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KuputakaGlossary

  • ACC earners' levy

    Income that you earn from personal effort is liable for ACC earners' levy.

    If you earn salary or wages, the levy is deducted as part of your PAYE deductions each payday.

    If you receive schedular payments or other types of income, you may need to pay the ACC earners’ levy directly to ACC.

  • Acceptable security

    This could include a bank bond, mortgage against real property, or a surety or bond from a finance entity/provider. You may also have another type of security you'd like to provide.

  • Accounting basis

    What you show in your GST return about the GST you've collected and paid.

    The options are: payments basis, invoice basis or hybrid basis.

  • Acquire cryptoassets

    You can acquire cryptoassets in many ways including:

    • buying cryptoassets (eg through an online exchange, peer-to-peer or from a crypto ATM)
    • mining or staking cryptoassets
    • exchanging one cryptoasset for another type of cryptoasset
    • providing goods or services in exchange for cryptoassets
    • receiving new cryptoassets from a fork of a cryptoasset you hold
    • receiving airdrops
    • earning cryptoassets through cryptoasset lending or ‘staking as a service’ providers
    • participating in an Initial Coin Offering (ICO) or Initial Exchange Offering (IEO).

  • Acquire property

    You acquire property when:

    • it's sold to you
    • it's given to you as a gift
    • you change your property's use from private to business.

  • Allowable rental expenses

    Rental expenses are what you spend on your property to earn rental income. They do not include expenses when you use the property.

    Your allowable rental expenses are your actual costs apportioned to the income-earning use days.

    There are tax rules to help you work what your property's expenses are. 

  • Assessable income

    Income that is not exempt, excluded or non residents' foreign-sourced income.

  • Associated person

    Persons and companies, trusts or partnerships which are associated with each other under tax law.

    For example, two companies (or a company and a person) with common voting interests and common market value interests; two relatives; a trustee and a beneficiary; or the settlor of a trust and trust's beneficiary.

    The associated persons rules are designed to make sure that transactions are taxed fairly and honestly.

    For more information download:

    Guide to associated persons - IR620 (PDF 397KB) 

  • Barter transaction

    A barter transaction is an exchange of goods or services in return for other goods or services.

    For example, a painter offers to paint a computer retailer’s store premises in return for a computer.

  • Base price adjustment

    A base price adjustment is a "wash-up" calculation a taxpayer does when they stop being part of a financial arrangement.

    The taxpayer has to compare total cashflow (received and paid) under the terms of the arrangement against the income and deductions from that arrangement.

  • Blockchain technology

    Enables secure information sharing online, which makes cryptocurrencies possible. Blockchain creates a shared database – but one that’s duplicated thousands (or even millions) of times across a network of computers.

    Most blockchain transactions are publically viewable and transparent. Every time an update is made to a blockchain database, it’s visible to everyone who has access. Transactions are also secure. Since a blockchain database isn’t stored in a single, centralised location the information it holds is easy to verify and hard for a hacker to corrupt.

  • Capital assets

    Assets that a business keeps for longer than a year. Also called fixed assets, they can include computers, vehicles and machinery. You claim depreciation loss on capital assets instead of claiming them as expenses.

  • Capital expenditure

    Also called capital expense, this is money spent by a business or organisation on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

  • Close company

    A company where 5 or fewer ultimate natural person shareholders hold either 50% of the total voting interests of 50% of the total market interests, that is, if market value circumstance exists.

    Special rules apply to treat certain associated persons as one person.

    Learn more in the guide, Associated persons definitions for income tax purposes - IR620.

  • Commercial production environment

    Commercial production means producing products or services for sale.

  • Competent authorities

    Competent authorities are the people in tax jurisdictions responsible for implementing a double tax agreement.

  • Continuity period

    The continuity period is the period from the beginning of the tax year in which the loss was incurred until the end of the tax year in which it was offset.

  • Control interest

    Control interests are used to work out if a foreign company is a controlled foreign company (CFC).

    Someone has a direct control interest (sometimes called 'a controlling interest') in a foreign company if they:

    • hold any shares
    • have any shareholder decision making rights
    • have the right to get income from the company, or have the company's income dealt with on their behalf
    • have the right to get value from the distribution of any of the company's assets.

  • Controlled foreign company (CFC)

    Controlled foreign companies are based overseas but controlled by a small number of New Zealand residents. The company itself must not be a tax resident in New Zealand or must be treated as foreign under a double tax agreement.

    Most commonly, 'control' means total ownership of the non resident company by a New Zealand resident.

    However, control can also exist where:

    • 5 or fewer New Zealand residents have a controlling interest of more than 50%
    • 5 or fewer New Zealand residents control the shareholder decision rights
    • a single New Zealand resident has a controlling interest of 40% or more, and no non-associated non resident owns a larger controlling interest.

    Controlled foreign companies

    Double tax agreements (DTAs)

  • Cryptoasset disposal

    A disposal includes:

    • selling cryptoassets for money
    • exchanging one cryptoasset for another type of cryptoasset
    • using cryptoassets to pay for goods or services
    • giving away cryptoassets to another person.

    A disposal does not include moving cryptoassets between wallets, addresses or accounts that all belong to you.

  • Customer due diligence

    Customer due diligence (CDD) is a process that is completed with a New Zealand reporting entity. As part of this process the reporting entity will need to:

    • gather information about a customer's identity
    • verify a customer's identity to make sure the customer is who they say they are.

    This process aids the detection, management and mitigation of the risk of money laundering and the financing of terrorism.

    You must already be, or become, a customer of a New Zealand reporting entity so that CDD can be carried out by them. If you aren't a customer of a New Zealand reporting entity, you can become one by choosing to use the service(s) provided by them.

  • Declare it all video transcript

    Visual:

    A builder standing on the street in front of a worksite, talking to camera.

    Audio:

    Builder 1

    The opportunities to do cash jobs come up from time to time, ah, but I don’t want to be associated with that.


    Visual:

    A second tradie standing inside a workshop, talking to camera.

    Audio:

    Builder 2

    As a builder your reputation is everything, you want your name to be strong. Doing cash jobs can potentially undermine that, because it comes with the word cheap, and cheap’s not often associated with good.


    Visual:

    A third builder, in a high-vis vest, standing in front of a worksite.

    Audio:

    Builder 3

    I’ve got a steady job, so doing something illegal for no real gain is not worth it to me.


    Visual:

    The camera cuts back to the second tradie.

    Audio:

    Builder 2

    The misconception around the small jobs being OK because it’s not that one big job – it’s false because the small jobs eventually add up to that big job.


    Visual:

    The camera returns to the first builder.

    Audio:

    Builder 1

    It’s a rip off to society, and you see people getting caught.


    Visual:

    The camera cuts back to the second tradie standing in a workshop.

    Audio:

    Builder 2

    IRD have a lot of resources at their disposal. They’re always looking out for these sort of things – it’s fraud.


    Visual:

    The camera cuts to the third builder on the worksite.

    Audio:

    Builder 3

    If I don’t declare all of my income during the year, when I go to the bank and try and get a loan it’s going to be a lot more difficult, the money that I think I’ve earnt for the year, the bank doesn’t see it the same way.


    Visual:

    The camera returns to the first builder.

    Audio

    Builder 1

    There are always consequences to doing cashies, and ah, for the consumer it’s going to mean that you don’t have any evidence that that work was carried out.


    Visual:

    The camera cuts back to the second tradie.

    Audio:

    Builder 2

    I have been tempted to do cash jobs in the past – it’s a tempting idea, it’s cash straight in hand. But at the end of the day it’s not worth the risk getting caught.


    Visual:

    The camera cuts to the third builder on the worksite.

    Audio:

    Builder 3

    There’s nothing wrong with doing a cash job, it’s just up to the tradie to declare that cash as part of his income and pay appropriate tax on it.


    Visual:

    A teal screen appears with the words “Declare it all. Or risk everything.” written in a large font near the top. Below it is ird.govt.nz/getitright with the Inland Revenue and New Zealand Government logos at the bottom of the screen.

  • Dependent child

    Dependent children are all children in your care who are:

    • 15 years of age or younger
    • 16 or 17 years of age and financially dependent on the caregiver
    • 18 years of age, financially dependent on the caregiver and still at secondary school or at a tertiary institution
    • not married, in a civil union or de facto relationship
    • not in receipt of Foster Care Allowance, Unsupported Child's Benefit, Orphan’s Benefit or board payment for their care.

    A financially independent child would be a child that works 30 hours or more a week or receives a student allowance, benefit or other government assistance.

    Ngā tamariki whirinaki

    Ko ngā tamariki whirinaki ko ngā tamariki katoa e tiakina ana e koe:

    • kei te 15 tau te pakeke, tamariki iho rānei
    • kei te 16, 17 tau rānei te pakeke kei te whirinaki ā-moni hoki ki te kaitiaki
    • kei te 18 tau te pakeke, kei te whirinaki ā-pūtea ki te kaitiaki, kei te kura tuarua tonu hoki, kei tētahi whare akoranga tuatoru rānei
    • kāore anō kia moe tāne, kia moe wahine rānei, kua piri ā-ture rānei, kei tētahi hononga moe māori rānei
    • kāore anō kia whiwhi i te Tāpiritanga Tiaki Tamariki Whāngai, i te Penihana Tamaiti Taurima-kore, i te Penihana Tamaiti Pani, i te utunga rēti rūma rānei mō ngā mahi tiaki i a ia.

    Ko tēnei mea te tamaiti tū motuhake ā-pūtea he tamaiti e mahi ana mō te 30 hāora neke atu rānei i te wiki, ka whiwhi moni ākonga, penihana rānei, tētahi atu āwhina kāwanatanga rānei.

  • Depreciable tangible asset

    Physical assets where you claim the cost over the life of the asset rather than as an expense in one tax return. For example, computers, furniture and machinery.

    Read more about depreciation here.

  • Depreciation loss

    The loss of economic value on a fixed asset. Read more about depreciation loss here.

  • Disposal of property

    Disposal of property is when you:

    • sell it
    • gift it
    • change it's use from business to private.

  • Double tax agreement (DTA)

    A DTA is a tax treaty between two countries or territories.

    One of the aims of a DTA is to relieve double taxation.

    New Zealand may have a DTA with your country or territory.

    Each DTA is different, so you or your tax agent need to check it to be sure how it applies.

    Double tax agreements (DTAs)

  • EI (Employment information)

    This is the information an employer files with us after every pay day.

  • Employer superannuation contribution tax (ESCT)

    A tax on any cash contribution an employer makes to a superannuation fund for the benefit of an employee. For example, employer contributions to an employee's Kiwisaver.

    If an employee asks their employer to make deductions from their wages and pay them to a superannuation scheme, these are not employer superannuation contributions.

  • End result assets

    End-result assets are:

    • the object of the R&D
    • used in the R&D process
    • used in the business’ activities.

  • Excess deduction

    Excess deductions, also known as rental losses, are when your allowable deductions for a residential property or portfolio exceed the amount of income you earned from the property or portfolio in the same tax year. Learn more about which rental property expenses can and cannot be deducted.

  • Excess deductions

    When you rent out residential property you can deduct allowable rental expenses from your gross rental income. When your gross rental income is less than your allowable rental expenses you're left with excess deductions.

  • Exclusions to the brightline property rule

    When you sell residential property there are situations when the brightline property rule does not apply:

    • The property is your main home.
    • You inherited the property.
    • You're the executor or administrator of a deceased estate.

     

  • Exempt income

    Exempt income is income you do not have to pay GST and/or income tax on. 

  • Facilitative assets

    Facilitative assets are used to assist the progress of R&D. This includes test equipment and technology.

  • Fiat currency

    Currency issued by a government (eg New Zealand Dollars, Australian Dollars, US Dollars, Euro)

  • Filing frequency

    How often you file your GST returns.

