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.

Accounting year

For any person, business or other type of entity, this generally means either a:

• tax year
• different 12-month period that ends on the approved balance date.

You can only have a different 12-month period if you have written approval from Inland Revenue.

Balance dates

Acquire cryptoassets

You can acquire cryptoassets in many ways including:

• buying cryptoassets (such as, 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).

Active sellers

Active sellers provide relevant services during 1 January to 31 December in any year, or they receive income from relevant services in that time.

Adjusted income

Income for the relevant tax year used to assess your child support.

Adjusted tax value

Adjusted tax value is generally the cost price, less depreciation deducted each year.

Administrative review

Also called a child support review, it's a process that considers whether a determination can be made to depart from some or all of the provisions relating to a formula assessment. Certain grounds for departure must be satisfied. This is a free service we provide.

Affected revenue period

The 3 affected revenue periods are as follows.

• 1st CSP - begins on 16 February 2022 and ends on 4 April 2022.
• 2nd CSP - begins on 7 March 2022 and ends 4 April 2022.
• 3rd CSP - begins on 21 March 2022 and ends on 4 April 2022.

Affected Revenue Period

The first 3 affected revenue periods are:

• 1st RSP - 17 August 2021 to 1 November 2021
• 2nd RSP - 8 September 2021 to 1 November 2021
• 3rd RSP - 1 October 2021 to 1 November 2021.

The affected revenue periods for payments 4, 5 and 6 are:

• 4th RSP – starting 22 October 2021.
• 5th RSP – starting 5 November 2021 (payment at an increased rate).
• 6th RSP - starting 19 November 2021 (payment at the increased rate).

Agency activity reports

Owners, administrator and restricted administrators can run a selection of reports applicable to your agency such as linking/delinking, EOT status changes, transfer requests, bank account changes, client redirect changes, Accounts not subscribed, Mail subscription. You can access from the Intermediary centre under ‘My business’ and select agency reports.

Airdrops

The distribution of cryptoassets for free, generally to increase awareness of a new cryptoasset, increase liquidity or reward early users.

All client mail

Owners, administrators, restricted administrators, and users can review and save all mail sent to your linked clients, including mail sent to you on their behalf. You can access from the Intermediary centre under the ‘My clients’ tab and select All client mail. Note: A user will have access to the all client mail service list, but not the actual letters or PDF export function. It will tell a user which client have letters and the full daily list of all the client letters that require review.   

All client transactions

Owners, administrators, restricted administrators, users and restricted users can view account transactions for any linked client, for any account type.  You can access from the Intermediary centre under ‘My business’ and select agency reports.

Annual gross income

Annual gross income is all your taxable income you receive in the tax year.

Annual total deductions

Annual total deductions is all the expenses that you can claim against your income in the tax year.

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)

Balance date

The date of the annual balance of the financial statements for a person, business or other type of entity's tax year.

The standard balance date is 31 March. You can only use a different date if you have written approval from Inland Revenue.

Balance dates

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.

Best Start

Best Start is a weekly payment for families supporting a new-born baby. Families who qualify for Best Start can receive the payment until their baby turns 1, no matter how much they earn.

After the first year, you can continue to receive Best Start payments until your child turns three, depending on your family income.

Best Start begins when paid parental leave finishes – you cannot receive both at the same time.

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.

Bright-line losses carried forward

If you sell a residential property at a loss, your total costs are more than the sale price of the property.

If the bright-line property rule applies to the sale, you can only offset the loss against net income from another property sale.

Any remaining bright-line loss is carried forward to the next year until the loss can be used.

Bright-line property rule

The bright-line rule means you'll pay tax when you buy/acquire and then sell/dispose of a residential property within a certain timeframe, unless an exclusion or rollover relief applies.

The bright-line property rule

Business industry classification (BIC) code

Your business industry classification (BIC) code should match your business industry description, based on the main activity you’re involved in.

You give your BIC code to government agencies when:

• applying for an IRD number
• registering for GST
• registering as an employer
• filing tax returns
• applying to go on the Companies Register.

ACC also uses your BIC code to work out the correct classification unit and levy rate your business pays to cover workplace accidents.

You can find the right BIC with the Business Industry Classification Code website.

Business Industry Classification Code 

Capital - trusts

Realised capital gains plus trustee income/loss retained from previous years less any amounts distributed to beneficiaries.

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.

Child support formula

A formula set out in the Child Support Act 1991 to calculate the amount of child support payable.

Child support group

Qualifying children of a parent who share the same other parent, and for who they have been/are being assessed for child support.

Child support reviews

If you meet certain grounds, reasons, we may be able to leave or change some or all of the conditions set by a formula assessment.

Child support reviews are free and managed by us.

We also refer to child support reviews as ‘administrative reviews’.

Client list report

Lets owners, administrators and restricted administrators access client registration information, by client list. You can access from the Intermediary centre under ‘My business’ and select agency reports.

Close company

A close company is one which is controlled by a small group of shareholders. This generally means 5 or fewer individuals or trustees must ultimately hold more than 50% of the voting interests (or the market value interests) in the company. Individuals who are associated persons can count as 1 individual.

Close family associates

2 people are close family associates if:

• they are within 4 degrees of blood relationship
• they are married, in a civil union, or in a de facto relationship or 1 person is within 4 degrees of blood relationship to the other person’s spouse, civil union partner, or de facto partner.

Some common examples of close family associates include the principal settlor’s:

• parents and children, stepparents and stepchildren, parents-in-law and children-in-law
• siblings, step-siblings and siblings-in-law
• grandchildren and grandparents
• aunts and uncles, nieces and nephews
• cousins
• great-grandchildren and great-grandparents
• great-aunts and great-uncles, great-nieces and great-nephews
• great-great-grandchildren and great-great-grandparents.

Close family beneficiary

A close family beneficiary is broadly:

• a principal settlor
• a close family associate of another beneficiary who is also a principal settlor
• a company controlled by a principal settlor or by another beneficiary who is a close family associate of a principal settlor
• a trustee of another trust with at least 1 beneficiary that is a close family associate of a beneficiary of the first trust
• a charity registered under the Charities Act 2005 or any association, club, institution, society, organisation or trust not carried on for the private profit of any person whose funds are applied wholly or principally to any civic, community, charitable, philanthropic, religious, benevolent, or cultural purpose.

Commercial production environment

Commercial production means producing products or services for sale.

Commissioner initiated review

A process used to determine whether the formula assessed amount accurately reflects the ability of a parent to provide financial support for their children. The first step of this process is an investigation by us into the parent's income, earning capacity, property and financial resources.

Commonly owned group

A commonly owned group (group) of businesses is one where each business has the same owners. It does not matter whether those owners have the same proportion of ownership in each business. 

A business may also be treated as being in the group if it is part of a larger group of businesses if they are centrally controlled or otherwise operate together. For example, the group:

• has a dominating shareholder or group of shareholders, and the businesses operate together as if they were one
• of businesses involves a complex ownership structure where the overall control is centralised and businesses are in substance one enterprise. 

Comparator period or comparison period

The comparator period falls during (either) the period beginning on either 5 January:  

• 2022 and ending at the close of 15 February 2022
• 2021 and ending at the close of 15 February 2021. 

Businesses or organisations with highly seasonal revenue must meet the drop in revenue test set out above. However, they may select a 7-day comparison period which is before 5 January 2022 and which may be from a past year, which reflects their typical revenue. 

Competent authorities

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

Connected persons

Connected persons are people with a beneficial interest in trust property and effective levels of control over the trust. These include:

• people who have made settlements on the trust - that is, settlors
• people who have a power to appoint or dismiss a trustee, amend the trust deed, or to add or remove a beneficiary - that is, appointors
• people with the power to control the exercise of a power to appoint or dismiss a trustee, amend the trust deed, or to add or remove a beneficiary and persons who have the power to control a trustee in the administration of the trust - that is, protectors
• trustees
• beneficiaries.

Contact trustee

The trustee that communicates on behalf of a trust with Inland Revenue.

