{"id":1607,"date":"2023-02-09T12:47:30","date_gmt":"2023-02-08T23:47:30","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=1607"},"modified":"2023-05-25T14:17:52","modified_gmt":"2023-05-25T02:17:52","slug":"a-deep-dive-into-tax-types","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/a-deep-dive-into-tax-types\/","title":{"rendered":"A Deep Dive into Small Business Tax Types"},"content":{"rendered":"

Income tax and provisional tax<\/b><\/h3>\n

In New Zealand all individuals and companies pay tax on their income or profit.<\/span><\/p>\n

Provisional tax is a way of paying income tax in advance instalments during the year, based on your expected annual income. It\u2019s usually required if you paid more than $5,000 in income tax the year before.\u00a0<\/span><\/p>\n

\n\tDownload the Small Business Guide to Tax<\/a>\n<\/div>\n

Setting tax money aside as you earn<\/b><\/p>\n

When you\u2019re starting out, it\u2019s important to put money aside for income tax as you earn money. This can also help avoid a common problem people run into in their first year of paying provisional tax. The catch is that your first provisional tax advance instalment will overlap with the income tax payment due for the previous year, which can put stress on your cash flow.\u00a0\u00a0<\/span><\/p>\n

Schedular payments for contractors<\/b><\/p>\n

If you work as a contractor through a labour hire company or recruitment agency, those organisations have to take tax from what they pay you and send it to Inland Revenue on your behalf. These are known as schedular payments. Most other contractors can also choose to have schedular payments made on their behalf, if the organisation paying them agrees to do it. Contractors can choose their schedular payment rate. It\u2019s just a way to pay tax as you earn – a bit like employee PAYE – and avoid a large tax bill at the end of the year.<\/span><\/p>\n

GST<\/b><\/h3>\n

You have to register for GST and start filing GST returns with Inland Revenue as soon as you think you\u2019ll earn more than $60,000 in the next 12 months. Otherwise, registering for GST is optional.\u00a0<\/span><\/p>\n

How often you file GST returns and make payments depends on your annual income. If it\u2019s less than $500,000 a year you can choose to file monthly, every two months or every six months. It usually comes down to how much work is involved for you and not letting it build up for too long. Using <\/span>Afirmo<\/span><\/a> can make managing GST and filing returns really easy.<\/span><\/p>\n

If you register for GST and file returns, you have to keep records for up to seven years in case Inland Revenue wants to audit your returns.<\/span><\/p>\n

To help you add GST to any price or remove it to get back to the excluding GST amount, Afirmo created a <\/span>handy GST calculator<\/span><\/a>. The page it\u2019s on also has more detail about managing GST in New Zealand.<\/span><\/p>\n

Fringe benefit tax<\/b><\/h3>\n

A business pays fringe benefit tax (FBT) when it provides something of personal benefit (a perk) to an employee or shareholder employee and the benefit provided has not already been taxed.\u00a0<\/span><\/p>\n

As mentioned earlier, common examples include:<\/span><\/p>\n