    The options are: monthly, two-monthly or six-monthly.

    Your filing frequency is also called your taxable period.

  • Frequency of transactions

    Frequency of transactions means:

    • how many transactions you make
    • how often you make them
    • over what period of time.

  • Goods and services tax (GST)

    GST is a tax of 15% added to the price of most goods and services, including imports.

    As a customer, you'll pay this when you buy goods and services. You'll also pay this on most imported goods and some imported services.

    If you're selling goods or services that are taxable, you may need to register for GST and charge it to customers.

    GST

  • Gross fare income

    The fare calculated by your digital platform is the full fare, which includes fees charged by the digital platform.

  • Gross rental income

    Gross rental income includes:

    • rental payments from tenants, eg $400 per week (this is the rental payment before you've deducted any management fees)
    • rental payments from short-term guests, eg $165 per night (this is the rental per night before you've deducted service fees)
    • fees paid to agencies like Airbnb and property management companies
    • payments from the Tenancy Board for damages or rent arrears
    • depreciation recovered.

  • Group of companies

    A group of companies means 2 or more companies in which a person holds common voting interests that add up to at least 66%.

  • Income tested benefits

    Income tested benefits are any of these:

    • Emergency Benefit
    • Jobseeker Support
    • Sole Parent Support
    • Supported Living Payment
    • Young Parent Payment
    • Youth Payment.

  • Income year

    The income year In most cases this will be the same as the tax year (1 April to 31 March). It may be an elected period not ending on 31 March and may be more or less than 12 months if the Commissioner agrees.

    Your balance date is the last day of your income year. The standard balance date is 31 March.

  • Independent earner tax credit (IETC)

    If you're a New Zealand tax resident earning between $24,000 and $48,000 in a tax year, you may qualify for the independent earner tax credit (IETC) of up to $520 per year. The amount you are eligible to receive depends on your income.

    If you or your partner receive Working for Families tax credits, you will not qualify for the independent earner tax credit.

    Independent earner tax credit (IETC)

  • Initial coin offering (ICO)

    An initial coin offering (ICO) is used by start-ups in campaigns to raise capital. In an ICO campaign cryptocurrency is sold to early backers of a project. In exchange backers get legal tender or other cryptocurrencies, like Bitcoin or Ethereum.

  • Input tax

    Input tax is GST any consumer pays when buying goods and services off a GST-registered person. 

  • Intention rule

    When a property has been bought with the firm intention of resale you'll have to pay tax on any profit from the sale.

    The intention to sell does not need to be the main reason for buying the property - it could be one of a number of reasons for buying.

  • IRD number

    A tax identification number that you use for your tax related activities with New Zealand.

    You keep the same IRD number for life. You'll need this number for certain types of income. There is no cost to apply for an IRD number.

  • Jointly and severally liable

    Jointly and severally liable means that when two or more parties have a shared debt, any one of them can be made to pay the full amount on their own.

  • Large enterprise

    A large enterprise has an annual turnover that is over $100 million (calculated based on GST101 returns). They can be:

    • a non-individual entity which by itself, or as a part of a business group, has an annual turnover exceeding $100 million 
    • an entity belonging to one of these specialist segments:
      • Crown
      • financial
      • high-wealth individuals
      • manufacturing
      • non-resident entertainers
      • non-resident contractors
      • resources
      • services.

  • Legal tender

    Legal tender is defined as bank notes and coins issued under the Reserve Bank of New Zealand Act 1989 (RBNZA). This is set out in section 27 of the RBNZA. Cheques are not included in this definition.

  • Life-shortening congenital condition

    A life-shortening congenital condition means a condition that exists for a person from the date of their birth and the condition is likely to reduce their life expectancy. 

  • Living allowance

    Before we calculate child support we deduct a set amount from each parent's adjusted taxable income. This allowance recognises the costs each parent has to support themselves.

    Child support annual adjustments

  • Long-term residential renting

    When you're renting out your residential property for 4 or more consecutive weeks. The people renting the property would be tenants who see your property as their main home. For example students, boarders or care home residents.

  • Look-through interests

    Look-through interest means a person’s shares in a look-through company.

    There are different criteria for look-through interests, depending on the income year - see "Terms we use" in the Look through companies - IR879 guide for full details.

  • Low turnover trader

    A low turnover trader is a person whose total turnover for the income year does not go over $3m. This also takes into account the turnover of associated persons.

  • Main home

    You cannot have more than 1 main home. If you live in more than 1 property - for example you own a property in a city you live and work in for part of the week, you must decide which property is your main home.  You need to think about:

    • where your personal property is kept
    • the amount of time you spend living in each house (if you have more than one house)
    • where your immediate family lives
    • where your social ties are strongest
    • your use of the home
    • what other ties (for example: employment, business, economic) you have with the surrounding community.

  • Main home exclusion

    The main home exclusion is the tax exemption for income earned from the sale of a main home.

    If you buy and sell your main home within 5 years (2 years if the property was acquired on or after 1 October 2015 through to 28 March 2018 inclusive), the income you earn from the sale of the property is not taxable if you used:

    • the property as your main home more than 50% of the time while you owned it
    • more than 50% of the area of the property as your main home. This includes the yard, gardens, garage, pool areas and tennis courts, etc.

    The main home exclusion does not apply if you show a regular pattern of buying and selling residential property, even if you or your family live in the property before it is sold.

  • Market value consideration

    You must charge fees for R&D services on commercial terms.

  • Mates rates

    This is when you rent out your property to family or friends under your property's market value rent. The mate rate is anything under 80% of the market value.

    So if rent for your property is usually $100 per night, and your friends rent it for $50, that's a mate rate. It's a mate rate because you're charging them 50% of your property's market value rent. 

  • Mining pool

    In a mining pool miners combine (pool) their processing power to earn rewards. They split the rewards proportionally to their individual contributions.

  • Mixed-use asset

    Mixed-use assets are holiday homes, boats and aircraft used both privately and to earn income.

    You have a mixed-use asset if during income year the asset is also unused for 62 days or more in an income year.

    Mixed-use assets do not include:

    • residential property used for long term rental
    • business assets where the private use is minor, for example once a year
    • a home office where the expense claimed is based on floor area.

  • Multi-rate PIE (MRP)

    A multi-rate PIE or multi-rate portfolio investment entity is an investment scheme where investors can choose their tax rate (prescribed investor rate or PIR).

    MRPs work out tax based on the PIR their investors give them.

    Kiwisaver scheme providers are a common type of MRP.

  • Natural person

    An individual human being as opposed to a legal person, which may be a private or public organisation.

  • Net loss

    At the end of the tax year if your annual total deduction is more than your annual gross income you’ll be left with a net loss for the year. Your net income for the year is zero.

  • New provisional taxpayer

    Generally you will not have to pay provisional tax if your residual income tax (RIT) for the previous year was $2,500 or less. However, there are certain situations when you'll have to pay provisional tax for the current year, even if you have not paid it before. This is called a new provisional tax liability.

    You're a new provisional taxpayer if:

    You're an individual (not including a trustee of a trust) and your residual income tax was less than $2,500 for the last 4 years; and your residual income tax for the current year is $60,000 or more; and during the current year you've stopped earning income from employment and have started to earn untaxed income from a taxable activity instead.

    You're a non-individual (including a trustee of a trust) and you've started to earn income from a taxable activity during the current year; you did not receive income from a taxable activity in the last 4 years; and for the 2018 year onwards, your residual income tax is $60,000 or more.

  • New Zealand source

    Non-resident taxpayers generally pay tax on income they earn from a source in New Zealand.

    This is called source-based taxation.

  • New Zealand tax resident

    New Zealand tax residents generally pay tax to New Zealand on their worldwide income, that is, what they earn in New Zealand and overseas.

    You can work out whether you're a New Zealand tax resident in the 'International' section.

    Tax residency status for individuals


    Tax residency status for companies

  • Non-business researcher

    A business not seeking profit.

  • Non-profit organisation

    All entities exempted from income tax and not belonging to large enterprises with the following exemption types:

    • societies or clubs with an income of less than $1000
    • amateur sports clubs
    • charity
    • dairy herd society
    • district societies
    • scientific and industrial research
    • veterinary service clubs, or
    • all entities except building societies and friendly societies with "other" exemption type.

  • Non-resident taxpayer

    Non-resident taxpayers generally pay tax to New Zealand on income they earn from New Zealand sources.

    You can work out whether you're a non-resident taxpayer and how you'll be taxed in New Zealand by checking your tax residency status in the 'International' section.

    International tax for individuals

    International tax for business

  • Non-resident withholding tax (NRWT)

    Non-resident withholding tax (NRWT) is a tax withheld from New Zealand-sourced payments of interest, dividends and royalties to non-resident taxpayers (foreign investors).

    Non-resident withholding tax (NRWT)

  • Off the plan

    Entering into an agreement to purchase a property that is yet to be built. You can view the design, building plans and specifications but there is no physical property to see or inspect.

  • Offshore person

    For an individual an offshore person is someone who:

    • is a New Zealand citizen and has been overseas for the last 3 or more years continuously
    • doesn’t have a New Zealand residence class visa granted by Immigration New Zealand
    • has a New Zealand residence class visa and has been overseas for the last 12 or more months continuously.

    A company is an offshore person if it is:

    • incorporated outside New Zealand
    • 25% or more owned or controlled by offshore persons.

    A trust is an offshore person if:

    • 25% or more of its governing body are offshore
    • offshore person(s) have 25% or more beneficial interest or entitlement to its trust property
    • 25% or more of persons with the right to amend or control the trust’s trust deed are offshore persons
    • 25% or more of persons with the right to control the composition of the trust’s governing body are offshore persons.

    A unit trust is an offshore person if:

    • the manager or trustee (or both) are offshore person(s)
    • offshore person(s) have beneficial interest or 25% or more of the trust’s property.

    A non-individual partnership, unincorporated joint venture, or other unincorporated body is an offshore person if:

    • 25% or more of its partners (or members) are offshore persons
    • offshore person(s) have a beneficial interest or entitlement to 25% or more of its profits or assets
    • offshore person(s) have the right to exercise (or control the exercise) of 25% or more of voting power at a meeting.

    Tangata o tāwāhi

    Mō te takitahi ko te tangata o tāwāhi ko:

    • te kirirarau o Aotearoa kua noho pūmau ki tāwāhi mō ngā tau e toru neke atu ka taha
    • tētahi kāhore tāna momo kōkota kainoho o Aotearoa i tukua e Immigration New Zealand
    • tētahi he momo kōkota kainoho o Aotearoa tāna otirā kua noho pūmau ki tāwāhi mō te 12 marama ka taha.

    Ko te kamupene ko tētahi tangata o tāwāhi ki te mea:

    • i whakakaporei i waho o Aotearoa
    • kei te pupuritia, kei te whakahaeretia rānei e te 25% neke atu tāngata o tāwāhi.

    Ko te kaitiaki ko tētahi tangata o tāwāhi ki te mea:

    • kei tāwāhi he 25% neke atu o tōna rōpū kaiwhakahaere
    • kei ngā tāngata o tāwāhi te 25% neke atu o āna pānga whaihua, o te whiwhinga rānei i āna rawa kaitiaki
    • kei ngā tāngata o tāwāhi he 25% neke atu o te mana ki te whakatika, ki te whakahaere rānei i te whakaaetanga ā pukapuka kaitiaki o te kaitiaki
    • kei ngā tāngata o tāwāhi e 25% neke atu o te mana ki te whakahaere i ngā mema o te rōpū kaiwhakahaere o te kaitiaki.