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)

COVID-19 circumstance

A public health measure, business circumstance. Such as restriction on how businesses can operate or are required to close.

COVID-19 circumstances

COVID-19 circumstances are one or more of the following.

• The widespread presence of COVID-19 in the New Zealand community.
• The legislative public health measures taken in order to reduce the spread of COVID-19 in the New Zealand community.
• Any business circumstances that are, or are reasonably likely to be, a consequence of the circumstances described above.

COVID-19 Vaccine Certificate Requirements (CVC requirements)

The CVC requirements are set out in the COVID-19 Public Health Response (Protection Framework) Order 2021 which came into force at 11.59 pm on 2 December 2021.

In brief, a regulated business or organisation must choose whether to operate under the CVC rules or non-CVC rules (as in, require the use of the My Vaccine Pass or not).  The conditions of operation that apply to the regulated business or organisation will depend upon the choice made. Operating in compliance with the CVC requirements means the business or organisation complies with the applicable conditions of operation.

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.

Customs value

The price the item is sold for. This does not include any amounts charged by the supplier for:

• GST
• duty payable under the Customs and Excise Act 2018
• the cost of international transport and associated insurance of the item between leaving the country of export and being delivered in New Zealand.

Deduction notice

When a taxpayer has unpaid taxes, we can send a deduction notice to a third party that owes money to the taxpayer. The deduction notice requires the third party (often an employer or a bank) to pay the money to Inland Revenue instead.

Deduction notices: collecting taxes from taxpayers who refuse to pay

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.

Dependent child

A child in a parent's care and for who the parent doesn't pay or receive child support for.

A dependent child must be:

• a child of whom you're the parent
• under 18 years of age or 18 years of age and enrolled at and attending a registered New Zealand school or an overseas school.If a child is 18 and still enrolled at and attending a school, then child support ends on 31 of December of the year they turn 18
• in your care at least 28% of the time
• be financially dependent, that is under the age of 16 or aged 16 and not working more than 30 hours a week on average or receiving a benefit or student allowance
• not living with another person in a marriage, civil union or de facto relationship, and
• not assessed for child support in New Zealand or overseas.

Dependent child allowance

An amount deducted from a parents income to recognise the costs of their dependent children.

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.

Domestic maintenance

Domestic maintenance is a payment made from one person to another. The people involved must have been in a marriage, civil union or de facto relationship, or have a child together.

Donee organisation

A donee organisation is an organisation that has Inland Revenue donee status. Anyone on the approved list is eligible to receive payroll giving donations

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.

Employee share scheme or ESS

An arrangement with a purpose or effect of issuing or transferring shares in a company to a person who will be, is, or has been an employee (or shareholder-employee) of that company or of another company in the same group, or to an associate of the person, if the arrangement is connected to the person’s employment or service.

Employer superannuation contribution tax

Employer superannuation contribution tax (ESCT) is a tax on any employer superannuation cash contribution an employer makes to a superannuation fund for the benefit of an employee. This includes a contribution to a KiwiSaver scheme or complying fund.  

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.

Estimate of income

When you want to use the income you expect to earn for the current year in the formula assessment, rather than your income from a previous year.

Event of default

Where a change of circumstances means you may have to repay the loan right away with any interest due.

Examples include:

• your business ceases or is sold
• your business is no longer viable
• you become insolvent
• you enter bankruptcy, liquidation or other creditor arrangement
• the nature of your business changes. For example the business changes from real estate agent to selling books.

Excess deductions

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

Excluded income

Income not liable to tax.

Exempt income

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

Exemption review

A process where a receiving carer can ask for a liable parent's exemption to be looked at and possibly overturned.

Extra pay period

An extra pay period means you got 1 more pay in the income year than you would usually get. This can only occur if you're employed by the same employer for the full income year.

• If you are paid weekly - 53 pay periods in the income year. 
• If you are paid fortnightly - 27 pay periods in the income year.
• If you are paid 4-weekly - 14 pay periods in the income year.

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.

Finance leases

Finance leases include:

• agreements to hire
• hire purchase agreements
• any other finance leases.

Financially independent

If your child is 16 or older, they're considered financially independent if they are in full employment - employed or self-employed on an average of 30 hours a week (excludes holiday job), or receiving one of the following:

• a student allowance
• an Income tested benefit
• other Government financial support.

Fixed costs

Fixed costs or fixed expenses are what you pay to keep your business running. You might also call them overheads. Examples are: rent, electricity, telephone, payments you make on a loan you took out for the business.

Formula assessment

The calculation we use to work out a person's formula assessment.

Frequency of transactions

Frequency of transactions means:

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

Full time equivalent employee

An employee working 20 hours or more per week is considered full-time .

An employee working up to 20 hours per week is considered part-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, for example $400 a week (this is the rental payment before you've deducted any property management fees or fees paid to agencies like Airbnb)
• rental payments from short-term guests, for example $165 per night (this is the rental each night before you've deducted service fees)
• 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%.

GST return summary report

Owners, administrators, restricted administrators, users, and restricted users can get a summary of GST returns filed. You can access from the Intermediary centre under ‘My business’ and select agency reports.

Hard fork

A hard fork changes the protocol of a blockchain to create a new version of the blockchain alongside the original. Generally, a new cryptoasset is created which operates under the rules of the amended protocol (on the new blockchain) while the original cryptoasset continues to operate under the existing protocol (on the original blockchain).

High value goods

Physical goods individually valued above NZ$1,000, excluding GST.

Hobby farmer

A person farming a piece of land whose principal occupation is something other than a farmer, and who is not carrying on farming as a business with an intention to make a profit.

Immigration New Zealand Application Number

This is the number directly linked to your visa application. You can find it on your visa approval letter from Immigration New Zealand.

Keep in mind that it is different from your Client Number with Immigration New Zealand.

Immovable property

Commercial and residential, such as carparks, short-stay and visitor accommodation.

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 you have written approval from Inland Revenue.

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

Income-tested benefits

Income-tested benefits include the:

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

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

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 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 1 of several reasons for buying.

IR56 taxpayers

IR56 taxpayers pay their own taxes on their salary or wage. Normally, an employer deducts income tax and the ACC Earners' levy from employees' salaries or wages. If you're an IR56 taxpayer, you'll need to register and do this yourself.

You're an IR56 taxpayer if you're:

• embassy staff
• a New Zealand-based representative of an overseas company
• a United States Antarctic Program worker
• a part-time private domestic worker, such as a home helper, caregiver, nanny or gardener.

You'll need to make sure you're not considered self-employed or an employee.

IR56 taxpayers

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.

Joint tenancy

Under joint tenancy, the owners do not have defined shares in the property and are equal owners.

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.

KiwiSaver opt-out

If you’ve been automatically enrolled but do not want to be a KiwiSaver member you can opt out.

You can opt out between the end of week 2 and week 8 of starting work.

That is on or after day 14 and on or before day 56. If you do not opt out, you will stay in KiwiSaver and your employer will continue to deduct contributions from your pay.

Opting out of KiwiSaver

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.

Liable parent

A parent of a qualifying child who is normally required to pay child support.

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 income. This allowance recognises the costs each parent has to support themselves.

Locked-in PIE

You cannot readily access your funds until you have reached a specified retirement age. Your PIE provider can tell you if this applies.

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 value goods

Physical goods individually valued at NZ$1,000 or less, excluding GST.

Low-turnover trader

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

Lump sum

A single payment directly paid to you or transferred to your New Zealand or Australian superannuation. Regular payments you receive from your pension are are not considered lump sum payments.

Main home

Your main home is the property where you live for most of the time. If you have more than 1 property, it is the one you have the greatest connection to. You cannot have more than 1 main home.

Which property is your main home depends on:

• the amount of time you spend living in each house
• where your immediate family lives
• where your personal property is kept
• where your social ties are strongest
• your use of the home
• what other ties you have with the surrounding community - for example, your job, business or finances.

Major change

Within the context of the business continuity test, a major change depends on the extent to which new assets, activities and operations are used in generating business income.

