A guide to company taxes

A company may have different tax responsibilities compared to other business structures (such as sole trader, partnership, trust). Understanding the basics of company taxes - what you should pay and when to pay them - is vital for business owners.​

Income tax is a tax on your company’s taxable income. To calculate taxable income, you need to subtract allowable deductions from your company’s income. In New Zealand, the current company tax rate is 28%*. ​

*For certain entities such as Maori authorities and some non-profit organisations, the tax rate might be different.​

Each year, companies need to file an annual income tax return (IR4) with the IRD. The due date for filing depends on the company’s balance date (the end of its financial year). For a standard March balance date, the due date for filing is 31st of March of the following year, and tax to pay is due on the 7th of April if you have EOT or February if you don't.​

Provisional tax is required if your terminal tax is over $5,000. IRD standard requirement for provisional tax is 105% of the previous years tax bill split over 3 equal instalments (or two instalments for 6 monthly GST filers).  If you’re interested to know more about income tax, we have a detailed blog on this topic.​

Terminal tax is the final tax bill for your company’s income tax for the year - it’s the difference between the total income tax owed, less any tax already deducted from income (withholding tax, RWT on interest received, DWT on dividends received, etc.) and any provisional tax already paid.​

If you have an accountant and qualify for extra time, your terminal tax is due on the 7th of April. Otherwise, it's due in February (not on a tax agency or who have lost EOT).​

If you’re not sure how to calculate or when to pay your terminal tax, it’s best consult your accountant. ​

Read more: Residual vs Provisional vs Terminal taxes​

GST is another common tax companies may pay. It’s a tax added to most of the goods and services sold in New Zealand. The standard GST rate is 15%, but certain products or services are exempted from GST or are zero-rated (GST is charged at 0%).​

If your business’s annual turnover is over $60,000, you’ll be required to become GST registered. If your annual turnover is below this threshold, you can still choose to register for GST. This is called a voluntary GST registration.​

Once you’re registered for GST, you’ll also need to:​

You can choose to file and pay your GST returns on a monthly, bi-monthly, and 6-monthly basis. The due dates are set out in our 2024 tax year dates calendar.​

If you’re interested to know more about GST, we have a number of blogs for you to read:​

GST basics business owners should know​

When and how to register for GST​

GST on second-hand goods​

10 common GST mistakes small business owners should avoid​

GST on special transactions in New Zealand​

GST Regulation Updates for Businesses Listing Their Services via a Marketplace App​

If you operate your business through a company structure and also have employees, you may be liable for below company taxes. ​

As an employer, you have a crucial role in managing your employees’ PAYE income tax. This means you'll need to deduct the correct amount of income tax from every paycheck and send it to IRD on your employees’ behalf. It's not just income tax though—you'll also be deducting and paying things like KiwiSaver contributions (we’ll talk about it in the later section), student loans, and ACC levies.​

The general rule of thumb is to pay your deducted PAYE by the 20th of the month following the pay period. So, if you pay your staff on the 10th of August, your PAYE for that pay period is due by the 20th of September.​

However, there's an exception for larger employers. If the total PAYE and Employer Superannuation Contribution Tax (ESCT) you deduct in a year is more than $500,000, you'll need to pay twice a month. The first payment covers the 1st to the 15th of the month and is due by the 20th of that same month. The second payment is for the 16th to the end of the month and is due by the 5th of the following month.​

Companies may be liable for FBT when you provide non-cash benefits to your employees. A typical example is company vehicles. FBT is calculated on the taxable value of these benefits, with the company being responsible for paying the tax. ​

Read more: Understanding fringe benefit tax (FBT)​

The due dates for paying FBT depend on your chosen filing frequency: ​

Quarterly filing (most of the employers file and pay FBT quarterly):​

Annual filing:​

Annual filing (Income Year):​

If you’re not sure when to file your FBT, talk to your accountant or check out our tax dates calendar. ​

As an employer, you have a legal responsibility to contribute to your employees’ Kiwisaver. This is known as ‘employer contribution’ and is set as a minimum of 3% of the employee’s gross earnings - it’s an addition to the employee’s regular salary or wages. This is paid together with your PAYE tax and filed under the same return.​

Among the various company taxes, income tax (provisional tax, terminal tax), GST, and several employer taxes stand out as major obligations to the IRD. However, there are other taxes you need to pay. For example, DWT (Dividend withholding tax) of 5% is required on any dividends paid to the shareholders. We have a blog on dividends and imputation tax credits if you’d like to know more.​

Hiring an accountant (e.g. Beany) to handle your company's taxes can feel like a weight lifted off your shoulders. Tax laws are a bit of a maze, a good accountant can guide you through the ever-changing tax landscape and make sure you don't miss any deductions or end up with any surprises from IRD. At Beany, we can handle your company taxes -  everything from GST returns to PAYE, so you can focus on what you do best – running your business. Contact us or register today.​