    Ko te kaitiaki wawae ko tētahi tangata o tāwāhi ki te mea:

    • he tangata o tāwāhi te kaiwhakahaere, te kaitiaki rānei (rāua e rua rānei)
    • kei ngā tāngata o tāwāhi he wāhi whaihua, he 25% neke atu rānei o ngā rawa o te kaitiaki.

    He tangata o tāwāhi te pātuitanga kore-takitahi, te hononga pakihi kaporeikore, te rōpū kaporeikore kē rānei, ki te mea:

    • he tāngata o tāwāhi te 25% neke atu rānei o āna kaipātui (mema rānei)
    • kei ngā tāngata o tāwāhi te 25% neke atu o āna pānga whaihua, o te whiwhinga rānei i āna monihua, āna rawa rānei
    • kei ngā tāngata o tāwāhi te mana ki whakahaere (ka tino whakahaere rānei) i te 25% neke atu o te mana pōti i tētahi hui.

  • Offshore RLWT person

    An offshore RLWT person is someone who meets the criteria for being offshore and must pay residential land withholding tax.

    To see if we see you as an offshore RLWT person for tax purposes check the page below:

    Offshore people who pay RLWT

  • Ordinary income

    Ordinary income is income that is not dealt with by another specific part of the tax legislation.

    To decide if an amount is ordinary income you need to consider the true nature of the payment as it relates to you. For example, why was the payment made and what have you done in order to receive it? There is usually repetition and regularity to ordinary income although a one-off payment can also be ordinary income in some cases.

  • Output tax

    Output tax is tax a GST-registered person charges on goods and services they supply. 

  • Pay cycle

    How often the employee is paid - for example, weekly, fortnightly, monthly.

    Also referred to as 'pay frequency'.

  • Pay frequency

    How often the employee is paid - for example, weekly, fortnightly, monthly.

    Also referred to as 'pay cycle'.

  • Pay period

    The period covered by an employee's pay. Your employees may have different pay periods.

    For example, employees you pay weekly may have a 7-day pay period. Employees you pay fortnightly may have a 14-day pay period.

    The pay period start date is the first day the employee's pay covers.

    The pay period end date is the last day the employee's pay covers.

    For example, an employee is paid weekly and their pay period start date is 1 August. Their pay period end date will be 8 August. They receive their pay on 9 August.

    You enter each employee's pay period start date and end date each time you file employment information about the employee.

  • Payment tokens

    Cryptoassets that are intended to be a means of payment or exchange, for example Bitcoin and Litecoin, are often called payment tokens, exchange tokens, intrinsic tokens or simply cryptocurrencies.

  • Personal services attribution rule

    A rule that prevents an individual from avoiding the top personal tax rate by diverting income to an associated entity.

    If you're associated with an entity that operates between you and the buyer of your personal services, you'll need to know the thresholds that make this rule apply to you. See the Interpretation statement 18/03 from July 2018 for guidance on the criteria and thresholds.

    Interpretation statement 18/03 - July 2018

  • Prescribed investor rate (PIR)

    A prescribed investor rate (PIR) is the tax rate that your portfolio investment entity (PIE) uses to work out the tax on your investment income.

    The PIR is based on your taxable income. You choose your rate.

     

  • Principal caregiver

    The person who is at least 16 years old and responsible for the day-to-day care of the child on a permanent basis.

    Kaitiaki mātāmua

    He tangata kei runga ake i te 16 tau te pakeke, ka riro māna e tiaki te tamaiti ia rā, ia rā, mō te wā tino roa.

  • Principal settlor

    The principal settlor is the person who has made the biggest financial contribution to the trust.

     

  • Private boarder or home-stay student

    A boarder or home-stay student rents a room in a private home. They get meals and other care and services as part of their rent.

    They are different to flatmates who share a house, expenses and chores. Usually one flatmate will be the tenancy holder.

  • Proof of stake

    Proof of stake requires an investment in the cryptoasset itself. Users are generally required to lock a certain number of cryptoassets into the network as their stake. A pseudo-random election process selects a user to be the validator of the next block. 

  • Proof of work

    Proof of work involves using computer resources to validate cryptoasset transactions and maintain the blockchain transaction ledger.

  • Publicly available

    Publicly available information refers to accessible information where New Zealand based professionals in that field would look. This information does not have to be available for free for it to be publicly available. It must be available on market terms. 

    This includes patents, published papers and textbooks. 

  • Qualifying company

    Qualifying companies have tax rules that aim to treat the company and its shareholders as one entity.

    If your company was not already a qualifying company before 1 April 2011, you cannot choose to be a qualifying company. You can choose to be a look-through company instead.

  • Rental expense deductions

    Rental expense deductions are your allowable rental expenses for the current tax year.

    They're called deductions as you can deduct them from your rental income, lowering the income tax you pay.

  • Rental losses

    Rental losses are when your rental income is less than your rental expenses.

    They're also called 'excess deductions' under the loss ring-fencing rules.

    Rental property losses and ring-fencing

  • Residency requirements

    To get Working for Families you must meet one of the following residency requirements:

    • you were born in New Zealand
    • you have New Zealand citizenship
    • you are a New Zealand resident and have been in New Zealand continuously for at least 12 months at any time
    • you care for a child who is a New Zealand resident and lives in New Zealand.

    Ngā whakaritenga kāinga noho

    E whiwhi ai koe i Working For Families me mātua tutuki i a koe tētahi o ngā whakaritenga kāinga noho e whai ake nei:

    • i whānau mai koe i Aotearoa
    • kua whai mana kirirarau koe i Aotearoa
    • he tangata noho tūturu koe i Aotearoa, ā, i Aotearoa tonu tō kāinga mō te 12 marama ka hipa, ahakoa te wā
    • e tiaki ana koe i tētahi tamaiti noho tūturu i Aotearoa, kei Aotearoa hoki e noho ana ināianei.

  • Resident withholding tax (RWT)

    Resident withholding tax (RWT) is a tax that is deducted from investment income before the investor receives it.

    It helps people who receive investment income to pay their tax throughout the year, and makes sure that people who do not declare their investment income still have tax deducted from it. (Inland Revenue still follows up on undeclared investment income and takes action against people who do not declare it.)

  • Residential exclusion

    Part of the intention test, the term is used in tax law to describe the exclusion of main homes from the tax rules around disposal of residential property.

  • Residential income

    Residential income is:

    • rental income
    • net income from the disposal of the property (or another property in the portfolio if you have a portfolio)
    • depreciation recovery income for an individual property or residential portfolio property - typically only relevant if you sell the property
    • the net income from residential land that is excluded because it is revenue account land. Residential land net income is rental income, depreciation recovery income, and net income from taxable sales.

  • Residential income

    Residential income generally means the rent you earn from residential land. However, if you sell the property in a taxable sale, the net income is also considered residential income - as is any depreciation recovery income from the sale.

  • Residential land

    Residential land includes a property with an existing dwelling, land that is to have a dwelling built on it, and bare land that may have a dwelling built on it under the relevant district plan.

    Residential land is not land used mostly for business premises and farmland.

  • Residential land

    Residential land includes a rental property with an existing dwelling, land that is to have a dwelling built on it, and bare land that could have a dwelling built on it under the relevant district plan. This includes overseas property held by a New Zealand tax resident. The way the property is held generally does not change the rules, so they apply to property owned by you, a partnership, a look-through company, a trust, or a close company. Some land used for residential purposes is excluded.

  • Residential land purchase amount

    An amount paid or payable for the disposal of the residential property, but excludes:

    • deposits
    • part-payments.

    As long as all deposits and part-payments total less than 50% of the purchase price for the property.

  • Residential property

    Residential property includes:

    • land with a house on it
    • land the owner will build a house on at some stage
    • land the owner may one day build a house on.

  • Residual income tax (RIT)

    The amount of income tax you pay for the year, less any PAYE and other tax credits you may be entitled to, except for Working for Families Tax Credits.

  • Security token

    Cryptoassets that represent existing property or financial assets, and so mirror securities like shares or debt, are often called security or asset tokens. 

  • Shadow payroll

    Your regular payroll pays your employee’s salary and manages their tax obligations to your country.

    In most cases your employee will also have tax obligations to New Zealand. You need to set up a shadow payroll in New Zealand to manage these.

    A shadow payroll is not needed if your employee’s salary is paid by a New Zealand employer.

  • Shared care

    At least one third of the care of the child is shared between people in different households. One third care equals 122 days a year or 5 days a fortnight. To count as shared care the arrangement needs to be in place for at least 4 months.

    Te tiaki tiri

    Kia kaua e iti iho i te kotahi hautoru o te wā e tiakina ana te tamaiti e ētahi tāngata i ētahi whare tū motuhake. Te ritenga o te kotahi hautoru nei kei te 122 rā i te tau, e 5 rā o roto i te rua wiki rānei. E kīia ai te tiaki he tiaki tiri, me mātua whai mana mō te whā marama, kaua e hoki iho.

  • Shared rental expenses

    Shared rental expenses are those you spend on your rental property to earn income and on any the private use by you. For a rental property, they'll be for things like:

    • utility bills
    • internet bills
    • repairs and maintenance
    • mortgage interest paid
    • insurance
    • rates.

  • Shareholder continuity

    Shareholder continuity refers to changes that have occurred to the number of shareholders and the nature of their shareholdings during the year. Continuity affects both tax losses brought forward from previous tax years and imputation credits.

    For a company to be able to carry its losses forward, at least 49% of shares should be held by the same shareholders through the continuity period (the year the loss was incurred through to the year it's offset). This is the shareholder continuity test.

  • Shortfall Penalty

    A penalty imposed as a percentage of a tax shortfall (a deficit or understatement of tax), resulting from certain actions on the part of a taxpayer. Shortfall penalties apply to most taxes and duties, including student loans, but not to child support repayments by liable parents.

  • Short-stay accommodation

    This is when you're renting out your residential property to guests for up to 4 consecutive weeks. Your guests would not also see your property as their main home. Short-stay accommodation does not include accommodation for residential tenants, boarders or care home residents. It also does not include student or emergency accommodation. Also referred to as short-term residential renting.

  • Short-term residential renting

    This is when you're renting out your residential property to guests for up to 4 consecutive weeks at a time. Also referred to as short-stay accommodation

    Your guests would not also see your property as their main home. Short-term accommodation does not include accommodation for residential tenants, boarders, or care home residents. It also does not include student or emergency accommodation.

  • Single Euro Payments Area (SEPA)

    The Single Euro Payments Area allows participating countries to more easily pay electronically in euros across certain borders. The SEPA is made up mostly of members of the European Union, but also some other countries and territories.

    If you’re in a country or territory that is on the SEPA list, you’ll be able to set up direct debit with Inland Revenue in myIR.

    Single Euro Payments Area (European Central Bank)


    Log in to myIR

  • Small and medium enterprises

    Small or medium enterprises can be either:

    • entities with an active relationship for GST or PAYE that do not belong to large enterprises or non-profit organisations
    • non-individual entities without active registration for GST or PAYE not belonging to non-profit organisations.

  • Sole Parent Support Benefit

    Sole Parent Support is a weekly payment that helps single parents find part-time work or get ready for future work.

  • Staking as a service

    Staking as a service providers and staking pools let you earn rewards from staking via a third-party service. The third-party service takes care of the technical aspects of the staking process for you.

  • Staking pools

    Staking pools let you earn rewards from staking via a third-party service. The third party takes care of the technical aspects of the staking process for you.   

  • Subvention payment

    Subvention payments are payments by a profit company to a loss company. If the loss company agrees to receive a subvention payment, the profit company’s net income and the loss company’s net loss are reduced by the same amount.

  • Tax obligations

    Under the Inland Revenue Acts for the two years before applying. 

    These must include business tax obligations, such as:

    • filing your employer returns and making employer tax payments (if registered as an employer)
    • filing GST returns and making GST payments
    • making provisional tax payments.