For example, using existing assets to start producing products or services related to those you already produce generally wouldn't be considered a major change. Acquiring new assets to start producing an unrelated and new product or service would generally be considered a major change.

Manage agency

Owners, administrators, restricted administrators can view the Agency EOT dashboard and manage staff access roles and security for client lists.  You can access from the Intermediary centre under ‘My business’ and select manage agency. 

Market value

The market value of a non-monetary item for income tax purposes is what it is usually sold for in the ordinary course of business. 

An example is what the item would be sold for at retail in shops or online.

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 mates 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 mates rate. It's a mates 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.

The asset must also be unused for 62 days or more during 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
• a room in your home rented out for short-stays.

Multi-group allowance

An amount deducted from a parent's income to recognise the costs of the children the parent has in other child support groups.

Multi-group cap

The purpose of the multi-group cap is to ensure liable parents don't pay more in child support than they would pay if all the children they are liable for were living together.

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 income

Your net income is your gross income less any allowable deductions you have. It excludes any losses you have to bring forward from a previous year.

Net income (or loss)

Net income is your total amount of income, less expenses, that you pay tax on. If this amount is negative it is a net loss.

Net income (or loss)

Net income is your total amount of income, less expenses, that you pay tax on. Net income does not include any losses brought forward or carried back. If this amount is negative it is a net loss.

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 $5,000 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 $5,000 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 Business Number (NZBN)

The NZBN is a globally unique identifier for each New Zealand business. Having an NZBN will speed up your interactions across Government. 

You can find out more and apply for one at nzbn.govt.nz

New Zealand foreign trust

A trust that meets the definition of a foreign exemption trust in an income year.

Foreign exemption trusts

New Zealand foreign trust

A foreign trust has one or more trustees who are New Zealand tax residents and includes any trust where a trustee makes use of the foreign sourced income exemption (defined as a foreign exemption trust).

Tax residency status for individuals

Tax residency status for companies

New Zealand resident

You are a NZ resident if you normally live in New Zealand (or intend to from the day you arrive) and you :

• are a citizen of New Zealand
• hold a residence or permanent residence visa
• receive an Emergency Benefit under sections 63 or 64 of the Social Security Act 2018.

You are not a NZ resident if you are in NZ unlawfully or are in NZ and hold a temporary entry class visa for example:

• Visitors visa
• Work visa
• Study visa.

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-active trust and estates

For the 2022 tax year onwards your trust or estate may be non-active if for the tax year, it has:

• reportable income of $1,000 or less
• not involved in any transactions that give income to an associated person or entity
• costs and payments that do not affect your trusts non-active status
• reasonable fees for administering the trust
• bank charges or minimal administrative costs that are $1,500 or less for the year
• insurance, rates, interest, and other costs related to living in a house owned by the trust and incurred by the beneficiaries of the trust.  

Testamentary Trust 

From 2022 onwards, your testamentary trust may be non-active if for the tax year, if it has:

• reportable income of $5,000 or less 
• non-reportable income of up to $1,000 with deductions that would reduce the net income to below $200.

Prior to the 2022 income year

Your trust or estate may be non-active if for the tax year, the trust or estate had

• not had income other than $200 or less of bank interest
• had no deductions.

If your trust is non-active you may want to declare this to us so that you don't need to file a return.

Non-business researcher

A business not seeking profit.

Non-locked-in PIE

You are able to readily access your funds.

Non-parent carer

A person who is caring for a child they are not the legal parent of. They are entitled to receive child support if they care for the child for 35% or more of the time.

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 contractor

A non-resident person, company or entity contracted to provide services, the use of another person’s services, or the use of equipment in New Zealand.

You are not a non-resident contractor if you are a non-resident company or entity that only sells goods in New Zealand.

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)

Not financially independent

A child who is:

• under the age of 16 or aged 16 and not working more than 30 hours a week on average
• not receiving a benefit or student allowance.

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
• does not 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.

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

Online marketplace

An operator of an app or website is treated as the supplier of listed services if they:

• authorise a charge for the supply of listed services to the customer
• authorise the delivery of the supply of listed services to the customer
• set the terms or conditions under which the supply of listed services is made, whether directly or indirectly.

Ordinarily resident

Having a permanent place of residence in New Zealand, or living in New Zealand, for over 183 days in any 12 months.

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.

Other names for cryptoassets

Cryptoassets is the term we use. They are also known as:

• cryptocurrencies
• cryptographic assets
• digital financial assets
• digital tokens
• virtual currencies.

Output tax

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

Overseas-based customer

If you have a student loan and you're outside of New Zealand for around 5 months in any 6-month period, you might become overseas-based.

If so, your student loan will stop being interest free. Your loan repayments will be based on the size of your loan balance.

You'll be able to use our overseas travel calculator to work out if you are or will be overseas-based.

I am moving overseas

Parenting agreement/care agreement

An agreement between parents or carers that records a child's care arrangements.

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.

PAYE return summary report

Owners, administrators, restricted administrators, users and restricted users can get an information summary of filed PAYE returns. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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.

Payment waiver

A non-parent carer who doesn't receive a sole parent or unsupported child's benefit from Work and Income can choose not to receive child support payments from one of the parents.

Personal service rehabilitation

Personal service rehabilitation is a payment type made by the Accident Compensation Corporation (ACC).

This payment includes:

• attendant care
• home help
• child care
• escorted travel by vehicle
• training for independence

Personal services

A personal service is a service involving time or task-based work performed by one or more individuals at the request of a user, (including any time- or task-based work carried out at the request of a user), such as ride-sharing, food and beverage delivery, and graphic and web design services.

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

Portfolio investment entity

Portfolio investment entities (PIEs) invest the contributions from its investors in different types of passive investment.

There are several types of PIEs, each with different abilities and tax requirements.

Types of portfolio investment entities

Powers of appointment

Powers of appointment are powers that have been given to someone to:

• appoint or change trustees and beneficiaries, or
• change the terms of the trust.

Prescribed investor rate

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.

Principal settlor

The principal settlor is the person who has provided the greatest (or equal greatest) value to the trust based on the market value of settlements on the trust. There could be more than 1 principal settlor.

A person is not a principal settlor if they have provided an unconditional (no-strings attached) gift to the trust.

Private agreement

An agreement about the financial support for the child (or children) made between the parents or carers without involving us.

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. A flatmate will often be a tenancy holder.

Proof of stake

Proof of stake (staking) 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.

Protected net earnings

The 60% of net earnings (after tax) that a person must be allowed to keep from their pay after child support has been deducted.

Public Lending Right payment

An annual payment made to New Zealand authors who are registered with the Public Lending Right scheme, run by the National Library of New Zealand. The scheme recognises New Zealand authors whose books are available for use in New Zealand libraries.

Find out more on the National Library website.

Public Lending Right for New Zealand authors

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 benefit for the Winter Energy Payment

The following benefits and payments from Ministry of Social Development qualify for the Winter Energy Payment.

• Sole Parent Support.
• Supported Living Payment.
• Jobseeker Support.
• Jobseeker Support Student Hardship.
• Emergency Benefit.
• Emergency Maintenance Allowance.
• Youth Payment.
• Young Parent Payment.
• New Zealand Superannuation.
• Veteran's Pension.

Qualifying child

To qualify for child support, the child must:

• be under 18 years of age, or 18 years of age and enrolled at and attending a registered school in New Zealand or an overseas school. If a child is 18 and still enrolled at and attending a school, then child support ends on 31 of December of the year they turn 18
• not be married, in a de facto relationship or civil union
• be financially dependent, that is under the age of 16 or aged 16 and not working more than 30 hours a week on average or receiving a benefit or student allowance
• be a New Zealand citizen or ordinarily resident in New Zealand

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.

Realisable value

The realisable value of an item is what the item can be on-sold for (for example, on marketplace websites).

When a non-monetary item is received in exchange for services, it is valued at the realisable value.

