New Zealand is a country with an economic outlook, free market philosophy and political stability that is highly geared for success.
The country is a sophisticated, highly technologically aware nation and its people are proven early adopters of a whole range of technologies.
There are three main business structures in New Zealand
An individual owns all the assets of the business and is responsible for all of the risk associated with the business.
Partnerships governed by the Partnership Act 1908.
Companies governed by the Companies Act 1993.
A company may be incorporated in New Zealand by registering certain documents with the Registrar of Companies and paying a prescribed fee.
Business in New Zealand is controlled by three government agencies:
- The Commerce Commission,
- The Securities Commission and
- the Takeovers Panel.
The Commerce Commission is responsible for making sure businesses adhere to the rules and regulations of the Fair Trading Act 1986, the Commerce Act 1986 and the Consumer Guarantees Act 1993.
The tax year for most businesses is April 1 to March 31. An income tax return must be completed each tax year. There are a number of taxes that New Zealand businesses will or may be involved with.
For all of these taxes your business will need to:
- Have an Inland Revenue (IRD) number;
- Complete and send various tax return forms to Inland Revenue each year;
- Make a number of tax payments each year.
Income tax is payable on the net profit from your business, which is the income earned less any business expenses. The resident business tax rate is flat 33%.
Note that income of husbands/wives/partners is treated separately for tax purposes. Goods and services tax (a consumption based tax known as GST) is charged at the rate of 12.5% on all goods and services in New Zealand with a few exceptions including financial services and domestic rents.
Fringe benefit tax is payable on certain items people may receive as part of an employment package (such as subsidised transport and low interest loans). There are also gift and stamp duties, minimal import tariffs and miscellaneous excise duties (for instance on alcohol and tobacco).
There are no capital gains taxes in New Zealand except for some classes of transaction. If your business operates as an employer, you will need to register with the Inland Revenue as an employer and make pay-as-you-earn (PAYE) and other deductions (such as student loan repayments) from your employee's wages each pay day.
Your business will also need to keep wages records, such as a wage book. On a monthly basis your business must notify Inland Revenue of who its employees are, how much they earned and what deductions were made from their wages.
Business tax and IRD numbers
If you already have an IRD number for non-business income and you are a sole trader, you will use the same number for your business.
If you are going to operate your business as a company, partnership or trust, you will need to get a separate IRD number.
Employing staff for your small business carries certain legal responsibilities with respect to your employees.
The Employment Relations Act 2000 is the principal statute regulating employment in New Zealand. There are also a number of other statutes regulating holidays, minimum wages and minimum working conditions for factories.
New Zealand law aims to prevent harm to workers and others in places of work. It does this by setting out the responsibilities of all people involved in the workplace to make sure it is safe.
Employers are responsible for:
- Making sure their employees are safe at work;
- Identifying all hazards in the workplace;
- Eliminating, isolating or minimising their employees' exposure to any hazards;and
- Having procedures for dealing with emergencies at work.
Licences and permits
Some businesses require licenses or permits in order to operate. It is important to have the correct business licences and permits required to legally operate your business.
Business immigration to New Zealand
New Zealand’s business immigration policy aims to attract migrants who will contribute to New Zealand’s economic growth through:
- Increasing New Zealand's level of human capital
- Encouraging enterprise and innovation and
- Fostering external links.
Currently the following business categories are available:
- New Zealand investor visa
- New Zealand long-term business visa
February 12, 2015