  • Tax residency status

    Your tax residency is different from your immigration residency.

    You'll need to know your tax residency status to understand how New Zealand's tax laws apply to you.

    You'll either be a:

    • non-resident taxpayer
    • New Zealand tax resident.

    Tax residency status for individuals

    Tax residency status for companies

  • Tax year

    The tax year is from 1 April to 31 March unless you have a non-standard balance date.

    Balance dates

  • Taxable activity

    A taxable activity is a continuous or regular activity undertaken by any person that supplies or intends to supply goods or services for money or other reward.

    This includes activities that do not make a profit.

    These things are not taxable activities:

    • working for salary or wages
    • selling items as a hobby or recreation
    • selling the occasional domestic item
    • making GST-exempt supplies.

  • Taxable income

    The income that you pay tax on. It's your net income, minus your expenses and any available losses.

  • Taxable period

    The period of time covered by your GST return.

    It may be one, two, or six months.

    Taxable periods end on the last day of the month.

  • Taxable supplies

    The supplies you provide while carrying out your taxable activity, which you need to pay GST on. This is charged at either 15% (standard-rated) or 0% (zero-rated).

    You can only claim back GST you pay on your purchases and expenses if you use those goods and services to make taxable supplies.

  • The bright-line property rule

    The bright-line rule means you'll pay tax when you buy and then sell a residential property in the brightline period, unless an exclusion applies.

    The bright-line rule applies to residential properties bought and sold on or after 1 October 2015. 

    There are 2 bright-line periods.

    • Properties bought on or after 1 October 2015 through to 28 March 2018 inclusive come under the bright-line rule if they're sold within 2 years of buying them.
    • Properties bought on or after 29 March 2018 come under brightline if sold within 5 years of buying them. 

    Exclusions to the bright-line rule.

    • The property is your main home.
    • You inherited the property.
    • Relationship settlement property when first settled, but the bright-line rule will apply when you sell the property
    • You’re the executor or administrator of a deceased estate.

    The bright-line rule is only for residential property. Commercial property or farmland is not part of the bright-line rule. 

    The bright-line property rule

  • Transcript - Sharing information to combat global tax evasion

    Visual:

    Inland Revenue's logo appears and slides up and off the screen.

    An image of Earth slides into view from the top of the screen. Circles with the dollar symbol in the middle start popping up around the Earth.

    Solid and dotted lines start linking the circles - indicating travel and transfer of money.

    Audio:

    "In our modern world money knows no borders - it can travel across the globe in an instant."

    "This helps support international trade and 21st century economies."

    Visual:

    The image of Earth slides up and off the screen.

    The circles turn into coins and fall into a bag. The bag has "Income Tax" written on it.

    As coins fall into it, the bag starts to fill with colour from the bottom. Some of the coins bounce out of the bag and turn a different colour - indicating tax evasion.

    Audio:

    "But these changes also make it easier for some individuals to avoid paying the right amount of tax."

    Visual:

    The income tax bag slides down and off the screen.

    Building blocks fall from the top to create two buildings. One building has "Hospital" written on it, the other has "School".

    An Earthworks tip truck comes into view from the left side. A traffic road cone and construction barrier appear behind the tip truck to complete the city scene.

    Audio:

    "And tax is important because Governments use it to pay for services we all need."

    Visual:

    The city scene slides down and off the screen.

    A document slides into view from the top, with "OECD" and "Automatic Exchange of Information" written on it. The outline of New Zealand appears in a circle on the bottom right of the document.

    The title "Automatic Exchange of Information" pops out of the document and the letters "A", "E", "O" and "I" pulse as they are said by the speaker.

    Audio:

    "That’s why the New Zealand government has signed up to a global initiative led by the OECD called, the Automatic Exchange of Information - or AEOI."

    Visual:

    The document fades away and is replaced by an image of the Earth.

    The outline of New Zealand in the circle remains, moves to New Zealand's location on the Earth and is replaced by a document with a signature.

    More documents with signatures start popping up around the Earth.

    Audio:

    "We’re one of 100 countries that have agreed to automatically share some financial account information about foreign tax residents."

    Visual:

    Dotted lines with circles on them start linking the documents - indicating the travel of information.

    Audio:

    "By working together we’ll make it easier to deal with global tax evasion."

    Visual:

    The screen zooms into the document where New Zealand is located and fades away.

    Audio:

    "So, how does AEOI work?"

    Visual:

    A circle with an image of a calendar and "1 July" written on it appears in the middle of the screen. "1 July" peels off  the circle to reveal "2017".

    The 2017 circle slides up and off the screen.

    Rectangles slide up and a new city is formed with two buildings in the background, and three buildings in the foreground. In the middle of the foreground is a building with "BANK" written on it.

    Audio:

    "From 1st July 2017, financial institutions in New Zealand – like banks, and some investment managers, managed trusts and certain brokers…"

    Visual:

    A circle with an image of a person in the middle appears above the bank. Three more of the same circles appear on each side of the first circle. Solid lines connect each surrounding circle to the middle circle.

    The bottom left and middle right circles start pulsing.

    The bottom left circle slides to the left of the screen onto an ID card. The city and remaining circles fade away.

    An office building slides into view from the right, taking up half the screen. Inland Revenue's logo is displayed under the office building.

    Audio:

    "…will be required to identify their customers who are foreign tax residents and send their financial information to us at Inland Revenue."

    Visual:

    The ID card opens up and a list appears with the headings:

    "Name"

    "DOB"

    "Address"

    "Country"

    "Tax ID No."

    "Account details", and

    "Gross income".

    Each of the headings is highlighted and pops out of the ID card when said by the speaker.

    Audio:

    "This includes their name, date of birth, address, country of tax residence, tax identification number, account details - including their annual balance - and gross income on any investments."

    Visual:

    The ID card closes and fades away.

    An image of the Earth slides down into view and starts spinning.

    The ID card slides left from behind the Inland Revenue building to the image of the Earth and fades away.

    Audio:

    "We’ll then share this information with their home country if we have an exchange agreement with that country."

    Visual:

    ID cards pop up around the Earth and slide right to the Inland Revenue building.

    Audio:

    "In return, we’ll receive the same financial information about New Zealand tax residents from other countries that have also signed up to AEOI."

    Visual:

    The Inland Revenue building slides down out of view and the Earth fades away.

    An image of a woman sitting in front of a computer slides up from the bottom and into view. The computer screen displays the words "New Zealand Financial Account", an outline of New Zealand inside a coloured circle and an image of a mouse pointer arrow on it.

    The image of the woman sitting in front of the computer shrinks to the bottom left of the screen. The Inland Revenue building and Earth appear. A dotted line appears, linking the computer, Inland Revenue building and Earth together.

    Audio:

    "This means, if you’re a foreign tax resident with a New Zealand financial account, or control an account, we may share this information with your home country."

    Visual:

    The woman sitting in front of a computer, Inland Revenue building and Earth images slide to the left and off the screen.

    A house and street light image slides into view from the right. The house has three windows and a door.

    The camera zooms into the third window from the left revealing the inside of the house.

    Inside the house there is a:

    tall floor lamp on the left

    man sitting at a table working on a laptop in the middle

    picture frame with a family portrait above the man, and

    a couch with a window behind it on the right.

    Audio:

    "If you’re a New Zealand tax resident and have financial accounts in any of the countries that have signed-up up to AEOI, this information may be shared with us."

    Visual:

    The house scene slides down and off the screen.

    A bank scene slides into view from the top. The man at the laptop remains with the transition.

    In the bank scene there is a:

    pot plant on the left

    clock above the pot plant

    man in the middle sitting at a desk

    woman sitting opposite the man at the desk working on a computer

    bank teller counter with a computer screen on it on the right.

    A circle appears above the woman's head with an image of a computer screen. A circle with a plus symbol in the middle appears on the top right side of the computer screen.

    The circle with the computer screen is replaced by a circle with a question mark.

    Audio:

    "And, financial institutions will ask you about your tax residence when you open a new account and they may ask you questions in relation to your existing accounts."

    Visual:

    The bank scene slides up and off the screen.

    A mouse pointer arrow appears in the bottom right corner an moves to the middle of the right side of the screen.

    The web address "www.ird.govt.nz/infoshare" appears in the middle of the screen.

    The New Zealand Government and Inland Revenue logos slide up from the bottom of the screen.

    Audio:

    "If you want to find out more about AEOI and tax residency go to ird.govt.nz/infoshare."

  • Transitional tax resident

    A New Zealand tax resident who has a temporary tax exemption. 

    If you're a new tax resident or returning to New Zealand after 10 years, you may be eligible for the 4-year temporary tax exemption on most types of foreign income.

    Temporary tax exemption

  • Unsupported Child's Benefit

    Unsupported Child’s Benefit is a weekly payment which helps carers supporting a child or young person whose parents can't care for them because of a family breakdown.

  • Use of money interest (UOMI)

    Use of money interest (UOMI) is not a penalty. It's an amount charged or credited to pay for "use of money" in the same way banks charge or credit interest.

    The use of money interest rules are designed to encourage people to pay the right amount of tax at the right time, compensate people who pay too much tax and compensate the Government if people pay too little tax.

  • Utility tokens

    Cryptoassets that are more like traditional payment vouchers are often called utility tokens because they can be used to gain direct access to specified goods or services. 

  • Wholly or mainly

    For the donee organisations test, "wholly or mainly" means at least 75% of the organisation's funds are used for charitable, benevolent, philanthropic or cultural purposes within New Zealand.

    For more information, see our Interpretation statement IS 18/05: Income tax – donee organisations – meaning of wholly or mainly applying funds to specified purposes in New Zealand.

    Interpretation statement IS 18/05

  • Wholly owned

    Wholly owned groups of companies are 100% owned by the same shareholders.

  • Worldwide income

    New Zealand tax residents generally pay tax on their worldwide income, that is, what they earn from sources in New Zealand and overseas.

    This is called residency-based taxation.

  • Zero-rated

    When the charge for GST is at 0%. GST is a tax on the supply of goods and services by a registered person on any taxable activity they do. Some supplies are zero-rated. 

    Zero-rated supplies

  • Barter transaction

    A barter transaction is an exchange of goods or services in return for other goods or services.

    For example, a painter offers to paint a computer retailer’s store premises in return for a computer.

  • Base price adjustment

    A base price adjustment is a "wash-up" calculation a taxpayer does when they stop being part of a financial arrangement.

    The taxpayer has to compare total cashflow (received and paid) under the terms of the arrangement against the income and deductions from that arrangement.

  • Benefit

    Work and Income benefits include payments to help with the cost of raising children.

    Penihana

    Kei roto i ngā penihana mō Te Hiranga Tangata ngā utunga hei āwhina i te utu mō te whakatupu tamariki.

  • Blockchain technology

    Enables secure information sharing online, which makes cryptocurrencies possible. Blockchain creates a shared database – but one that’s duplicated thousands (or even millions) of times across a network of computers.

    Most blockchain transactions are publically viewable and transparent. Every time an update is made to a blockchain database, it’s visible to everyone who has access. Transactions are also secure. Since a blockchain database isn’t stored in a single, centralised location the information it holds is easy to verify and hard for a hacker to corrupt.

  • Blocks

    Blocks contain transactional information such as the time, value and participants in a trade. Each block contains many transactions.

  • Capital assets

    Assets that a business keeps for longer than a year. Also called fixed assets, they can include computers, vehicles and machinery. You claim depreciation loss on capital assets instead of claiming them as expenses.

  • Capital expenditure

    Also called capital expense, this is money spent by a business or organisation on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

  • Cheque

    A cheque is defined as a bill of exchange drawn on a bank which is payable on demand, as set out in section 73(1) of the Bills of Exchange Act 1908.