Receiving carer

A parent or non-parent carer of a qualifying child, normally entitled to receive child support from a liable parent. They must have at least 35% care to receive child support.

Recognised care

The amount of care a parent provides their child. It's taken into account in the formula assessment and must be for at least 28% of the time.

A parent or non-parent carer will only receive child support payments if they provide ongoing daily care for at least 35% of the time.

Regulated business

A regulated business or organisation includes the following.

• A food and drink business or services
• Close proximity business and services.
• Gyms.
• Tertiary education providers.

These are defined in the Covid –19 Public Health Response (Protection Framework) Order 2021 Schedule 7.

Relevant services

These are:

• the rental of immovable property (including commercial and residential), such as carparks, short-stay and visitor accommodation
• personal services such as ride-sharing, food and beverage delivery, and graphic and web design services.

A personal service is a service involving time or task-based work performed by one or more individuals at the request of a buyer.

Reportable income

Reportable income is income information that Inland Revenue receives regularly from a third party (e.g. an employer, a bank, etc) for an individual and a tax year. This includes:

• PAYE income payments
• NZ superannuation
• income payments
• ACC attendant care payments
• Portfolio investment entity (PIE) income
• Employee share scheme (ESS) income with tax withheld
• NZ resident interest/dividends
• Non-Resident interest/dividends/royalties
• Taxable Māori authority distributions

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.

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 income

Residential income is:

• rental income subject to the residential property deduction rules
• net income from a bright-line sale (excluding losses)
• income in relation to a loan in a foreign currency from the portfolio and/or individual property
• depreciation recovery income from disposed assets from the portfolio and/or individual property
• the net income from residential property outside the residential property deduction rules because it is held on revenue account.

Residential land

Residential land means:

• land that has a dwelling on it
• land which the owner has an agreement to put a dwelling on
• bare land that may be used for putting a dwelling on under the local district plan.

Residential land does not include farmland or land used predominantly as business premises, unless it is a business providing accommodation in a dwelling that is not the owner's home.

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 beneficiaries

Are also known as final beneficiaries and are beneficiaries that have a right to any undistributed trust property when the trust is wound up.

The residual beneficiary does not have a fixed, vested or contingent interest in the trust property.

Your trust deed may describe residual beneficiaries as a class or group – for example, children of the settlor. If this is the case, describe the class to us when registering the New Zealand foreign trust.

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.

Rollover trust

A family trust qualifies as a rollover trust if:

• each transferor (in the case of transfers to a trust) or each transferee of the property (in the case of transfers from a trust back to a settlor) is both a settlor and a beneficiary of the trust
• at least one of those transferors or transferees of the property is also a principal settlor of the trust
• all principal settlors are beneficiaries of the trust
• all principal settlors are close family associates.
• each beneficiary is a close family beneficiary.

Security tokens

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

Self-contained dwelling

Self-contained dwelling means it has its own cooking and bathroom facilities and its own entrance. The entrance can be from a shared accessway, for example, a hallway shared by a block of flats in the same building.

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.

Share scheme taxing date

The earlier of the date when the :

• benefits are cancelled
• benefits are transferred to a non-associated person
• employees' ownership of shares is no longer affected by the terms of their employment.

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.

Shared rental expenses

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

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

From the 2020/2021 income year, a company may also be able to carry a loss forward if they meet the requirements for the business continuity test.

Business 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 at a time.

Your guests do not 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.

Short-term international business travellers

An employee whose work in the host country will typically be within a 12-month period.  

People who visit New Zealand on short-term business trips may be exempt from tax, depending on how long they are here. If the trip is longer than 92 days allowed under 'Amounts derived during short-term visits' (CW19) section in the Income Tax Act or 183 days in some double tax agreements, New Zealand tax needs to be paid.

New Zealand Legislation

Single European Payments Area (SEPA)

The Single European 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 benefit

This is one of the following benefits from Work and Income:

• sole parent support (excluding jobseeker support student hardship)
• supported living payment (on the grounds of sickness, injury, disability or total blindness)
• jobseeker support with children included
• young parent payment.

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.

Square-up

When you've estimated your income, this is the process for working out how much child support should have been paid based on your actual income for the period you estimated for.

(For 2022 and previous child support years, we call this the election period. For 2023 onwards, we call this the reconciliation period.)

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.   

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.

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.

Sufficient connection

A sufficient connection can be established through evidence that you work for a New Zealand employer, pay income tax to New Zealand, and that your employment relationship is subject to New Zealand employment law.

Tailored tax code

Tailored tax codes help you pay the right amount of tax if your circumstances mean you often have a large tax bill or refund.

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, sometimes called an income year, is from 1 April to 31 March. The last day of the tax year, the balance date, is 31 March.

You can only have a late balance date if you have written approval from Inland Revenue.

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

It's your total income, less:

• eligible expenses
• any available losses.

Most types of income are taxable.

Taxable income

It's your total income, less:

• eligible expenses
• any available losses.

Most types of income are taxable, but you can be sure by checking how individual and business incomes get taxed.

How income gets taxed

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.

Taxable value

The employment income is broadly equal to the value of the shares at the share scheme taxing date (or, if rights or shares are transferred or cancelled, the amount received for the transfer or cancellation), less the amount paid (if any) for the rights or shares.

Tenancy in common

Under tenancy in common, the owners have different interests in land and these are shown on the title of the property.

Tertiary study

Happens after completing college or high school. It may be study or training at an educational organisation like a polytechnic, university or a private organisation.

Testamentary trust

A trust that is created by the terms of a Will that states (or it is implied) that the trustees must hold some assets in trust for beneficiaries.  

Trading stock

Trading stock means property that a person, who owns or carries on a business, has for the purpose of selling or exchanging in the ordinary course of the business.

Trailing payments

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

Unconditional gift

A payment you make to a non-profit:

• voluntarily for the carrying on or carrying out of the non-profit's purposes
• without an 'identifiable direct valuable benefit' in the form of a supply of goods and services to the payer or an associated person.

For examples and more context, see our interpretation statement about GST and unconditional gifts.

Interpretation statement 20/09 - GST - unconditional gifts (Tax Technical)

Unfiled returns report

Owners, administrators and restricted administrators can get a list of the unfiled income tax returns that show in your EOT dashboard, unfiled L Letter or D status returns, and auto-issued assessment with requests for more information. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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. 

Valuation rule

Where trading stock is disposed of at below market value then it is deemed to have been sold by the disposer (and subsequently purchased by the recipient) at market value.

Viable and ongoing

A viable business is a business with a plan in place to make sure it can keep trading. This generally means the owner has good reason to believe it's more likely than not that the business or organisation will be able to pay its debts as they fall due within the next 18 months and its current overdue debts. Your accountant may be able to provide this advice. 

You must keep any evidence of the business or organisation's ongoing viability at the time of requesting the CSP, as we may audit your application in the future. 

This evidence could include, for example: 

• a cash-flow forecast for the business or organisation for the short term
• a plan for where the revenue will come from in future market conditions and a forecast of those revenues
• financial statements showing the business or organisation has enough resources to sustain itself when including the CSP
• details of approved funding
• your accountant's assessment that the business or organisation is viable and ongoing. 

Visa travel date

This is the date by which you must arrive in New Zealand. You can find this date on your visa from Immigration New Zealand.

Voluntary agreement

An agreement to pay child support or domestic maintenance where both parties agree on the amount to be paid. It's registered with us and we collect and pay out the child support or domestic maintenance.

Web logon activity report

Lets owners monitor staff myIR logon activity. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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.

Working days (GST)

As per the GST Act (1985) a 'working day' is defined as "any day of the week other than—
(a) Saturday, Sunday, Good Friday, Easter Monday, Anzac Day, Labour Day, the Sovereign’s birthday, and Waitangi Day; and
(ab) if Waitangi Day or Anzac Day falls on a Saturday or a Sunday, the following Monday; and
(b) a day in the period commencing with 25 December in any year and ending with 15 January in the following year.

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

Balance date

The date of the annual balance of the financial statements for a person, business or other type of entity's tax year.

