New Zealand went through a major programme of tax reform in the 1980s. The top marginal rate of income tax was reduced from 66% to 33% (since increased to 39% in April 2000) and corporate income tax rate from 48% to 33% (reduced to 30% in 2008). Goods and services tax was introduced, initially at a rate of 10% (now 12.5%). An OECD report in 2001 described the New Zealand tax system as one of the most neutral and efficient within its membership.
Tax reform continues in New Zealand with key issues being:
|$0 - $14,000||12.5%|
|$14,001 - $40,000||21%|
|$40,001 - $70,000||33%|
|No declaration form (IR330)||45%|
In New Zealand, the income is taxed by the amount that falls within each tax bracket. In other words, if a person earns $70,000, they will only pay 33% on the amount that falls between $40,001 and $70,000 rather than paying this on the full $70,000.
At the end of each tax year individuals who may not have paid the correct amount of income tax are required to submit a personal tax summary, to allow the IRD to calculate any under or overpayment of tax made during the year.
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|France||Russian Federation||United Kingdom|
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The earners levy is payable on salary and wages plus any other income that is subject to PAYE, for example overtime, bonuses or holiday pay. The levy is 1.4% for the year from 1 April 2008 to 31 March 2009. It is payable on income up to a maximum amount. The amount for the tax year 1 April, 2006 to 31 March, 2007 was of $96,619).
Payments are made in three installments through the year. These are known as provisional tax payments. At the end of the year the business files a tax return (due on the following 7 July for businesses with a tax year ending 31 March) and any under or overpayment is then calculated.
Companies pay income tax at 30% on profits. Tax rates for individuals operating as a business (that is, individuals who are self-employed) are the same as for employees. (See individual tax rates, above.)
All businesses are required to register for GST once their turnover exceeds (or is likely to exceed) $40,000 per annum. Once registered, businesses charge GST on all goods and services they supply and can reclaim any GST they have been charged on goods and services they have purchased.
There are several methods available for calculating FBT liability, including an option of paying a flat rate of 64% on all benefits provided.
In New Zealand excise or a duty duties are charged on a number of products, including alcohol products, tobacco products, and some fuels.
The rates for alcohol products are as follows:
|Beer||More than 1.15%, but not more than 2.5%||37.142 per litre|
|More than 2.5%||$24.765 per litre of alcohol|
|Wine (not fortified)||Not more than 14%||$2.4765 per litre|
|More than 14%||$45.102 per litre of alcohol|
|Fortified Wine, Spirits and spirituous breverages||$2.4765 per litre of alcohol|
|Other fermented beverages (such as cider, perry, mead), Liquers and cordials, and Ice Cream||More than 1.15% but not more than 2.5%||37.142c per litre|
|More than 2.5%, but not more than 6%||$24.765 per litre of alcohol|
|More than 6%, but not more than 9%||$1.9811 per litre|
|More than 9%, but not more than 14%||$2.4765 per litre|
|More than 14%||$45.105 per litre of alcohol|
There are also excise duties on tobacco products, with a rate of $294.62 per thousand cigarettes, and $368.72 per kilo of tobacco, on other tobacco products.
The excise duties on fuel are 42.524c per litre (plus 8c per gram of lead) on motor fuel, 30.2c per litre on Menthol and 10.4c per litre on Liquified petroleum gas. Compressed natural gas has an excise of $3.17 per gigajoule.