Tax residence rules are different from the normal New Zealand immigration residency rules. You can still be a NZ tax resident and pay tax for your worldwide income when not living in NZ and vice versa.
This article helps you test whether you are a New Zealand tax resident, and understand your tax obligations.
NZ tax residents
Your worldwide income is subject to NZ tax laws.
Only NZ-sourced income is taxable.
Tax obligations for NZ tax residents and non-residents
If you are a NZ tax resident, your income earning from other countries will also be subject to New Zealand tax law, even if you did not bring that income into this country.
New Zealand has Double-tax-agreements with many countries. In most situations, you won’t be taxed twice.
You’re a New Zealand tax resident if:
you’ve been in New Zealand for more than 183 days in any 12-month period*; or
you have a permanent place of abode (see below) in New Zealand.
*Except for 1) you’re away from New Zealand in the service of the New Zealand government; 2) you are an overseas seasonal worker.
Permanent place of abode
This question is similar to “Is New Zealand your home?”.
To satisfy this, you must have a house or other dwelling that you could live in NZ. But this isn’t enough.
The following questions should also be considered:
Do you intend to return to NZ? For how long?
Past use of your dwelling in NZ
Your family, social, employment ties with NZ
Individuals with strong ties to New Zealand are likely to have a permanent place of abode in New Zealand, but all of the circumstances need to be considered.
Becoming a NZ tax non-resident:
If a New Zealand tax resident is absent from New Zealand for a period of 325 days in any 12-month period they will become non-resident, unless they continue to satisfy the permanent place of abode test.
For more information, contact one of our tax advisory team by emailing email@example.com or simply call 09 281 8885 to discuss your situation today!
The New Zealand government has announced some changes to the eligibility criteria for the Small Business Cashflow (Loan) Scheme (SBCS).
The Government has announced some changes to the eligibility criteria for the Small Business Cashflow (Loan) Scheme (SBCS). These changes align the eligibility criteria with the Government’s recent decision to extend the application period for the scheme until the end of 2023.
These changes will take place from early February 2021. In the meantime, the current eligibility criteria will remain in effect and businesses can continue to apply for the loan using the existing criteria.
“We want to keep viable businesses afloat where we can.”
Revenue Minister David Parker
The main changes to SBCS include:
Businesses established after 1 April 2020, which have existed for six months, will now be eligible for a loan if they meet other eligibility criteria;
Firms can draw down a second loan, if they still meet eligibility criteria and have repaid the original loan in full;
Enable borrowing for investment in new equipment and digital infrastructure. Previously, SBCS should only be used for business operating costs.
A summary of proposed SBCS loan criteria
$10,000+$1800 per full-time equivalent employee (FTE*), with a maximum of $100,000. Sole traders can receive a loan of up to $11,800. Business may apply for the loan more than once. *Work out the number of FTEs using the calculator here.
No interest if repaid within the first 24 months; 3% per year after 24 months.
The loan should be used for core business operating cost and investment in new equipment and digital infrastructure.
1. The business must have no more than 50 FTE staff. 2. The business has existed for at least 6 months. 3. The businesses can demonstrate an actual drop in revenue of at least 30% because of COVID-19, over any 14-day period in the previous six months, compared with the same 14-day period a year ago. If the applicant was not in business a year ago, the 14-day period can be compared with the same or similar period in the previous month. 4. The business must be viable.
Last updated on 18 Dec 2020.
What does “viable” mean?
A business is viable means that it is more likely than not that the business will be able to pay its debts as they fall due within the next 18 months.
An evidence of the business’s ongoing viability will be required when apply the loan. Acceptable evidence could include:
a cash-flow forecast,
a forecast of future revenues,
financial statements, or
your accountant’s assessment.
How do I apply?
Eligible businesses should log in to myIR through the Inland Revenue website, then select “apply for a Small Business loan” to create an online application.
The government has introduced a new tax bill on 2 December 2020. As taxpayers, you may be affected by the following changes:
From 1 April 2021, the new highest tax rate of 39% will apply if an individual’s income exceeds $180,000.
The Inland Revenue is also demanding more details to be disclosed for trusts.
The bill also includes changes to increase the Minimum Family Tax Credit threshold for the 2020–21 tax year and to clarify that Inland Revenue can request information solely for tax policy development purposes.
For more information, please visit the Inland Revenue website here.
The Current Rates
NZ individual income tax is using progressive rates. This means the tax rate increases as the taxable value goes up.
Currently, individual income tax rates are as follows:
For Each Dollar of Income
Up to $14,000
Over $14,000 and up to $48,000
Over $48,000 and up to $70,000
Remaining income over $70,000
Other NZ income tax rates are not changed:
Most companies and corporates are taxed at a flat rate of 28%.
For any income the trust earns, the tax rate is 33%.
Who Will Be Affected By The New Tax Rate?
From the year beginning 1 April 2021, for each $100 earned above $180,000, individual taxpayers will pay an additional $6, compared to under the current tax rates.
“It is also about keeping a lid on debt while ensuring we can maintain our investment in health and education. For 98 per cent of earners there won’t be any change.”
–Finance Minister Grant Robertson
What Is Included In “Individual Taxable Income”?
Taxable income can include income from:
working including salary, wages or self-employed income
benefits and student allowances
assets and investments including Kiwisaver and rental income
You may need to pay income tax for any of the above type of income you earn. You might have more than one type of income.
If you sell a residential property you have owned for less than 5 years, you may have to pay income tax as well. This rule also applies to New Zealand tax residents who buy overseas residential properties.
The government is also requesting more information from taxpayers to make sure people pay their correct share of tax.
According to Revenue Minister David Parker, the new tax bill includes powers to collect information from trustees to test compliance and the effective operation of the 39% tax rate and to further understand what trustees do with trust assets and income.
Contact one of our tax advisory team by emailing firstname.lastname@example.org or simply call 09 281 8885 to discuss your situation today!