The standard balance date is 31 March. You can only use a different date if you have written approval from Inland Revenue.

Balance dates

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.

Best Start

Best Start is a weekly payment for families supporting a new-born baby. Families who qualify for Best Start can receive the payment until their baby turns 1, no matter how much they earn.

After the first year, you can continue to receive Best Start payments until your child turns three, depending on your family income.

Best Start begins when paid parental leave finishes – you cannot receive both at the same time.

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.

Bright-line losses carried forward

If you sell a residential property at a loss, your total costs are more than the sale price of the property.

If the bright-line property rule applies to the sale, you can only offset the loss against net income from another property sale.

Any remaining bright-line loss is carried forward to the next year until the loss can be used.

Bright-line property rule

The bright-line rule means you'll pay tax when you buy/acquire and then sell/dispose of a residential property within a certain timeframe, unless an exclusion or rollover relief applies.

The bright-line property rule

Business industry classification (BIC) code

Your business industry classification (BIC) code should match your business industry description, based on the main activity you’re involved in.

You give your BIC code to government agencies when:

• applying for an IRD number
• registering for GST
• registering as an employer
• filing tax returns
• applying to go on the Companies Register.

ACC also uses your BIC code to work out the correct classification unit and levy rate your business pays to cover workplace accidents.

You can find the right BIC with the Business Industry Classification Code website.

Business Industry Classification Code 

Capital - trusts

Realised capital gains plus trustee income/loss retained from previous years less any amounts distributed to beneficiaries.

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.

Child support formula

A formula set out in the Child Support Act 1991 to calculate the amount of child support payable.

Child support group

Qualifying children of a parent who share the same other parent, and for who they have been/are being assessed for child support.

Child support reviews

If you meet certain grounds, reasons, we may be able to leave or change some or all of the conditions set by a formula assessment.

Child support reviews are free and managed by us.

We also refer to child support reviews as ‘administrative reviews’.

Client list report

Lets owners, administrators and restricted administrators access client registration information, by client list. You can access from the Intermediary centre under ‘My business’ and select agency reports.

Close company

A close company is one which is controlled by a small group of shareholders. This generally means 5 or fewer individuals or trustees must ultimately hold more than 50% of the voting interests (or the market value interests) in the company. Individuals who are associated persons can count as 1 individual.

Close family associates

2 people are close family associates if:

• they are within 4 degrees of blood relationship
• they are married, in a civil union, or in a de facto relationship or 1 person is within 4 degrees of blood relationship to the other person’s spouse, civil union partner, or de facto partner.

Some common examples of close family associates include the principal settlor’s:

• parents and children, stepparents and stepchildren, parents-in-law and children-in-law
• siblings, step-siblings and siblings-in-law
• grandchildren and grandparents
• aunts and uncles, nieces and nephews
• cousins
• great-grandchildren and great-grandparents
• great-aunts and great-uncles, great-nieces and great-nephews
• great-great-grandchildren and great-great-grandparents.

Close family beneficiary

A close family beneficiary is broadly:

• a principal settlor
• a close family associate of another beneficiary who is also a principal settlor
• a company controlled by a principal settlor or by another beneficiary who is a close family associate of a principal settlor
• a trustee of another trust with at least 1 beneficiary that is a close family associate of a beneficiary of the first trust
• a charity registered under the Charities Act 2005 or any association, club, institution, society, organisation or trust not carried on for the private profit of any person whose funds are applied wholly or principally to any civic, community, charitable, philanthropic, religious, benevolent, or cultural purpose.

Commercial production environment

Commercial production means producing products or services for sale.

Commissioner initiated review

A process used to determine whether the formula assessed amount accurately reflects the ability of a parent to provide financial support for their children. The first step of this process is an investigation by us into the parent's income, earning capacity, property and financial resources.

Commonly owned group

A commonly owned group (group) of businesses is one where each business has the same owners. It does not matter whether those owners have the same proportion of ownership in each business. 

A business may also be treated as being in the group if it is part of a larger group of businesses if they are centrally controlled or otherwise operate together. For example, the group:

• has a dominating shareholder or group of shareholders, and the businesses operate together as if they were one
• of businesses involves a complex ownership structure where the overall control is centralised and businesses are in substance one enterprise. 

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.

Comparator period or comparison period

The comparator period falls during (either) the period beginning on either 5 January:  

• 2022 and ending at the close of 15 February 2022
• 2021 and ending at the close of 15 February 2021. 

Businesses or organisations with highly seasonal revenue must meet the drop in revenue test set out above. However, they may select a 7-day comparison period which is before 5 January 2022 and which may be from a past year, which reflects their typical revenue. 

Competent authorities

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

Connected persons

Connected persons are people with a beneficial interest in trust property and effective levels of control over the trust. These include:

• people who have made settlements on the trust - that is, settlors
• people who have a power to appoint or dismiss a trustee, amend the trust deed, or to add or remove a beneficiary - that is, appointors
• people with the power to control the exercise of a power to appoint or dismiss a trustee, amend the trust deed, or to add or remove a beneficiary and persons who have the power to control a trustee in the administration of the trust - that is, protectors
• trustees
• beneficiaries.

Consideration

Consideration is compensation in any form that is paid or credited to a seller in connection with relevant services.

Consideration includes:

• money
• crypto assets
• payments in kind
• tips
• gratuities
• goods or services provided to a seller.

If consideration is paid or credited to a seller in any form other than a fiat currency, it should be reported to us in NZ dollars.

Contact trustee

The trustee that communicates on behalf of a trust with Inland Revenue.

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.

Corpus

Amounts settled on the trust. Must be recorded at market value unless the settlement does not change the net assets of the trust (for example, interest not charged)

Reduced by any amounts distributed to beneficiaries.

COVID-19 circumstance

A public health measure, business circumstance. Such as restriction on how businesses can operate or are required to close.

COVID-19 circumstances

COVID-19 circumstances are one or more of the following.

• The widespread presence of COVID-19 in the New Zealand community.
• The legislative public health measures taken in order to reduce the spread of COVID-19 in the New Zealand community.
• Any business circumstances that are, or are reasonably likely to be, a consequence of the circumstances described above.

COVID-19 Vaccine Certificate Requirements (CVC requirements)

The CVC requirements are set out in the COVID-19 Public Health Response (Protection Framework) Order 2021 which came into force at 11.59 pm on 2 December 2021.

In brief, a regulated business or organisation must choose whether to operate under the CVC rules or non-CVC rules (as in, require the use of the My Vaccine Pass or not).  The conditions of operation that apply to the regulated business or organisation will depend upon the choice made. Operating in compliance with the CVC requirements means the business or organisation complies with the applicable conditions of operation.

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.

Customs value

The price the item is sold for. This does not include any amounts charged by the supplier for:

• GST
• duty payable under the Customs and Excise Act 2018
• the cost of international transport and associated insurance of the item between leaving the country of export and being delivered in New Zealand.

Deduction notice

When a taxpayer has unpaid taxes, we can send a deduction notice to a third party that owes money to the taxpayer. The deduction notice requires the third party (often an employer or a bank) to pay the money to Inland Revenue instead.

Deduction notices: collecting taxes from taxpayers who refuse to pay

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.

Dependent child

A child in a parent's care and for who the parent doesn't pay or receive child support for.

A dependent child must be:

• a child of whom you're the parent
• under 18 years of age or 18 years of age and enrolled at and attending a registered New Zealand school or an overseas school.If a child is 18 and still enrolled at and attending a school, then child support ends on 31 of December of the year they turn 18
• in your care at least 28% of the time
• be financially dependent, that is under the age of 16 or aged 16 and not working more than 30 hours a week on average or receiving a benefit or student allowance
• not living with another person in a marriage, civil union or de facto relationship, and
• not assessed for child support in New Zealand or overseas.

Dependent child allowance

An amount deducted from a parents income to recognise the costs of their dependent children.

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.

Developer

When you're a developer you:

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

Domestic maintenance

Domestic maintenance is a payment made from one person to another. The people involved must have been in a marriage, civil union or de facto relationship, or have a child together.

