SIGNIFICANT DEVELOPMENTS
The top personal tax rate was increased to 39% for income over NZ$60,000 from April 1,2000. The Government has implemented several antiavoidance measures to prevent individuals from structuring their affairs so they are not subject to the 39% tax rate, and is about to introduce further measures.
During the 2001 income year, the Government introduced measures to prevent individuals from diverting personal income through companies (which are still subject to a flat tax rate of 33%), raised fringe benefit tax to complement the higher individual income tax rate, and introduced a superannuation fund withdrawal tax to prevent employees from substituting
super-annuation contributions, which are taxed at 33%, for personal income.
The Government will shortly implement a regime that will prevent individuals from diverting income through trusts to related minors and will re-characterize certain services-related payments (that are currently not assessable) so that they become gross income.
TAXES ON CORPORATE INCOME
Income tax/Resident and nonresident companies (including branches) are subject to income tax at a flat rate of 33%.
State and municipal taxes/ Nil.
CORPORATE RESIDENCE
Residence is determined by place of incorporation, location of head office, or center of management or by directors’ exercising, in New Zealand, control of the company.
OTHER TAXES
Accident compensation levy/Levied on the employer annually, on the basis of payroll and industry type.
Excise duty/Excise duty is levied on petroleum products, tobacco, and alcohol.
Goods and services tax/ Goods and services tax (GST) is a form of value added tax. It applies to most supplies of goods and services. The narrow category of exempt supplies includes financial services. The rate is 12.5% or 0%. The 0% rate applies to only a few supplies, including exports.
Fringe benefit tax/Employers are subject to a tax-deductible fringe benefit tax (FBT) on the value of noncash fringe benefits provided to their employees. Employers can elect to pay FBT at flat rates (64% on attributed benefits, 49% on pool benefits, i.e., those benefits that cannot be attributed to a particular employee) applied against the value of the benefit or can attribute fringe benefits to individual employees and pay FBT based on each employee’s marginal tax rate. Under the attribution option, the applicable FBT rate depends on the net remuneration (including fringe benefits) paid to the employee. The attribution calculation treats the fringe benefit as if it were paid in cash and calculates FBT as the notional increase in income that otherwise would have arisen. The multirates are as follows.
Net remuneration FBT rate %
8,071 or less 17.65
8,076-30,590 26.58
30,591-45,330 49.25
>45,331 63.93
Fringe benefits include cars available for private use, loans at less than prescribed interest rates, and contributions to medical insurance funds and to foreign superannuation schemes. Employers’ contributions to approved superannuation schemes (excludes foreign schemes) are subject to 33% withholding tax.
Superannuation fund withdrawal tax/ An effective tax of 5% applies to amounts withrawn from superannuation funds, to the extent the withdrawals include the return of superannuation contributions made by an employer on an employee’s behalf after April 1,2000. The tax also applies towithdrawals of earnings derived after April 1,2000, on employer contributions.
INCOME DETERMINATION
Invent
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