Tax Advise

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Doing Business in New Zealand: Why Consider Setting Up a Company Instead of Being a Sole Trader?

In New Zealand, you can start your business as a sole trader without any formal registration. Your business tax number is simply your personal IRD number, and you pay tax based on your personal tax rate. However, as your business grows, you may need to hire employees, which can expose you to legal risks. At this stage, transitioning to a company structure could provide several advantages and help your business expand.

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Intention of acquiring land and Land Tainting Rules

In the business world, acquiring goods can have two intentions: trading or investing. Most of the business activities related to acquiring will only have the intention of trading, such as fruit importers buy fruit from overseas with the intention of buy low and sell high (Trading and making profit) and will not have the intention of hold the goods and get investment returns. However, there are times like when people buy stocks, they can have two intentions, the intention of get stable dividends income through long-term investment, or the intention of make profits by sell it in a high price when the market goes up.

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What is Approved Issuer Levy

In an effort to streamline taxation processes and ensure a fair tax regime, New Zealand introduced the Approved Issuer Levy (AIL) system. The AIL is a tax measure designed specifically for non-resident investors who receive interest income from investments in New Zealand. This was introduced by New Zealand Government in Budget 1991, the AIL seeks to simplify tax obligations for non-resident investors while promoting transparency and compliance within the financial sector.

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Determining Tax Residency

If you're living or planning to move to New Zealand, it's important to understand whether or not you are considered a tax resident. Being a tax resident in New Zealand means that you are subject to New Zealand tax on all income earned, both locally and abroad. However, if you are not a tax resident any income sourced in New Zealand will be subject to the relevant New Zealand tax.

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NZ Income Tax and GST due dates

One of the challenges that Small business owners will have is tax payment cashflow planning, you don't want an unexpected tax bill pop-up and cause cashflow issue to your business. At The Number Studio, we try to keep our clients informed of all critical tax dates that related to their tax return and tax payment. In this article, we will provide you a general guide of tax return and payment due dates.

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