Donee organisation

A donee organisation is an organisation that has Inland Revenue donee status. Anyone on the approved list is eligible to receive payroll giving donations

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.

Employee share scheme or ESS

An arrangement with a purpose or effect of issuing or transferring shares in a company to a person who will be, is, or has been an employee (or shareholder-employee) of that company or of another company in the same group, or to an associate of the person, if the arrangement is connected to the person’s employment or service.

Employer superannuation contribution tax

Employer superannuation contribution tax (ESCT) is a tax on any employer superannuation cash contribution an employer makes to a superannuation fund for the benefit of an employee. This includes a contribution to a KiwiSaver scheme or complying fund.  

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.

Estimate of income

When you want to use the income you expect to earn for the current year in the formula assessment, rather than your income from a previous year.

Event of default

Where a change of circumstances means you may have to repay the loan right away with any interest due.

Examples include:

• your business ceases or is sold
• your business is no longer viable
• you become insolvent
• you enter bankruptcy, liquidation or other creditor arrangement
• the nature of your business changes. For example the business changes from real estate agent to selling books.

Excess deductions

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

Excluded income

Income not liable to tax.

Exempt income

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

Exemption

Temporary

Stopping a child support or domestic maintenance liability while a person is a long-term prison inmate, hospital patient, or under 16 years of age. Certain conditions must be met to qualify.

Permanent

Stopping child support liability for victims of sexual offences in certain circumstances.

Certain criteria must be met to qualify.

Exemption review

A process where a receiving carer can ask for a liable parent's exemption to be looked at and possibly overturned.

Extra pay period

An extra pay period means you got 1 more pay in the income year than you would usually get. This can only occur if you're employed by the same employer for the full income year.

• If you are paid weekly - 53 pay periods in the income year. 
• If you are paid fortnightly - 27 pay periods in the income year.
• If you are paid 4-weekly - 14 pay periods in the income year.

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.

Finance leases

Finance leases include:

• agreements to hire
• hire purchase agreements
• any other finance leases.

Financially independent

If your child is 16 or older, they're considered financially independent if they are in full employment - employed or self-employed on an average of 30 hours a week (excludes holiday job), or receiving one of the following:

• a student allowance
• an Income tested benefit
• other Government financial support.

Fixed costs

Fixed costs or fixed expenses are what you pay to keep your business running. You might also call them overheads. Examples are: rent, electricity, telephone, payments you make on a loan you took out for the business.

Flip

Flipping a property generally means you buy it intending to quickly resell it. This may mean you renovate the property before you resell it.

Formula assessment

The calculation we use to work out a person's formula assessment.

Frequency of transactions

Frequency of transactions means:

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

Full time equivalent employee

An employee working 20 hours or more per week is considered full-time .

An employee working up to 20 hours per week is considered part-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, for example $400 a week (this is the rental payment before you've deducted any property management fees or fees paid to agencies like Airbnb)
• rental payments from short-term guests, for example $165 per night (this is the rental each night before you've deducted service fees)
• 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%.

GST return summary report

Owners, administrators, restricted administrators, users, and restricted users can get a summary of GST returns filed. You can access from the Intermediary centre under ‘My business’ and select agency reports.

Hard fork

A hard fork changes the protocol of a blockchain to create a new version of the blockchain alongside the original. Generally, a new cryptoasset is created which operates under the rules of the amended protocol (on the new blockchain) while the original cryptoasset continues to operate under the existing protocol (on the original blockchain).

Hashed

Hashing is the process of turning your personal information into an encrypted string of letters and numbers. After hashing, the data cannot be decrypted and it's safe for our computer program to send your information to the third party's computer program

High value goods

Physical goods individually valued above NZ$1,000, excluding GST.

Hobby farmer

A person farming a piece of land whose principal occupation is something other than a farmer, and who is not carrying on farming as a business with an intention to make a profit.

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.

Immigration New Zealand Application Number

This is the number directly linked to your visa application. You can find it on your visa approval letter from Immigration New Zealand.

Keep in mind that it is different from your Client Number with Immigration New Zealand.

Immovable property

Commercial and residential, such as carparks, short-stay and visitor accommodation.

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 you have written approval from Inland Revenue.

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

Income-tested benefits

Income-tested benefits include the:

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

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

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 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 1 of several reasons for buying.

IR56 taxpayers

IR56 taxpayers pay their own taxes on their salary or wage. Normally, an employer deducts income tax and the ACC Earners' levy from employees' salaries or wages. If you're an IR56 taxpayer, you'll need to register and do this yourself.

You're an IR56 taxpayer if you're:

• embassy staff
• a New Zealand-based representative of an overseas company
• a United States Antarctic Program worker
• a part-time private domestic worker, such as a home helper, caregiver, nanny or gardener.

You'll need to make sure you're not considered self-employed or an employee.

IR56 taxpayers

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.

Joint tenancy

Under joint tenancy, the owners do not have defined shares in the property and are equal owners.

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.

Jurisdiction

The country or territory you have received overseas income from.

KiwiSaver opt-out

If you’ve been automatically enrolled but do not want to be a KiwiSaver member you can opt out.

You can opt out between the end of week 2 and week 8 of starting work.

That is on or after day 14 and on or before day 56. If you do not opt out, you will stay in KiwiSaver and your employer will continue to deduct contributions from your pay.

Opting out of KiwiSaver

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.

Liable parent

A parent of a qualifying child who is normally required to pay child support.

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 income. This allowance recognises the costs each parent has to support themselves.

Locked-in PIE

You cannot readily access your funds until you have reached a specified retirement age. Your PIE provider can tell you if this applies.

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 value goods

Physical goods individually valued at NZ$1,000 or less, excluding GST.

Low-turnover trader

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

Lump sum

A single payment directly paid to you or transferred to your New Zealand or Australian superannuation. Regular payments you receive from your pension are are not considered lump sum payments.

Main home

Your main home is the property where you live for most of the time. If you have more than 1 property, it is the one you have the greatest connection to. You cannot have more than 1 main home.

Which property is your main home depends on:

• the amount of time you spend living in each house
• where your immediate family lives
• where your personal property is kept
• where your social ties are strongest
• your use of the home
• what other ties you have with the surrounding community - for example, your job, business or finances.

Major change

Within the context of the business continuity test, a major change depends on the extent to which new assets, activities and operations are used in generating business income.

For example, using existing assets to start producing products or services related to those you already produce generally wouldn't be considered a major change. Acquiring new assets to start producing an unrelated and new product or service would generally be considered a major change.

Manage agency

Owners, administrators, restricted administrators can view the Agency EOT dashboard and manage staff access roles and security for client lists.  You can access from the Intermediary centre under ‘My business’ and select manage agency. 

Market value

The market value of a non-monetary item for income tax purposes is what it is usually sold for in the ordinary course of business. 

An example is what the item would be sold for at retail in shops or online.

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 mates 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 mates rate. It's a mates 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.

The asset must also be unused for 62 days or more during 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
• a room in your home rented out for short-stays.

Multi-group allowance

An amount deducted from a parent's income to recognise the costs of the children the parent has in other child support groups.

Multi-group cap

The purpose of the multi-group cap is to ensure liable parents don't pay more in child support than they would pay if all the children they are liable for were living together.

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 income

Your net income is your gross income less any allowable deductions you have. It excludes any losses you have to bring forward from a previous year.

Net income (or loss)

Net income is your total amount of income, less expenses, that you pay tax on. If this amount is negative it is a net loss.

Net income (or loss)

Net income is your total amount of income, less expenses, that you pay tax on. Net income does not include any losses brought forward or carried back. If this amount is negative it is a net loss.

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 $5,000 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 $5,000 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 Business Number (NZBN)

The NZBN is a globally unique identifier for each New Zealand business. Having an NZBN will speed up your interactions across Government. 

You can find out more and apply for one at nzbn.govt.nz

New Zealand foreign trust

A trust that meets the definition of a foreign exemption trust in an income year.