  • Close company

    A company where 5 or fewer ultimate natural person shareholders hold either 50% of the total voting interests of 50% of the total market interests, that is, if market value circumstance exists.

    Special rules apply to treat certain associated persons as one person.

    Learn more in the guide, Associated persons definitions for income tax purposes - IR620.

  • Commercial production environment

    Commercial production means producing products or services for sale.

  • Company

    A company is a type of business. It is often an organisation that produces or sells goods or services in order to make a profit. This includes an incorporated society.

  • Competent authorities

    Competent authorities are the people in tax jurisdictions responsible for implementing a double tax agreement.

  • Continuity period

    The continuity period is the period from the beginning of the tax year in which the loss was incurred until the end of the tax year in which it was offset.

  • Control interest

    Control interests are used to work out if a foreign company is a controlled foreign company (CFC).

    Someone has a direct control interest (sometimes called 'a controlling interest') in a foreign company if they:

    • hold any shares
    • have any shareholder decision making rights
    • have the right to get income from the company, or have the company's income dealt with on their behalf
    • have the right to get value from the distribution of any of the company's assets.

  • Controlled foreign company (CFC)

    Controlled foreign companies are based overseas but controlled by a small number of New Zealand residents. The company itself must not be a tax resident in New Zealand or must be treated as foreign under a double tax agreement.

    Most commonly, 'control' means total ownership of the non resident company by a New Zealand resident.

    However, control can also exist where:

    • 5 or fewer New Zealand residents have a controlling interest of more than 50%
    • 5 or fewer New Zealand residents control the shareholder decision rights
    • a single New Zealand resident has a controlling interest of 40% or more, and no non-associated non resident owns a larger controlling interest.

    Controlled foreign companies

    Double tax agreements (DTAs)

  • Conveyancer

    A conveyancer is a lawyer, incorporated law firm, conveyancing practitioner or incorporated conveyancing firm who handles the legal aspects of buying and/or selling property on behalf of a buyer or seller.

  • Cryptoasset disposal

    A disposal includes:

    • selling cryptoassets for money
    • exchanging one cryptoasset for another type of cryptoasset
    • using cryptoassets to pay for goods or services
    • giving away cryptoassets to another person.

    A disposal does not include moving cryptoassets between wallets, addresses or accounts that all belong to you.

  • Cryptoassets

    Cryptoassets are property. For us ‘cryptoassets’ are digital assets that use cryptography and blockchain technology. We see them as: 

    • cryptocurrencies 
    • crypto coins 
    • digital tokens 
    • cryptographic assets  
    • digital financial assets 
    • virtual currencies
    • representing property or financial assets for securities like shares or debt. For example security or asset tokens like Dai and tZERO.   

    We do not see cryptoassets as currency or money. But they are used as payment or exchanged as a payment. So for us we’ll also see cryptocurrencies as: 

    • tokens, for example Bitcoin and Litecoin (also called payment tokens, exchange tokens, intrinsic tokens or simply cryptocurrencies) 
    • traditional payment vouchers, for example Siacoin and Dentacoin (also called ‘utility’ tokens).  

  • Cryptography

    The process of converting text or numbers into a code you can't break to keep it safe.

  • Customer due diligence

    Customer due diligence (CDD) is a process that is completed with a New Zealand reporting entity. As part of this process the reporting entity will need to:

    • gather information about a customer's identity
    • verify a customer's identity to make sure the customer is who they say they are.

    This process aids the detection, management and mitigation of the risk of money laundering and the financing of terrorism.

    You must already be, or become, a customer of a New Zealand reporting entity so that CDD can be carried out by them. If you aren't a customer of a New Zealand reporting entity, you can become one by choosing to use the service(s) provided by them.

  • Declare it all video transcript

    Visual:

    A builder standing on the street in front of a worksite, talking to camera.

    Audio:

    Builder 1

    The opportunities to do cash jobs come up from time to time, ah, but I don’t want to be associated with that.


    Visual:

    A second tradie standing inside a workshop, talking to camera.

    Audio:

    Builder 2

    As a builder your reputation is everything, you want your name to be strong. Doing cash jobs can potentially undermine that, because it comes with the word cheap, and cheap’s not often associated with good.


    Visual:

    A third builder, in a high-vis vest, standing in front of a worksite.

    Audio:

    Builder 3

    I’ve got a steady job, so doing something illegal for no real gain is not worth it to me.


    Visual:

    The camera cuts back to the second tradie.

    Audio:

    Builder 2

    The misconception around the small jobs being OK because it’s not that one big job – it’s false because the small jobs eventually add up to that big job.


    Visual:

    The camera returns to the first builder.

    Audio:

    Builder 1

    It’s a rip off to society, and you see people getting caught.


    Visual:

    The camera cuts back to the second tradie standing in a workshop.

    Audio:

    Builder 2

    IRD have a lot of resources at their disposal. They’re always looking out for these sort of things – it’s fraud.


    Visual:

    The camera cuts to the third builder on the worksite.

    Audio:

    Builder 3

    If I don’t declare all of my income during the year, when I go to the bank and try and get a loan it’s going to be a lot more difficult, the money that I think I’ve earnt for the year, the bank doesn’t see it the same way.


    Visual:

    The camera returns to the first builder.

    Audio

    Builder 1

    There are always consequences to doing cashies, and ah, for the consumer it’s going to mean that you don’t have any evidence that that work was carried out.


    Visual:

    The camera cuts back to the second tradie.

    Audio:

    Builder 2

    I have been tempted to do cash jobs in the past – it’s a tempting idea, it’s cash straight in hand. But at the end of the day it’s not worth the risk getting caught.


    Visual:

    The camera cuts to the third builder on the worksite.

    Audio:

    Builder 3

    There’s nothing wrong with doing a cash job, it’s just up to the tradie to declare that cash as part of his income and pay appropriate tax on it.


    Visual:

    A teal screen appears with the words “Declare it all. Or risk everything.” written in a large font near the top. Below it is ird.govt.nz/getitright with the Inland Revenue and New Zealand Government logos at the bottom of the screen.

  • Dependent child

    Dependent children are all children in your care who are:

    • 15 years of age or younger
    • 16 or 17 years of age and financially dependent on the caregiver
    • 18 years of age, financially dependent on the caregiver and still at secondary school or at a tertiary institution
    • not married, in a civil union or de facto relationship
    • not in receipt of Foster Care Allowance, Unsupported Child's Benefit, Orphan’s Benefit or board payment for their care.

    A financially independent child would be a child that works 30 hours or more a week or receives a student allowance, benefit or other government assistance.

    Ngā tamariki whirinaki

    Ko ngā tamariki whirinaki ko ngā tamariki katoa e tiakina ana e koe:

    • kei te 15 tau te pakeke, tamariki iho rānei
    • kei te 16, 17 tau rānei te pakeke kei te whirinaki ā-moni hoki ki te kaitiaki
    • kei te 18 tau te pakeke, kei te whirinaki ā-pūtea ki te kaitiaki, kei te kura tuarua tonu hoki, kei tētahi whare akoranga tuatoru rānei
    • kāore anō kia moe tāne, kia moe wahine rānei, kua piri ā-ture rānei, kei tētahi hononga moe māori rānei
    • kāore anō kia whiwhi i te Tāpiritanga Tiaki Tamariki Whāngai, i te Penihana Tamaiti Taurima-kore, i te Penihana Tamaiti Pani, i te utunga rēti rūma rānei mō ngā mahi tiaki i a ia.

    Ko tēnei mea te tamaiti tū motuhake ā-pūtea he tamaiti e mahi ana mō te 30 hāora neke atu rānei i te wiki, ka whiwhi moni ākonga, penihana rānei, tētahi atu āwhina kāwanatanga rānei.

  • Depreciable tangible asset

    Physical assets where you claim the cost over the life of the asset rather than as an expense in one tax return. For example, computers, furniture and machinery.

    Read more about depreciation here.

  • Depreciation

    Assets lose value over time as they get older. This loss of value is called depreciation.

    Businesses claim depreciation loss as a deduction expense each tax year. 

    You can claim a deduction for depreciation loss on capital assets. That's those you own, lease, or buy under a hire purchase agreement and use, or intend to use, in your business. 

     

  • Depreciation loss

    The loss of economic value on a fixed asset. Read more about depreciation loss here.

  • Deverloper

    When you're a developer you:

    • subdivide land or make in to lots
    • put up buildings.

  • Disposal of property

    Disposal of property is when you:

    • sell it
    • gift it
    • change it's use from business to private.

  • Double tax agreement (DTA)

    A DTA is a tax treaty between two countries or territories.

    One of the aims of a DTA is to relieve double taxation.

    New Zealand may have a DTA with your country or territory.

    Each DTA is different, so you or your tax agent need to check it to be sure how it applies.

    Double tax agreements (DTAs)

  • EI (Employment information)

    This is the information an employer files with us after every pay day.

  • Employer superannuation contribution tax (ESCT)

    A tax on any cash contribution an employer makes to a superannuation fund for the benefit of an employee. For example, employer contributions to an employee's Kiwisaver.

    If an employee asks their employer to make deductions from their wages and pay them to a superannuation scheme, these are not employer superannuation contributions.

  • End result assets

    End-result assets are:

    • the object of the R&D
    • used in the R&D process
    • used in the business’ activities.

  • Entity

    An entity can be:

    • a person
    • a company
    • an incorporated or unincorporated society or club
    • a joint venture or partnership
    • a trustee or a trust or estate
    • a public or local authority.

  • Excess deduction

    Excess deductions, also known as rental losses, are when your allowable deductions for a residential property or portfolio exceed the amount of income you earned from the property or portfolio in the same tax year. Learn more about which rental property expenses can and cannot be deducted.

  • Excess deductions

    When you rent out residential property you can deduct allowable rental expenses from your gross rental income. When your gross rental income is less than your allowable rental expenses you're left with excess deductions.

  • Exclusions to the brightline property rule

    When you sell residential property there are situations when the brightline property rule does not apply:

    • The property is your main home.
    • You inherited the property.
    • You're the executor or administrator of a deceased estate.

     

  • Exempt income

    Exempt income is income you do not have to pay GST and/or income tax on. 

  • Facilitative assets

    Facilitative assets are used to assist the progress of R&D. This includes test equipment and technology.

  • Farmers

    The term "farmer" includes anybody carrying on an agricultural business on land in New Zealand.

  • Fiat currency

    Currency issued by a government (eg New Zealand Dollars, Australian Dollars, US Dollars, Euro)

  • Filing frequency

    How often you file your GST returns.

    The options are: monthly, two-monthly or six-monthly.

    Your filing frequency is also called your taxable period.

  • Flip

    Buying a property to flip generally means you invest in a property needing some work. You renovate it and then either selling the property straight away, or hold it for the long-term.

  • Frequency of transactions

    Frequency of transactions means:

    • how many transactions you make
    • how often you make them
    • over what period of time.

  • Goods and services tax (GST)

    GST is a tax of 15% added to the price of most goods and services, including imports.

    As a customer, you'll pay this when you buy goods and services. You'll also pay this on most imported goods and some imported services.

    If you're selling goods or services that are taxable, you may need to register for GST and charge it to customers.

    GST

  • Grandparented

    Meets old rules or regulations but not current ones.

    For look-through companies, a grandparented Māori authority or tax charity is one that before 3 May 2016 was an owner of a look-through company or had entered into an arrangement to become a look-through company. 

    A Māori authority is also grandparented if it was a beneficiary of a trust that was an owner of a look-through company before the same date.

    Even though the look-through company rules have changed, a grandparented charity or Māori authority can still be a look-through company if they were one (or connected to one) before the rules changed.

  • Gross fare income

    The fare calculated by your digital platform is the full fare, which includes fees charged by the digital platform.

