Tax Obligations for Self-Employed Individuals in New Zealand
When you are self-employed, there are some important facts you need to know about taxes in New Zealand. This page will help you understand them.
How Do Taxes Work for Businesses and Organisations?
Businesses and organisations give income tax. They pay tax on their profit, this is their income, minus any costs. In the first year of business, they usually file their income tax returns at the end of the year and pay the full amount.
After the first year, tax payment is done in parts during the year. This is called provisional tax. Provisional tax payments often go together with GST payments.
What is the Tax Rate For Self-Employed Individuals?
Self-employed people get taxed as individuals. The table below gives the tax rates for different business types:
| Business type | Tax Rate |
|---|---|
| Self-employed | The tax rate for individuals |
| Most companies | 28% |
| Māori authorities | 17.5% |
| Non-profit organisations registered and incorporated | 28% |
| Unincorporated organisations | The tax rate for individuals |
What About Trusts and Estates?
A trust or estate does not pay tax on settlements or on property passed to an estate on death. They pay tax on any income, such as income from the property held in trust or by the estate. The amount of tax depends on the individual circumstances of the trust or estate.
Tax Credits
There are some tax credits that you can claim as an individual. This means that you do not have to pay as much income tax. If you’ve already paid the tax, you may get a refund at the end of the year.
Student Loan Repayments
If you are self-employed or earn income from sources other than salary or wages, you may have to make your own student loan repayments. You’ll have to pay back if:
- You have adjusted net income of $500 or more
- You earn $500 or more over the yearly repayment limit.