Foreign exemption trusts

New Zealand foreign trust

A foreign trust has one or more trustees who are New Zealand tax residents and includes any trust where a trustee makes use of the foreign sourced income exemption (defined as a foreign exemption trust).

Tax residency status for individuals

Tax residency status for companies

New Zealand resident

You are a NZ resident if you normally live in New Zealand (or intend to from the day you arrive) and you :

• are a citizen of New Zealand
• hold a residence or permanent residence visa
• receive an Emergency Benefit under sections 63 or 64 of the Social Security Act 2018.

You are not a NZ resident if you are in NZ unlawfully or are in NZ and hold a temporary entry class visa for example:

• Visitors visa
• Work visa
• Study visa.

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-active trust and estates

For the 2022 tax year onwards your trust or estate may be non-active if for the tax year, it has:

• reportable income of $1,000 or less
• not involved in any transactions that give income to an associated person or entity
• costs and payments that do not affect your trusts non-active status
• reasonable fees for administering the trust
• bank charges or minimal administrative costs that are $1,500 or less for the year
• insurance, rates, interest, and other costs related to living in a house owned by the trust and incurred by the beneficiaries of the trust.  

Testamentary Trust 

From 2022 onwards, your testamentary trust may be non-active if for the tax year, if it has:

• reportable income of $5,000 or less 
• non-reportable income of up to $1,000 with deductions that would reduce the net income to below $200.

Prior to the 2022 income year

Your trust or estate may be non-active if for the tax year, the trust or estate had

• not had income other than $200 or less of bank interest
• had no deductions.

If your trust is non-active you may want to declare this to us so that you don't need to file a return.

Non-business researcher

A business not seeking profit.

Non-locked-in PIE

You are able to readily access your funds.

Non-parent carer

A person who is caring for a child they are not the legal parent of. They are entitled to receive child support if they care for the child for 35% or more of the time.

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 contractor

A non-resident person, company or entity contracted to provide services, the use of another person’s services, or the use of equipment in New Zealand.

You are not a non-resident contractor if you are a non-resident company or entity that only sells goods in New Zealand.

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)

Not financially independent

A child who is:

• under the age of 16 or aged 16 and not working more than 30 hours a week on average
• not receiving a benefit or student allowance.

Objection

When you advise us in writing that you disagree with a decision or an assessment we've made.

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
• does not 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.

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

Online marketplace

An operator of an app or website is treated as the supplier of listed services if they:

• authorise a charge for the supply of listed services to the customer
• authorise the delivery of the supply of listed services to the customer
• set the terms or conditions under which the supply of listed services is made, whether directly or indirectly.

Ordinarily resident

Having a permanent place of residence in New Zealand, or living in New Zealand, for over 183 days in any 12 months.

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.

Other names for cryptoassets

Cryptoassets is the term we use. They are also known as:

• cryptocurrencies
• cryptographic assets
• digital financial assets
• digital tokens
• virtual currencies.

Output tax

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

Overseas-based customer

If you have a student loan and you're outside of New Zealand for around 5 months in any 6-month period, you might become overseas-based.

If so, your student loan will stop being interest free. Your loan repayments will be based on the size of your loan balance.

You'll be able to use our overseas travel calculator to work out if you are or will be overseas-based.

I am moving overseas

Parent

For child support purposes a person who:

• is named on the child's birth certificate as a parent, or
• has acknowledged in writing, in a court, or before an overseas public authority that they are the parent of a child, or
• was legally married at the time the child was conceived by or born to the person, or the other party to the marriage, or has adopted the child and the adoption order hasn't been discharged, or
• is found to be a parent of the child by the Court or public authority and that finding hasn't been cancelled or set aside, or
• has been granted a paternity order against the person in respect of the child, or
• is the natural mother of the child, or
• the Court has declared to be the step-parent of the child, or
• a Court has appointed or declared the person as a guardian of the child because he is the child's father.

Parenting agreement/care agreement

An agreement between parents or carers that records a child's care arrangements.

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.

PAYE return summary report

Owners, administrators, restricted administrators, users and restricted users can get an information summary of filed PAYE returns. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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.

Payment waiver

A non-parent carer who doesn't receive a sole parent or unsupported child's benefit from Work and Income can choose not to receive child support payments from one of the parents.

Personal service rehabilitation

Personal service rehabilitation is a payment type made by the Accident Compensation Corporation (ACC).

This payment includes:

• attendant care
• home help
• child care
• escorted travel by vehicle
• training for independence

Personal services

A personal service is a service involving time or task-based work performed by one or more individuals at the request of a user, (including any time- or task-based work carried out at the request of a user), such as ride-sharing, food and beverage delivery, and graphic and web design services.

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.

Portfolio investment entity

Portfolio investment entities (PIEs) invest the contributions from its investors in different types of passive investment.

There are several types of PIEs, each with different abilities and tax requirements.

Types of portfolio investment entities

Powers of appointment

Powers of appointment are powers that have been given to someone to:

• appoint or change trustees and beneficiaries, or
• change the terms of the trust.

Prescribed investor rate

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.

Principal settlor

The principal settlor is the person who has provided the greatest (or equal greatest) value to the trust based on the market value of settlements on the trust. There could be more than 1 principal settlor.

A person is not a principal settlor if they have provided an unconditional (no-strings attached) gift to the trust.

Private agreement

An agreement about the financial support for the child (or children) made between the parents or carers without involving us.

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. A flatmate will often be a tenancy holder.

Proof of stake

Proof of stake (staking) 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.

Protected net earnings

The 60% of net earnings (after tax) that a person must be allowed to keep from their pay after child support has been deducted.

Public Lending Right payment

An annual payment made to New Zealand authors who are registered with the Public Lending Right scheme, run by the National Library of New Zealand. The scheme recognises New Zealand authors whose books are available for use in New Zealand libraries.

Find out more on the National Library website.

Public Lending Right for New Zealand authors

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 benefit for the Winter Energy Payment

The following benefits and payments from Ministry of Social Development qualify for the Winter Energy Payment.

• Sole Parent Support.
• Supported Living Payment.
• Jobseeker Support.
• Jobseeker Support Student Hardship.
• Emergency Benefit.
• Emergency Maintenance Allowance.
• Youth Payment.
• Young Parent Payment.
• New Zealand Superannuation.
• Veteran's Pension.

Qualifying child

To qualify for child support, the child must:

• be under 18 years of age, or 18 years of age and enrolled at and attending a registered school in New Zealand or an overseas school. If a child is 18 and still enrolled at and attending a school, then child support ends on 31 of December of the year they turn 18
• not be married, in a de facto relationship or civil union
• be financially dependent, that is under the age of 16 or aged 16 and not working more than 30 hours a week on average or receiving a benefit or student allowance
• be a New Zealand citizen or ordinarily resident in New Zealand

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.

Realisable value

The realisable value of an item is what the item can be on-sold for (for example, on marketplace websites).

When a non-monetary item is received in exchange for services, it is valued at the realisable value.

Receiving carer

A parent or non-parent carer of a qualifying child, normally entitled to receive child support from a liable parent. They must have at least 35% care to receive child support.

Recognised care

The amount of care a parent provides their child. It's taken into account in the formula assessment and must be for at least 28% of the time.

A parent or non-parent carer will only receive child support payments if they provide ongoing daily care for at least 35% of the time.

Regulated business

A regulated business or organisation includes the following.

• A food and drink business or services
• Close proximity business and services.
• Gyms.
• Tertiary education providers.

These are defined in the Covid –19 Public Health Response (Protection Framework) Order 2021 Schedule 7.

Relevant services

These are:

• the rental of immovable property (including commercial and residential), such as carparks, short-stay and visitor accommodation
• personal services such as ride-sharing, food and beverage delivery, and graphic and web design services.

A personal service is a service involving time or task-based work performed by one or more individuals at the request of a buyer.