  • Gross rental income

    Gross rental income includes:

    • rental payments from tenants, eg $400 per week (this is the rental payment before you've deducted any management fees)
    • rental payments from short-term guests, eg $165 per night (this is the rental per night before you've deducted service fees)
    • fees paid to agencies like Airbnb and property management companies
    • payments from the Tenancy Board for damages or rent arrears
    • depreciation recovered.

  • Group of companies

    A group of companies means 2 or more companies in which a person holds common voting interests that add up to at least 66%.

  • Honoraria

    Sometimes payments are made for a service, where the usual custom is that a price is not set.

    These payments are called honoraria. (One payment is called an honorarium.)

    Honoraria include payments made to mayors, chairpersons and/or members of local bodies, clubs, societies and organisations.

    All these payments are subject to withholding tax and are treated as schedular payments for tax purposes.

  • Income tested benefits

    Income tested benefits are any of these:

    • Emergency Benefit
    • Jobseeker Support
    • Sole Parent Support
    • Supported Living Payment
    • Young Parent Payment
    • Youth Payment.

  • Income year

    The income year In most cases this will be the same as the tax year (1 April to 31 March). It may be an elected period not ending on 31 March and may be more or less than 12 months if the Commissioner agrees.

    Your balance date is the last day of your income year. The standard balance date is 31 March.

  • Independent earner tax credit (IETC)

    If you're a New Zealand tax resident earning between $24,000 and $48,000 in a tax year, you may qualify for the independent earner tax credit (IETC) of up to $520 per year. The amount you are eligible to receive depends on your income.

    If you or your partner receive Working for Families tax credits, you will not qualify for the independent earner tax credit.

    Independent earner tax credit (IETC)

  • Individual

    Customers not registered for GST or PAYE and not belonging to large enterprises (LE) or non-profit organisations (NPO).

    Notes

    1. This includes individual customers receiving income from business (eg, rental property, shares) but not registered for GST or PAYE.
    2. Where there are overlaps between LE, NPO, SME and individuals, entities are allocated to the group according to the following order of priority. The priorities are:
      1. large enterprises (LE)
      2. non-profit organisations (NPO)
      3. small and medium enterprises (SME)
      4. individuals.

  • Initial coin offering (ICO)

    An initial coin offering (ICO) is used by start-ups in campaigns to raise capital. In an ICO campaign cryptocurrency is sold to early backers of a project. In exchange backers get legal tender or other cryptocurrencies, like Bitcoin or Ethereum.

  • Input tax

    Input tax is GST any consumer pays when buying goods and services off a GST-registered person. 

  • Intention rule

    When a property has been bought with the firm intention of resale you'll have to pay tax on any profit from the sale.

    The intention to sell does not need to be the main reason for buying the property - it could be one of a number of reasons for buying.

  • IRD number

    A tax identification number that you use for your tax related activities with New Zealand.

    You keep the same IRD number for life. You'll need this number for certain types of income. There is no cost to apply for an IRD number.

  • Jointly and severally liable

    Jointly and severally liable means that when two or more parties have a shared debt, any one of them can be made to pay the full amount on their own.

  • Large enterprise

    A large enterprise has an annual turnover that is over $100 million (calculated based on GST101 returns). They can be:

    • a non-individual entity which by itself, or as a part of a business group, has an annual turnover exceeding $100 million 
    • an entity belonging to one of these specialist segments:
      • Crown
      • financial
      • high-wealth individuals
      • manufacturing
      • non-resident entertainers
      • non-resident contractors
      • resources
      • services.

  • Legal tender

    Legal tender is defined as bank notes and coins issued under the Reserve Bank of New Zealand Act 1989 (RBNZA). This is set out in section 27 of the RBNZA. Cheques are not included in this definition.

  • Life-shortening congenital condition

    A life-shortening congenital condition means a condition that exists for a person from the date of their birth and the condition is likely to reduce their life expectancy. 

  • Living allowance

    Before we calculate child support we deduct a set amount from each parent's adjusted taxable income. This allowance recognises the costs each parent has to support themselves.

    Child support annual adjustments

  • Long-term residential renting

    When you're renting out your residential property for 4 or more consecutive weeks. The people renting the property would be tenants who see your property as their main home. For example students, boarders or care home residents.

  • Look-through interests

    Look-through interest means a person’s shares in a look-through company.

    There are different criteria for look-through interests, depending on the income year - see "Terms we use" in the Look through companies - IR879 guide for full details.

  • Low turnover trader

    A low turnover trader is a person whose total turnover for the income year does not go over $3m. This also takes into account the turnover of associated persons.

  • Main home

    You cannot have more than 1 main home. If you live in more than 1 property - for example you own a property in a city you live and work in for part of the week, you must decide which property is your main home.  You need to think about:

    • where your personal property is kept
    • the amount of time you spend living in each house (if you have more than one house)
    • where your immediate family lives
    • where your social ties are strongest
    • your use of the home
    • what other ties (for example: employment, business, economic) you have with the surrounding community.

  • Main home exclusion

    The main home exclusion is the tax exemption for income earned from the sale of a main home.

    If you buy and sell your main home within 5 years (2 years if the property was acquired on or after 1 October 2015 through to 28 March 2018 inclusive), the income you earn from the sale of the property is not taxable if you used:

    • the property as your main home more than 50% of the time while you owned it
    • more than 50% of the area of the property as your main home. This includes the yard, gardens, garage, pool areas and tennis courts, etc.

    The main home exclusion does not apply if you show a regular pattern of buying and selling residential property, even if you or your family live in the property before it is sold.

  • Market value consideration

    You must charge fees for R&D services on commercial terms.

  • Mates rates

    This is when you rent out your property to family or friends under your property's market value rent. The mate rate is anything under 80% of the market value.

    So if rent for your property is usually $100 per night, and your friends rent it for $50, that's a mate rate. It's a mate rate because you're charging them 50% of your property's market value rent. 

  • Mining pool

    In a mining pool miners combine (pool) their processing power to earn rewards. They split the rewards proportionally to their individual contributions.

  • Mixed-use asset

    Mixed-use assets are holiday homes, boats and aircraft used both privately and to earn income.

    You have a mixed-use asset if during income year the asset is also unused for 62 days or more in an income year.

    Mixed-use assets do not include:

    • residential property used for long term rental
    • business assets where the private use is minor, for example once a year
    • a home office where the expense claimed is based on floor area.

  • Multi-rate PIE (MRP)

    A multi-rate PIE or multi-rate portfolio investment entity is an investment scheme where investors can choose their tax rate (prescribed investor rate or PIR).

    MRPs work out tax based on the PIR their investors give them.

    Kiwisaver scheme providers are a common type of MRP.

  • Natural person

    An individual human being as opposed to a legal person, which may be a private or public organisation.

  • Net loss

    At the end of the tax year if your annual total deduction is more than your annual gross income you’ll be left with a net loss for the year. Your net income for the year is zero.

  • New provisional taxpayer

    Generally you will not have to pay provisional tax if your residual income tax (RIT) for the previous year was $2,500 or less. However, there are certain situations when you'll have to pay provisional tax for the current year, even if you have not paid it before. This is called a new provisional tax liability.

    You're a new provisional taxpayer if:

    You're an individual (not including a trustee of a trust) and your residual income tax was less than $2,500 for the last 4 years; and your residual income tax for the current year is $60,000 or more; and during the current year you've stopped earning income from employment and have started to earn untaxed income from a taxable activity instead.

    You're a non-individual (including a trustee of a trust) and you've started to earn income from a taxable activity during the current year; you did not receive income from a taxable activity in the last 4 years; and for the 2018 year onwards, your residual income tax is $60,000 or more.

  • New Zealand source

    Non-resident taxpayers generally pay tax on income they earn from a source in New Zealand.

    This is called source-based taxation.

  • New Zealand tax resident

    New Zealand tax residents generally pay tax to New Zealand on their worldwide income, that is, what they earn in New Zealand and overseas.

    You can work out whether you're a New Zealand tax resident in the 'International' section.

    Tax residency status for individuals


    Tax residency status for companies

  • Non-business researcher

    A business not seeking profit.

  • Non-profit organisation

    All entities exempted from income tax and not belonging to large enterprises with the following exemption types:

    • societies or clubs with an income of less than $1000
    • amateur sports clubs
    • charity
    • dairy herd society
    • district societies
    • scientific and industrial research
    • veterinary service clubs, or
    • all entities except building societies and friendly societies with "other" exemption type.

  • Non-resident taxpayer

    Non-resident taxpayers generally pay tax to New Zealand on income they earn from New Zealand sources.

    You can work out whether you're a non-resident taxpayer and how you'll be taxed in New Zealand by checking your tax residency status in the 'International' section.

    International tax for individuals

    International tax for business

  • Non-resident withholding tax (NRWT)

    Non-resident withholding tax (NRWT) is a tax withheld from New Zealand-sourced payments of interest, dividends and royalties to non-resident taxpayers (foreign investors).

    Non-resident withholding tax (NRWT)

  • Off the plan

    Entering into an agreement to purchase a property that is yet to be built. You can view the design, building plans and specifications but there is no physical property to see or inspect.

  • Offshore person

    For an individual an offshore person is someone who:

    • is a New Zealand citizen and has been overseas for the last 3 or more years continuously
    • doesn’t have a New Zealand residence class visa granted by Immigration New Zealand
    • has a New Zealand residence class visa and has been overseas for the last 12 or more months continuously.

    A company is an offshore person if it is:

    • incorporated outside New Zealand
    • 25% or more owned or controlled by offshore persons.

    A trust is an offshore person if:

    • 25% or more of its governing body are offshore
    • offshore person(s) have 25% or more beneficial interest or entitlement to its trust property
    • 25% or more of persons with the right to amend or control the trust’s trust deed are offshore persons
    • 25% or more of persons with the right to control the composition of the trust’s governing body are offshore persons.

    A unit trust is an offshore person if:

    • the manager or trustee (or both) are offshore person(s)
    • offshore person(s) have beneficial interest or 25% or more of the trust’s property.

    A non-individual partnership, unincorporated joint venture, or other unincorporated body is an offshore person if:

    • 25% or more of its partners (or members) are offshore persons
    • offshore person(s) have a beneficial interest or entitlement to 25% or more of its profits or assets
    • offshore person(s) have the right to exercise (or control the exercise) of 25% or more of voting power at a meeting.

    Tangata o tāwāhi

    Mō te takitahi ko te tangata o tāwāhi ko:

    • te kirirarau o Aotearoa kua noho pūmau ki tāwāhi mō ngā tau e toru neke atu ka taha
    • tētahi kāhore tāna momo kōkota kainoho o Aotearoa i tukua e Immigration New Zealand
    • tētahi he momo kōkota kainoho o Aotearoa tāna otirā kua noho pūmau ki tāwāhi mō te 12 marama ka taha.

    Ko te kamupene ko tētahi tangata o tāwāhi ki te mea:

    • i whakakaporei i waho o Aotearoa
    • kei te pupuritia, kei te whakahaeretia rānei e te 25% neke atu tāngata o tāwāhi.

    Ko te kaitiaki ko tētahi tangata o tāwāhi ki te mea:

    • kei tāwāhi he 25% neke atu o tōna rōpū kaiwhakahaere
    • kei ngā tāngata o tāwāhi te 25% neke atu o āna pānga whaihua, o te whiwhinga rānei i āna rawa kaitiaki
    • kei ngā tāngata o tāwāhi he 25% neke atu o te mana ki te whakatika, ki te whakahaere rānei i te whakaaetanga ā pukapuka kaitiaki o te kaitiaki
    • kei ngā tāngata o tāwāhi e 25% neke atu o te mana ki te whakahaere i ngā mema o te rōpū kaiwhakahaere o te kaitiaki.

