New Zealand is a member of the AFCI.
Sunday 8th December
New Zealand has a relatively simple, low-cost tax system compared to other countries.
The following information is intended as a guide only. Professional advice should be sought prior to commitment to production, as the application of the tax rules will be facts specific and dependent on individual circumstances. In addition, tax laws may change; the information contained in this guide is only as up to date as at the date of publication.
Please contact Film New Zealand to facilitate access to professional advice, or visit the screen production section of the Inland Revenue Department's website.
Tax Rate 2012/2013
0 - 14,000
14,001 - 48,000
48,001 - 70,000
For more details on this incentive, please visit our Large Budget Screen Production Grant Scheme page.
New Zealand government policy has created a further incentive through an open, deregulated economy. This provides overseas investors with a stable, competitive, transparent, low cost business environment in which to invest for the long term.
There are a number of other financial benefits:
New Zealand has
New Zealand operates under a self-assessment tax regime, whereby taxpayers are responsible for calculating their own tax obligations, paying the tax to the Inland Revenue and filing their tax returns. The self-assessment regime is buttressed by audit activity, and a stringent penalties regime (including penalties for late payment of tax, not taking sufficient care and having technically incorrect tax positions). It is critical that productions undertaken in New Zealand get their tax obligations correct to avoid unexpected additional costs.
GST is a value added tax levied on the supply of goods and services in New Zealand. Financial services (primarily debt and equity instruments) and domestic accommodation are exempt from GST.
In most circumstances the rate of GST to be charged is 15% for supplies made on or after 1 October 2010.
More information in respect of the change in rate of GST can be found on the Inland Revenue website.
GST is charged at 0% on the export of goods and services.
GST is intended to be a tax on the end user of goods and services. Therefore businesses that incur GST in the course of making their taxable supplies can claim back that GST from the Inland Revenue. All productions will incur GST on supplies received. Productions will be required to register for GST in order to claim back this GST cost, thereby effectively neutralising the effect of GST on the cost of production.
New Zealand’s year for income tax purposes is 1 April to 31 March. In certain circumstances approval may be obtained from the Inland Revenue to use a different balance date, such as to align with that used in a foreign jurisdiction.
Income tax is charged on the world-wide taxable income, net of allowable deductions, for entities and individuals tax resident in New Zealand (immigration residency is not relevant).
Non-residents will be subject to income tax only on income sourced from New Zealand.
Individuals who qualify as 'transitional residents' will generally only be subject to tax on New Zealand sourced income.
These rules may be modified by Double Taxation Agreements (“DTA’s”) New Zealand has entered into. New Zealand has DTA’s with most developed countries, including the USA, Canada, Australia, and the United Kingdom.
A company is deemed to be tax resident in New Zealand if it is either:
New Zealand treats individuals as being tax resident in New Zealand if they:
However, individuals who are also tax resident in countries which have a DTA with New Zealand may be treated as a non-resident for the purposes of the DTA. This could be the case, for example, if an individual maintains a permanent home and personal and economic ties in the country they are ordinarily tax resident.
Complexities can arise if services are provided through a service company (i.e. where individuals contract through associated companies). For example, if that service company is deemed to have a permanent establishment in New Zealand (through the presence of employees in New Zealand for extended periods), the company could also be subject to New Zealand income tax and New Zealand GST. If contemplating the use of a service company, tax advice should be sought in advance of entering into any contracts.
Overseas operations in New Zealand may be subject to New Zealand’s comprehensive “transfer pricing” rules. These rules require goods and services passing between cross-border related parties to be made at “arm’s length” prices.
New Zealand also has certain debt to equity ratio requirements (“thin capitalisation”) that may restrict the interest deductions of overseas owned entities.
Registration for GST is compulsory where the value of supplies made in New Zealand in the prior 12 month period exceeds $NZ60,000 or there are reasonable grounds for believing that it will exceed $NZ60,000 within the following 12 month period. Registration is a simple process and can be completed on the Inland Revenue website.
Special rules apply to non-residents making supplies in New Zealand; we can provide a referral for advice if this situation applies.
Any registered person must charge GST on taxable supplies made in New Zealand. In most circumstances the rate of GST to be charged is 15% for supplies made on or after 1 October 2010.
If goods or services produced within New Zealand (such as the image) are exported to an overseas client then GST may be "zero-rated" i.e. GST is 0%, provided certain requirements are met.