Reportable income

Reportable income is income information that Inland Revenue receives regularly from a third party (e.g. an employer, a bank, etc) for an individual and a tax year. This includes:

• PAYE income payments
• NZ superannuation
• income payments
• ACC attendant care payments
• Portfolio investment entity (PIE) income
• Employee share scheme (ESS) income with tax withheld
• NZ resident interest/dividends
• Non-Resident interest/dividends/royalties
• Taxable Māori authority distributions

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.

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 income

Residential income is:

• rental income subject to the residential property deduction rules
• net income from a bright-line sale (excluding losses)
• income in relation to a loan in a foreign currency from the portfolio and/or individual property
• depreciation recovery income from disposed assets from the portfolio and/or individual property
• the net income from residential property outside the residential property deduction rules because it is held on revenue account.

Residential land

Residential land means:

• land that has a dwelling on it
• land which the owner has an agreement to put a dwelling on
• bare land that may be used for putting a dwelling on under the local district plan.

Residential land does not include farmland or land used predominantly as business premises, unless it is a business providing accommodation in a dwelling that is not the owner's home.

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 beneficiaries

Are also known as final beneficiaries and are beneficiaries that have a right to any undistributed trust property when the trust is wound up.

The residual beneficiary does not have a fixed, vested or contingent interest in the trust property.

Your trust deed may describe residual beneficiaries as a class or group – for example, children of the settlor. If this is the case, describe the class to us when registering the New Zealand foreign trust.

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.

Revenue

Revenue is the money you make from running your business. It's what you earn before you take off all your costs. 

Rollover trust

A family trust qualifies as a rollover trust if:

• each transferor (in the case of transfers to a trust) or each transferee of the property (in the case of transfers from a trust back to a settlor) is both a settlor and a beneficiary of the trust
• at least one of those transferors or transferees of the property is also a principal settlor of the trust
• all principal settlors are beneficiaries of the trust
• all principal settlors are close family associates.
• each beneficiary is a close family beneficiary.

Security tokens

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

Self-contained dwelling

Self-contained dwelling means it has its own cooking and bathroom facilities and its own entrance. The entrance can be from a shared accessway, for example, a hallway shared by a block of flats in the same building.

Settlement

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

Settlement

A trust settlement is when a transfer of value is made to the trust, or to the benefit of the trust.

Settlor

Generally a settlor is a person who transfers value in cash or kind to the trust for the benefit of the beneficiaries.

You're also a settlor if you both:

• provide financial assistance to a trust (or for the benefit of the trust) with an obligation to pay you back on demand
• you do not ask the trust to pay you back or you defer making the request for repayment.

We can identify attempts to artificially increase the number of settlors by having friends or family become settlors of the trust. The initial settlor will be treated as the sole settlor of the trust and shortfall penalties may apply.

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.

Share scheme taxing date

The earlier of the date when the :

• benefits are cancelled
• benefits are transferred to a non-associated person
• employees' ownership of shares is no longer affected by the terms of their employment.

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.

Shared rental expenses

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

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

From the 2020/2021 income year, a company may also be able to carry a loss forward if they meet the requirements for the business continuity test.

Business 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 at a time.

Your guests do not 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.

Short-term international business travellers

An employee whose work in the host country will typically be within a 12-month period.  

People who visit New Zealand on short-term business trips may be exempt from tax, depending on how long they are here. If the trip is longer than 92 days allowed under 'Amounts derived during short-term visits' (CW19) section in the Income Tax Act or 183 days in some double tax agreements, New Zealand tax needs to be paid.

New Zealand Legislation

Single European Payments Area (SEPA)

The Single European 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.

SmartStart

SmartStart is a one stop shop for parents of newborns. It provides step-by-step information and support to help you access the right services for you and your baby.

Sole parent benefit

This is one of the following benefits from Work and Income:

• sole parent support (excluding jobseeker support student hardship)
• supported living payment (on the grounds of sickness, injury, disability or total blindness)
• jobseeker support with children included
• young parent payment.

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.

Square-up

When you've estimated your income, this is the process for working out how much child support should have been paid based on your actual income for the period you estimated for.

(For 2022 and previous child support years, we call this the election period. For 2023 onwards, we call this the reconciliation period.)

Staking

See proof of stake.

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.   

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.

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.

Sufficient connection

A sufficient connection can be established through evidence that you work for a New Zealand employer, pay income tax to New Zealand, and that your employment relationship is subject to New Zealand employment law.

Tailored tax code

Tailored tax codes help you pay the right amount of tax if your circumstances mean you often have a large tax bill or refund.

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, sometimes called an income year, is from 1 April to 31 March. The last day of the tax year, the balance date, is 31 March.

You can only have a late balance date if you have written approval from Inland Revenue.

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

It's your total income, less:

• eligible expenses
• any available losses.

Most types of income are taxable.

Taxable income

It's your total income, less:

• eligible expenses
• any available losses.

Most types of income are taxable, but you can be sure by checking how individual and business incomes get taxed.

How income gets taxed

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.

Taxable value

The employment income is broadly equal to the value of the shares at the share scheme taxing date (or, if rights or shares are transferred or cancelled, the amount received for the transfer or cancellation), less the amount paid (if any) for the rights or shares.

Tenancy in common

Under tenancy in common, the owners have different interests in land and these are shown on the title of the property.

Tertiary study

Happens after completing college or high school. It may be study or training at an educational organisation like a polytechnic, university or a private organisation.

Testamentary trust

A trust that is created by the terms of a Will that states (or it is implied) that the trustees must hold some assets in trust for beneficiaries.  

Trading stock

Trading stock means property that a person, who owns or carries on a business, has for the purpose of selling or exchanging in the ordinary course of the business.

Trailing payments

Transferee

A person property is transferred to.

Transferor

A transferor is a person(s) who makes a transfer of property.

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.

Unconditional gift

A payment you make to a non-profit:

• voluntarily for the carrying on or carrying out of the non-profit's purposes
• without an 'identifiable direct valuable benefit' in the form of a supply of goods and services to the payer or an associated person.

For examples and more context, see our interpretation statement about GST and unconditional gifts.

Interpretation statement 20/09 - GST - unconditional gifts (Tax Technical)

Unfiled returns report

Owners, administrators and restricted administrators can get a list of the unfiled income tax returns that show in your EOT dashboard, unfiled L Letter or D status returns, and auto-issued assessment with requests for more information. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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. 

Valuation rule

Where trading stock is disposed of at below market value then it is deemed to have been sold by the disposer (and subsequently purchased by the recipient) at market value.

Viable and ongoing

A viable business is a business with a plan in place to make sure it can keep trading. This generally means the owner has good reason to believe it's more likely than not that the business or organisation will be able to pay its debts as they fall due within the next 18 months and its current overdue debts. Your accountant may be able to provide this advice. 

You must keep any evidence of the business or organisation's ongoing viability at the time of requesting the CSP, as we may audit your application in the future. 

This evidence could include, for example: 

• a cash-flow forecast for the business or organisation for the short term
• a plan for where the revenue will come from in future market conditions and a forecast of those revenues
• financial statements showing the business or organisation has enough resources to sustain itself when including the CSP
• details of approved funding
• your accountant's assessment that the business or organisation is viable and ongoing. 

Visa travel date

This is the date by which you must arrive in New Zealand. You can find this date on your visa from Immigration New Zealand.

Voluntary agreement

An agreement to pay child support or domestic maintenance where both parties agree on the amount to be paid. It's registered with us and we collect and pay out the child support or domestic maintenance.

Web logon activity report

Lets owners monitor staff myIR logon activity. You can access from the Intermediary centre under ‘My business’ and select agency reports.

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.

Working days (GST)

As per the GST Act (1985) a 'working day' is defined as "any day of the week other than—
(a) Saturday, Sunday, Good Friday, Easter Monday, Anzac Day, Labour Day, the Sovereign’s birthday, and Waitangi Day; and
(ab) if Waitangi Day or Anzac Day falls on a Saturday or a Sunday, the following Monday; and
(b) a day in the period commencing with 25 December in any year and ending with 15 January in the following year.

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