    Ko te kaitiaki wawae ko tētahi tangata o tāwāhi ki te mea:

    • he tangata o tāwāhi te kaiwhakahaere, te kaitiaki rānei (rāua e rua rānei)
    • kei ngā tāngata o tāwāhi he wāhi whaihua, he 25% neke atu rānei o ngā rawa o te kaitiaki.

    He tangata o tāwāhi te pātuitanga kore-takitahi, te hononga pakihi kaporeikore, te rōpū kaporeikore kē rānei, ki te mea:

    • he tāngata o tāwāhi te 25% neke atu rānei o āna kaipātui (mema rānei)
    • kei ngā tāngata o tāwāhi te 25% neke atu o āna pānga whaihua, o te whiwhinga rānei i āna monihua, āna rawa rānei
    • kei ngā tāngata o tāwāhi te mana ki whakahaere (ka tino whakahaere rānei) i te 25% neke atu o te mana pōti i tētahi hui.

  • Offshore RLWT person

    An offshore RLWT person is someone who meets the criteria for being offshore and must pay residential land withholding tax.

    To see if we see you as an offshore RLWT person for tax purposes check the page below:

    Offshore people who pay RLWT

  • Ordinary income

    Ordinary income is income that is not dealt with by another specific part of the tax legislation.

    To decide if an amount is ordinary income you need to consider the true nature of the payment as it relates to you. For example, why was the payment made and what have you done in order to receive it? There is usually repetition and regularity to ordinary income although a one-off payment can also be ordinary income in some cases.

  • Output tax

    Output tax is tax a GST-registered person charges on goods and services they supply. 

  • Pay cycle

    How often the employee is paid - for example, weekly, fortnightly, monthly.

    Also referred to as 'pay frequency'.

  • Pay frequency

    How often the employee is paid - for example, weekly, fortnightly, monthly.

    Also referred to as 'pay cycle'.

  • Pay period

    The period covered by an employee's pay. Your employees may have different pay periods.

    For example, employees you pay weekly may have a 7-day pay period. Employees you pay fortnightly may have a 14-day pay period.

    The pay period start date is the first day the employee's pay covers.

    The pay period end date is the last day the employee's pay covers.

    For example, an employee is paid weekly and their pay period start date is 1 August. Their pay period end date will be 8 August. They receive their pay on 9 August.

    You enter each employee's pay period start date and end date each time you file employment information about the employee.

  • Payment tokens

    Cryptoassets that are intended to be a means of payment or exchange, for example Bitcoin and Litecoin, are often called payment tokens, exchange tokens, intrinsic tokens or simply cryptocurrencies.

  • Personal services attribution rule

    A rule that prevents an individual from avoiding the top personal tax rate by diverting income to an associated entity.

    If you're associated with an entity that operates between you and the buyer of your personal services, you'll need to know the thresholds that make this rule apply to you. See the Interpretation statement 18/03 from July 2018 for guidance on the criteria and thresholds.

    Interpretation statement 18/03 - July 2018

  • Plant

    Plant is a fixed (or capital) asset with a useful life of more than one year used in producing income in a business's operations.

    You claim depreciation loss on plant assets instead of claiming them as expenses. Plant does not include an item that is structural in relation to a building.

  • Prescribed investor rate (PIR)

    A prescribed investor rate (PIR) is the tax rate that your portfolio investment entity (PIE) uses to work out the tax on your investment income.

    The PIR is based on your taxable income. You choose your rate.

     

  • Principal

    In a contractual relationship, the principal appoints an agent or contractor to do something on their behalf.

  • Principal caregiver

    The person who is at least 16 years old and responsible for the day-to-day care of the child on a permanent basis.

    Kaitiaki mātāmua

    He tangata kei runga ake i te 16 tau te pakeke, ka riro māna e tiaki te tamaiti ia rā, ia rā, mō te wā tino roa.

  • Principal settlor

    The principal settlor is the person who has made the biggest financial contribution to the trust.

     

  • Private boarder or home-stay student

    A boarder or home-stay student rents a room in a private home. They get meals and other care and services as part of their rent.

    They are different to flatmates who share a house, expenses and chores. Usually one flatmate will be the tenancy holder.

  • Proof of stake

    Proof of stake requires an investment in the cryptoasset itself. Users are generally required to lock a certain number of cryptoassets into the network as their stake. A pseudo-random election process selects a user to be the validator of the next block. 

  • Proof of work

    Proof of work involves using computer resources to validate cryptoasset transactions and maintain the blockchain transaction ledger.

  • Publicly available

    Publicly available information refers to accessible information where New Zealand based professionals in that field would look. This information does not have to be available for free for it to be publicly available. It must be available on market terms. 

    This includes patents, published papers and textbooks. 

  • Qualifying company

    Qualifying companies have tax rules that aim to treat the company and its shareholders as one entity.

    If your company was not already a qualifying company before 1 April 2011, you cannot choose to be a qualifying company. You can choose to be a look-through company instead.

  • Rental expense deductions

    Rental expense deductions are your allowable rental expenses for the current tax year.

    They're called deductions as you can deduct them from your rental income, lowering the income tax you pay.

  • Rental losses

    Rental losses are when your rental income is less than your rental expenses.

    They're also called 'excess deductions' under the loss ring-fencing rules.

    Rental property losses and ring-fencing

  • Residency requirements

    To get Working for Families you must meet one of the following residency requirements:

    • you were born in New Zealand
    • you have New Zealand citizenship
    • you are a New Zealand resident and have been in New Zealand continuously for at least 12 months at any time
    • you care for a child who is a New Zealand resident and lives in New Zealand.

    Ngā whakaritenga kāinga noho

    E whiwhi ai koe i Working For Families me mātua tutuki i a koe tētahi o ngā whakaritenga kāinga noho e whai ake nei:

    • i whānau mai koe i Aotearoa
    • kua whai mana kirirarau koe i Aotearoa
    • he tangata noho tūturu koe i Aotearoa, ā, i Aotearoa tonu tō kāinga mō te 12 marama ka hipa, ahakoa te wā
    • e tiaki ana koe i tētahi tamaiti noho tūturu i Aotearoa, kei Aotearoa hoki e noho ana ināianei.

  • Resident withholding tax (RWT)

    Resident withholding tax (RWT) is a tax that is deducted from investment income before the investor receives it.

    It helps people who receive investment income to pay their tax throughout the year, and makes sure that people who do not declare their investment income still have tax deducted from it. (Inland Revenue still follows up on undeclared investment income and takes action against people who do not declare it.)

  • Residential exclusion

    Part of the intention test, the term is used in tax law to describe the exclusion of main homes from the tax rules around disposal of residential property.

  • Residential income

    Residential income is:

    • rental income
    • net income from the disposal of the property (or another property in the portfolio if you have a portfolio)
    • depreciation recovery income for an individual property or residential portfolio property - typically only relevant if you sell the property
    • the net income from residential land that is excluded because it is revenue account land. Residential land net income is rental income, depreciation recovery income, and net income from taxable sales.

  • Residential income

    Residential income generally means the rent you earn from residential land. However, if you sell the property in a taxable sale, the net income is also considered residential income - as is any depreciation recovery income from the sale.

  • Residential land

    Residential land includes a property with an existing dwelling, land that is to have a dwelling built on it, and bare land that may have a dwelling built on it under the relevant district plan.

    Residential land is not land used mostly for business premises and farmland.

  • Residential land

    Residential land includes a rental property with an existing dwelling, land that is to have a dwelling built on it, and bare land that could have a dwelling built on it under the relevant district plan. This includes overseas property held by a New Zealand tax resident. The way the property is held generally does not change the rules, so they apply to property owned by you, a partnership, a look-through company, a trust, or a close company. Some land used for residential purposes is excluded.

  • Residential land purchase amount

    An amount paid or payable for the disposal of the residential property, but excludes:

    • deposits
    • part-payments.

    As long as all deposits and part-payments total less than 50% of the purchase price for the property.

  • Residential property

    Residential property includes:

    • land with a house on it
    • land the owner will build a house on at some stage
    • land the owner may one day build a house on.

  • Residual income tax (RIT)

    The amount of income tax you pay for the year, less any PAYE and other tax credits you may be entitled to, except for Working for Families Tax Credits.

  • Security token

    Cryptoassets that represent existing property or financial assets, and so mirror securities like shares or debt, are often called security or asset tokens. 

  • Settlement

    Settlement is the process of transferring property from buyer to seller.

  • Shadow payroll

    Your regular payroll pays your employee’s salary and manages their tax obligations to your country.

    In most cases your employee will also have tax obligations to New Zealand. You need to set up a shadow payroll in New Zealand to manage these.

    A shadow payroll is not needed if your employee’s salary is paid by a New Zealand employer.

  • Shared care

    At least one third of the care of the child is shared between people in different households. One third care equals 122 days a year or 5 days a fortnight. To count as shared care the arrangement needs to be in place for at least 4 months.

    Te tiaki tiri

    Kia kaua e iti iho i te kotahi hautoru o te wā e tiakina ana te tamaiti e ētahi tāngata i ētahi whare tū motuhake. Te ritenga o te kotahi hautoru nei kei te 122 rā i te tau, e 5 rā o roto i te rua wiki rānei. E kīia ai te tiaki he tiaki tiri, me mātua whai mana mō te whā marama, kaua e hoki iho.

  • Shared rental expenses

    Shared rental expenses are those you spend on your rental property to earn income and on any the private use by you. For a rental property, they'll be for things like:

    • utility bills
    • internet bills
    • repairs and maintenance
    • mortgage interest paid
    • insurance
    • rates.

  • Shareholder continuity

    Shareholder continuity refers to changes that have occurred to the number of shareholders and the nature of their shareholdings during the year. Continuity affects both tax losses brought forward from previous tax years and imputation credits.

    For a company to be able to carry its losses forward, at least 49% of shares should be held by the same shareholders through the continuity period (the year the loss was incurred through to the year it's offset). This is the shareholder continuity test.

  • Shortfall Penalty

    A penalty imposed as a percentage of a tax shortfall (a deficit or understatement of tax), resulting from certain actions on the part of a taxpayer. Shortfall penalties apply to most taxes and duties, including student loans, but not to child support repayments by liable parents.

  • Short-stay accommodation

    This is when you're renting out your residential property to guests for up to 4 consecutive weeks. Your guests would not also see your property as their main home. Short-stay accommodation does not include accommodation for residential tenants, boarders or care home residents. It also does not include student or emergency accommodation. Also referred to as short-term residential renting.

  • Short-term residential renting

    This is when you're renting out your residential property to guests for up to 4 consecutive weeks at a time. Also referred to as short-stay accommodation

    Your guests would not also see your property as their main home. Short-term accommodation does not include accommodation for residential tenants, boarders, or care home residents. It also does not include student or emergency accommodation.

  • Single Euro Payments Area (SEPA)

    The Single Euro Payments Area allows participating countries to more easily pay electronically in euros across certain borders. The SEPA is made up mostly of members of the European Union, but also some other countries and territories.

    If you’re in a country or territory that is on the SEPA list, you’ll be able to set up direct debit with Inland Revenue in myIR.

    Single Euro Payments Area (European Central Bank)


    Log in to myIR

  • Small and medium enterprises

    Small or medium enterprises can be either:

    • entities with an active relationship for GST or PAYE that do not belong to large enterprises or non-profit organisations
    • non-individual entities without active registration for GST or PAYE not belonging to non-profit organisations.

  • Sole Parent Support Benefit

    Sole Parent Support is a weekly payment that helps single parents find part-time work or get ready for future work.

  • Staking

    See proof of stake.

  • Staking as a service

    Staking as a service providers and staking pools let you earn rewards from staking via a third-party service. The third-party service takes care of the technical aspects of the staking process for you.

