Calculating business tax in New Zealand can be complex for small business owners and companies. This guide provides a clear, step-by-step explanation of business tax calculation in New Zealand, including how to determine taxable income, apply tax rates, and account for GST and provisional tax obligations.
Understanding your business tax responsibilities is crucial to remain compliant with the IRD and avoid penalties. Whether you are a sole trader, partnership, or company, this guide will help you accurately calculate your tax liability and plan for payments throughout the year.
Business Tax Calculation in New Zealand
Calculating business tax in New Zealand depends on your business structure, taxable income, and applicable tax rates.
This guide explains how business tax works in NZ and how to calculate it step by step.
What Is Business Tax in New Zealand?
Business tax is income tax paid on profits earned by a business.
Tax is calculated on taxable income, which is your total revenue minus allowable business expenses.
Taxable Income = Total Revenue − Allowable Expenses
Business Tax Rates in New Zealand
- Company: 28% flat tax rate
- Sole Trader: Personal income tax rates (10.5% – 39%)
- Partnership: Taxed at individual partner rates
- Trust: 33%
Companies in New Zealand always pay tax at a flat rate of 28%, regardless of profit.
Step-by-Step: How to Calculate Business Tax in NZ
Step 1: Calculate Total Business Revenue
Include all income earned from business activities such as sales, services, commissions, and online income.
GST is excluded if you are GST-registered.
Step 2: Deduct Allowable Business Expenses
- Rent and utilities
- Salaries and wages
- Marketing and advertising
- Accounting and legal fees
- Software subscriptions
- Vehicle and travel expenses (business use)
Step 3: Calculate Taxable Income
Step 4: Apply the Correct Tax Rate
Revenue: NZD 250,000
Expenses: NZD 150,000
Taxable Income: NZD 100,000
Tax Rate: 28%
Business Tax Payable: NZD 28,000
Sole Trader Tax Calculation Example
Sole traders are taxed at personal income tax rates. Tax is applied progressively, not as a flat rate.
Tax is calculated across income brackets, resulting in a blended tax rate.
What Is Provisional Tax in NZ?
If your residual income tax exceeds NZD 2,500, you may need to pay provisional tax.
This is paid in instalments throughout the year to avoid a large year-end tax bill.
Is GST Included in Business Tax?
No. GST is separate from income tax. If your annual turnover exceeds NZD 60,000,
you must register for GST at a rate of 15%.
Helpful Tools & Guides
Need Help Calculating Your Business Tax?
Online calculations provide estimates. For accurate tax planning and compliance,
speak to a qualified NZ accountant.