Overview of Tax Compliance in New Zealand
The self-assessment concept governs the tax system in New Zealand, which implies that taxpayers are in charge of figuring out their tax liabilities and filing tax returns with the IRD. The IRD offers online resources and tools to help taxpayers fulfil their obligations. New Zealand has additional indirect taxes, such as excise taxes on products like alcohol, cigarettes, and petrol, in addition to income tax and GST. These levies promote environmental sustainability, public health, and reduction of consumption. New Zealand's progressive tax structure was created to pay for public services and promote the nation's overall health. The Inland Revenue Department (IRD) oversees compliance and tax collection and is in charge of its administration. New Zealand has established double tax treaties with several other nations to keep you from paying taxes twice. These determine whether the nation has the initial or exclusive authority to tax particular forms of revenue.
Inland Revenue Department
The Inland Revenue Department (IRD) in New Zealand oversees the nation's tax system and ensures that all applicable laws are followed. The IRD is essential to tax collection, social policy program administration, and taxpayer aid. The Inland Revenue Department of New Zealand is an essential government agency that aims to promote a fair and efficient tax system. The IRD fulfills its duties professionally and impartially with a dedication to upholding the integrity and transparency of tax collection.
The Inland Revenue Department provides various online services and tools to help taxpayers. Individuals and companies can obtain crucial information, submit tax returns, make payments, and get advice on tax-related issues through their user-friendly websites and secure online portals. Additionally, the IRD offers assistance through a specialized helpline and physical service centers nationwide. The Inland Revenue Department of New Zealand works with a high focus on honesty and compliance to preserve public confidence. The IRD regularly examines tax fraud and evasion to ensure everyone pays their taxes honestly. The agency works to level the playing field for all taxpayers by conducting audits and implementing stringent compliance procedures.
Taxes in New Zealand
- Corporate Income Tax: The companies are divided into two types – resident companies and non-resident companies. The non-resident companies are only taxed on the income they make in New Zealand, while the resident companies are taxed on incomes they make inside and outside New Zealand. The standard rate for corporate income tax is 28% in New Zealand.
- GST: The Goods and Services Tax (GST) was implemented in New Zealand in 1986, representing a substantial change in the nation's taxation policy. Direct taxes were the main means of revenue collection up until this point. The rates of GST apply from 15% to 0%.
- Custom Duty: The charge known as customs duty is levied on goods when it is moved across international boundaries. Its goals are to finance the government, safeguard domestic businesses, and regulate the flow of products. It is essentially a levy imposed on products imported and exported. Some imported goods are subject to customs duty, typically assessed at rates between 1% and 10%.
- Excise Duty: Excise duty is a kind of tax that the government imposes on particular products, including alcohol, tobacco, petrol, and luxury goods. The excise duty rates vary from item to item in New Zealand. This duty is levied in addition to GST tax.
- Property Tax: The government imposes a type of tax known as property tax on real estate assets, including land and buildings. It is based on the property’s assessed value.
- Residential Land Withholding Tax: In New Zealand, RLWT is applicable to the sale of residential land based on the length of ownership and the precise dates of acquisition. RLWT is mandated in the following circumstances:
- If the land is owned for less than five years and was purchased between March 29, 2018, and March 27, 2021.
- If the land has been owned for less than ten years and was purchased on or after March 27, 2021.
- 'New build' homes purchased on or after March 27, 2021, and for as long as they are owned for less than five years.
Payment and Return of Taxes in New Zealand
Deadline for filing tax returns:
- For taxpayers not associated with a tax advisor, the deadline is July 7.
- March 31 of the following year for taxpayers who are associated with a tax agent.
Deadline for Terminal Tax Payment:
- February 7 is the deadline for balance dates between March 31 and September 30.
- Additional balance dates: The balance date's eleventh month, on the seventh day.
- Extension for individuals connected to a tax advisor: Beyond the customary due date by two months.
Deadlines for Provisional Tax Payment:
- The first payment is due on the 28th day of the seventh month prior to the due date.
- 28th day of the third month prior to the balance date for the second installment.
- 28th day of the month following the balance date for the third installment.
Tax Period in New Zealand
The tax period followed in New Zealand ends on March 31. To ensure correct reporting and on-time tax payment, taxpayers must abide by the rules and regulations pertaining to fiscal year-end and filing tax returns. A taxpayer must normally request authorization from the appropriate tax authority or submit an application if they want to have a fiscal year-end other than March 31.
Penalty for Non-Compliance of Tax Regulations
- Initial Late Payment Penalty: A 1% initial late payment penalty is assessed if a tax payment is not made by the deadline. This fine is levied right away following the due date.
- Grace Period: For taxpayers who miss the payment deadline for the first time, Inland Revenue offers a grace period. There is no late payment penalty applied during this grace period. Instead, the taxpayer is informed of the missed payment and given a new deadline.
- Second Late Payment Penalty: A late payment penalty is assessed starting from the initial due date if the taxpayer fails to complete the payment by the new due date specified during the grace period. An additional 4% of the underpaid tax is the penalty.
- Additional Monthly Penalty: In addition to the first and second late payment penalties, a further 1% fine is assessed for each month that the unpaid balance of the tax, together with penalties, is not paid.
Services offered by Enterslice
- We specialize in providing comprehensive tax management services to our clients, leveraging our technical knowledge and industry expertise.
- Our aim is to successfully manage our clients' tax liabilities and reduce tax expenses. We guarantee smooth and effective worldwide and domestic tax risk management by applying the most recent techniques and technologies.
- We collaborate closely with our customers to comprehend their specific tax objectives and create plans that are in line with their goals.
- We work with clients to create tax plans that improve productivity, save expenses, manage risks, and generate strategic value. Navigating regulatory changes, using data to create value, and simplifying compliance and planning procedures across departments are all part of this.
- We provide advice on how to handle and settle tax disputes at the national and international levels.
- Our expertise assists clients in creating plans to effectively defend their tax status and minimize any problems in the future.
- Our tax experts provide advice on tax optimization, the implementation of cutting-edge tax planning, and guaranteeing compliance for funds in New Zealand and internationally. From the beginning to the end of the fund's existence, we offer full assistance.
- We evaluate if a company is eligible for R&D super-deductions and make sure that the requirements for intellectual property-related tax incentives are met. Our expertise enables clients to get the most out of the considerable tax breaks.
- We guide clients through difficult cross-border transactions, taking tax consequences into account at every step. Our knowledge of regional tax trends enables customers to avoid traps and maximize their M&A efforts.
- In light of the constantly changing nature of international tax legislation, we help clients determine the impact on their operations and provide workable solutions.
- We assist clients in adjusting to present and upcoming tax issues by identifying potential effects, creating communication plans, and supporting clients.