  • Staking pools

    Staking pools let you earn rewards from staking via a third-party service. The third party takes care of the technical aspects of the staking process for you.   

  • Submission

    Information you have filed which we have not yet processed.

    For example, your end-of-year tax submission.

    For employers this could be the employment information you file after each pay day.

    Once we have processed your submission it becomes your 'return'. For example, your tax return.

  • Subvention payment

    Subvention payments are payments by a profit company to a loss company. If the loss company agrees to receive a subvention payment, the profit company’s net income and the loss company’s net loss are reduced by the same amount.

  • Tax obligations

    Under the Inland Revenue Acts for the two years before applying. 

    These must include business tax obligations, such as:

    • filing your employer returns and making employer tax payments (if registered as an employer)
    • filing GST returns and making GST payments
    • making provisional tax payments.

  • Tax residency status

    Your tax residency is different from your immigration residency.

    You'll need to know your tax residency status to understand how New Zealand's tax laws apply to you.

    You'll either be a:

    • non-resident taxpayer
    • New Zealand tax resident.

    Tax residency status for individuals

    Tax residency status for companies

  • Tax year

    The tax year is from 1 April to 31 March unless you have a non-standard balance date.

    Balance dates

  • Taxable activity

    A taxable activity is a continuous or regular activity undertaken by any person that supplies or intends to supply goods or services for money or other reward.

    This includes activities that do not make a profit.

    These things are not taxable activities:

    • working for salary or wages
    • selling items as a hobby or recreation
    • selling the occasional domestic item
    • making GST-exempt supplies.

  • Taxable income

    The income that you pay tax on. It's your net income, minus your expenses and any available losses.

  • Taxable period

    The period of time covered by your GST return.

    It may be one, two, or six months.

    Taxable periods end on the last day of the month.

  • Taxable supplies

    The supplies you provide while carrying out your taxable activity, which you need to pay GST on. This is charged at either 15% (standard-rated) or 0% (zero-rated).

    You can only claim back GST you pay on your purchases and expenses if you use those goods and services to make taxable supplies.

  • The bright-line property rule

    The bright-line rule means you'll pay tax when you buy and then sell a residential property in the brightline period, unless an exclusion applies.

    The bright-line rule applies to residential properties bought and sold on or after 1 October 2015. 

    There are 2 bright-line periods.

    • Properties bought on or after 1 October 2015 through to 28 March 2018 inclusive come under the bright-line rule if they're sold within 2 years of buying them.
    • Properties bought on or after 29 March 2018 come under brightline if sold within 5 years of buying them. 

    Exclusions to the bright-line rule.

    • The property is your main home.
    • You inherited the property.
    • Relationship settlement property when first settled, but the bright-line rule will apply when you sell the property
    • You’re the executor or administrator of a deceased estate.

    The bright-line rule is only for residential property. Commercial property or farmland is not part of the bright-line rule. 

    The bright-line property rule

  • Transcript - Sharing information to combat global tax evasion

    Visual:

    Inland Revenue's logo appears and slides up and off the screen.

    An image of Earth slides into view from the top of the screen. Circles with the dollar symbol in the middle start popping up around the Earth.

    Solid and dotted lines start linking the circles - indicating travel and transfer of money.

    Audio:

    "In our modern world money knows no borders - it can travel across the globe in an instant."

    "This helps support international trade and 21st century economies."

    Visual:

    The image of Earth slides up and off the screen.

    The circles turn into coins and fall into a bag. The bag has "Income Tax" written on it.

    As coins fall into it, the bag starts to fill with colour from the bottom. Some of the coins bounce out of the bag and turn a different colour - indicating tax evasion.

    Audio:

    "But these changes also make it easier for some individuals to avoid paying the right amount of tax."

    Visual:

    The income tax bag slides down and off the screen.

    Building blocks fall from the top to create two buildings. One building has "Hospital" written on it, the other has "School".

    An Earthworks tip truck comes into view from the left side. A traffic road cone and construction barrier appear behind the tip truck to complete the city scene.

    Audio:

    "And tax is important because Governments use it to pay for services we all need."

    Visual:

    The city scene slides down and off the screen.

    A document slides into view from the top, with "OECD" and "Automatic Exchange of Information" written on it. The outline of New Zealand appears in a circle on the bottom right of the document.

    The title "Automatic Exchange of Information" pops out of the document and the letters "A", "E", "O" and "I" pulse as they are said by the speaker.

    Audio:

    "That’s why the New Zealand government has signed up to a global initiative led by the OECD called, the Automatic Exchange of Information - or AEOI."

    Visual:

    The document fades away and is replaced by an image of the Earth.

    The outline of New Zealand in the circle remains, moves to New Zealand's location on the Earth and is replaced by a document with a signature.

    More documents with signatures start popping up around the Earth.

    Audio:

    "We’re one of 100 countries that have agreed to automatically share some financial account information about foreign tax residents."

    Visual:

    Dotted lines with circles on them start linking the documents - indicating the travel of information.

    Audio:

    "By working together we’ll make it easier to deal with global tax evasion."

    Visual:

    The screen zooms into the document where New Zealand is located and fades away.

    Audio:

    "So, how does AEOI work?"

    Visual:

    A circle with an image of a calendar and "1 July" written on it appears in the middle of the screen. "1 July" peels off  the circle to reveal "2017".

    The 2017 circle slides up and off the screen.

    Rectangles slide up and a new city is formed with two buildings in the background, and three buildings in the foreground. In the middle of the foreground is a building with "BANK" written on it.

    Audio:

    "From 1st July 2017, financial institutions in New Zealand – like banks, and some investment managers, managed trusts and certain brokers…"

    Visual:

    A circle with an image of a person in the middle appears above the bank. Three more of the same circles appear on each side of the first circle. Solid lines connect each surrounding circle to the middle circle.

    The bottom left and middle right circles start pulsing.

    The bottom left circle slides to the left of the screen onto an ID card. The city and remaining circles fade away.

    An office building slides into view from the right, taking up half the screen. Inland Revenue's logo is displayed under the office building.

    Audio:

    "…will be required to identify their customers who are foreign tax residents and send their financial information to us at Inland Revenue."

    Visual:

    The ID card opens up and a list appears with the headings:

    "Name"

    "DOB"

    "Address"

    "Country"

    "Tax ID No."

    "Account details", and

    "Gross income".

    Each of the headings is highlighted and pops out of the ID card when said by the speaker.

    Audio:

    "This includes their name, date of birth, address, country of tax residence, tax identification number, account details - including their annual balance - and gross income on any investments."

    Visual:

    The ID card closes and fades away.

    An image of the Earth slides down into view and starts spinning.

    The ID card slides left from behind the Inland Revenue building to the image of the Earth and fades away.

    Audio:

    "We’ll then share this information with their home country if we have an exchange agreement with that country."

    Visual:

    ID cards pop up around the Earth and slide right to the Inland Revenue building.

    Audio:

    "In return, we’ll receive the same financial information about New Zealand tax residents from other countries that have also signed up to AEOI."

    Visual:

    The Inland Revenue building slides down out of view and the Earth fades away.

    An image of a woman sitting in front of a computer slides up from the bottom and into view. The computer screen displays the words "New Zealand Financial Account", an outline of New Zealand inside a coloured circle and an image of a mouse pointer arrow on it.

    The image of the woman sitting in front of the computer shrinks to the bottom left of the screen. The Inland Revenue building and Earth appear. A dotted line appears, linking the computer, Inland Revenue building and Earth together.

    Audio:

    "This means, if you’re a foreign tax resident with a New Zealand financial account, or control an account, we may share this information with your home country."

    Visual:

    The woman sitting in front of a computer, Inland Revenue building and Earth images slide to the left and off the screen.

    A house and street light image slides into view from the right. The house has three windows and a door.

    The camera zooms into the third window from the left revealing the inside of the house.

    Inside the house there is a:

    tall floor lamp on the left

    man sitting at a table working on a laptop in the middle

    picture frame with a family portrait above the man, and

    a couch with a window behind it on the right.

    Audio:

    "If you’re a New Zealand tax resident and have financial accounts in any of the countries that have signed-up up to AEOI, this information may be shared with us."

    Visual:

    The house scene slides down and off the screen.

    A bank scene slides into view from the top. The man at the laptop remains with the transition.

    In the bank scene there is a:

    pot plant on the left

    clock above the pot plant

    man in the middle sitting at a desk

    woman sitting opposite the man at the desk working on a computer

    bank teller counter with a computer screen on it on the right.

    A circle appears above the woman's head with an image of a computer screen. A circle with a plus symbol in the middle appears on the top right side of the computer screen.

    The circle with the computer screen is replaced by a circle with a question mark.

    Audio:

    "And, financial institutions will ask you about your tax residence when you open a new account and they may ask you questions in relation to your existing accounts."

    Visual:

    The bank scene slides up and off the screen.

    A mouse pointer arrow appears in the bottom right corner an moves to the middle of the right side of the screen.

    The web address "www.ird.govt.nz/infoshare" appears in the middle of the screen.

    The New Zealand Government and Inland Revenue logos slide up from the bottom of the screen.

    Audio:

    "If you want to find out more about AEOI and tax residency go to ird.govt.nz/infoshare."

  • Transitional tax resident

    A New Zealand tax resident who has a temporary tax exemption. 

    If you're a new tax resident or returning to New Zealand after 10 years, you may be eligible for the 4-year temporary tax exemption on most types of foreign income.

    Temporary tax exemption

  • Turnover

    The amount of money you make from selling goods or services over a particular period.

    Turnover is not the same as profit. Profit is the money you have after you've paid your expenses.

  • Unamortised

    example

  • Unsupported Child's Benefit

    Unsupported Child’s Benefit is a weekly payment which helps carers supporting a child or young person whose parents can't care for them because of a family breakdown.

  • Use of money interest (UOMI)

    Use of money interest (UOMI) is not a penalty. It's an amount charged or credited to pay for "use of money" in the same way banks charge or credit interest.

    The use of money interest rules are designed to encourage people to pay the right amount of tax at the right time, compensate people who pay too much tax and compensate the Government if people pay too little tax.

  • Utility tokens

    Cryptoassets that are more like traditional payment vouchers are often called utility tokens because they can be used to gain direct access to specified goods or services. 

  • Wholly or mainly

    For the donee organisations test, "wholly or mainly" means at least 75% of the organisation's funds are used for charitable, benevolent, philanthropic or cultural purposes within New Zealand.

    For more information, see our Interpretation statement IS 18/05: Income tax – donee organisations – meaning of wholly or mainly applying funds to specified purposes in New Zealand.

    Interpretation statement IS 18/05

  • Wholly owned

    Wholly owned groups of companies are 100% owned by the same shareholders.

  • Withholder

    A withholder is the person required to deduct and pay an amount of RLWT on behalf of the seller.

    The withholder will be the seller's conveyancer (unless the seller is associated to the buyer). Otherwise the withholder will be the buyers' conveyancer (if the seller doesn't have a conveyancer), or the buyer if:

    • neither the seller or buyer have a conveyancer
    • the seller and buyer are associated persons.

  • Worldwide income

    New Zealand tax residents generally pay tax on their worldwide income, that is, what they earn from sources in New Zealand and overseas.

    This is called residency-based taxation.

  • Zero

    When the property sale is a loss, then use for calculation 2 & 3, for example, Brenda purchases property for $500,000 and sells it for $450,000. In this case, since Brenda incurred a loss, under calculation 2 & 3, the amount will be zero.

  • Zero-rated

    When the charge for GST is at 0%. GST is a tax on the supply of goods and services by a registered person on any taxable activity they do. Some supplies are zero-rated. 

    Zero-rated supplies