GST will be charged by GST registered suppliers on all production costs incurred in New Zealand, except financial services and domestic accommodation. Provided these production costs are incurred in making taxable supplies (either at 15% or 0%) the GST can be claimed back from the Inland Revenue.
A GST invoice referred to as a "Tax Invoice" is required to be held for any claims above NZ$50 (including GST).
Provided the production is effectively structured and registered, GST should not be a final cost to a production.
GST registered persons are required to account for the net GST paid and collected when filing GST returns. The options for filing GST returns are monthly, bi-monthly or six monthly, calculated on an invoice (accruals), payments (cash) or hybrid (mixed accruals/cash) basis. The GST return is to be filed with the Inland Revenue by the 28th of the month (or the next business day if this falls on a weekend or public holiday) following the end of the GST period, except for the periods ending:
Film productions that export their goods or services usually elect to file their GST returns monthly, on an invoice basis in order to claim the GST cost on expenses regularly and improve cash flow.
Expenditure incurred in producing a film classified as a “New Zealand Film” by the New Zealand Film Commission is generally fully deductible in the year in which the film is completed.
Expenditure incurred in producing or acquiring other films is generally deductible over two years commencing from the year in which the film is completed.
Additional rules also apply, such as where non-recourse loans or deferred payment arrangements exist. Professional advice should be sought where any film is subject to New Zealand income tax.
There are rules in New Zealand that may limit and defer the tax deductions available to film investors to the amount of money they have at risk.
Other than certain employees, generally any person who is subject to income tax must file an income tax return with the Inland Revenue. These returns are due to be filed by 7 July of the year following the relevant tax year, although an extension of time is permitted for taxpayers with late balance dates, or represented by approved tax agents.
Where sufficient tax is not withheld at source from a person’s income then a person is required to make equal interim tax payments (referred to as provisional tax) in the fifth, ninth and thirteenth month of the person’s tax year to cover their income tax liability. The amounts of these payments are either based on an uplift of the previous year’s liability or an estimate of the current year’s liability. A wash up payment is required by 7 February of the year following the relevant tax year, although this date will differ for early balance date taxpayers, and those represented by a tax agent.
Alternatively provisional tax may be calculated and paid under the GST Ratio Method. For more information relating to this method please refer to the Inland Revenue website.
Any overpayment of tax paid will be refunded when the tax return is filed.
Interest is charged or paid by the Inland Revenue on any under or overpayments of tax (currently 8.91% and 1.82% per annum respectively) at each of the provisional tax instalment dates, except for individuals whose total tax liability does not exceed NZ$50,000. Due to the high interest cost, most taxpayers endeavour to make their payments at each of the provisional tax dates as close as possible to one third to the amount of actual liability for the year.
Most actors in New Zealand operate as self-employed individuals, or through service companies. As such the only withholding obligations are:
Any overseas actors who are regarded as New Zealand tax resident (after the application of any DTA) will be treated as New Zealand actors for tax purposes.
Generally, all workers in the screen production industry who perform work behind the camera are treated as contractors rather than as entertainers and operate either as self-employed individuals, or through service companies. As such the only withholding obligations are:
Any overseas crew who are regarded as New Zealand tax resident (after the application of any DTA) will be treated as New Zealand crew for tax purposes.
Overseas actors and performers are subject to
The application of withholding tax to overseas crew is as follows:
Withholding tax is not a final tax and a personal tax return will need to be filed with personal tax rates applying, less the withholding tax credit.
Any payments to non-residents for the use of equipment brought to New Zealand may be subject to a withholding tax. You should seek professional advice if this situation applies.
If any person is an employee of the production company, there are obligations on the production company to withhold PAYE, and account for fringe benefits. This situation would be unusual for production companies but is determined on a case by case basis; if this situation arises please seek advice. Further details on what constitutes an employment relationship are available from the Inland Revenue Department.
These taxes are deducted from the amounts paid and must be remitted to the Inland Revenue (located online at www.ird.govt.nz) fortnightly or monthly.
Where there is an obligation to withhold, an approved declaration form is required to be obtained (excluding non-resident actors and performers); in absence of this a further 15% is required to be withheld e.g. if the withhold for crew is 15% and no declaration form is provided, 30% must be deducted.
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