets from New Zealand chapter).

GST is also charged on any goods which are imported into New Zealand. An input tax credit can be claimed for this GST (meaning no net cost arises) where the importer is GST-registered and is acquiring the imported goods for the purpose of making supplies which are subject to GST.


Rates are the main source of local government revenue. These are calculated as a percentage of the value of land and/or capital.

Other taxes

Currently, gift duty of between 5% and 25% is payable in respect of any dutiable gift of money or property, if the value of all gifts given exceeds NZ$27,000 in any 12 month period. Gift duty will be abolished as of 1 October 2011.

Stamp duty is no longer payable in New Zealand.

There is no estate duty and no death duties payable in New Zealand.

We make every effort to ensure the accuracy of the information provided but it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions