Income Tax Return
Taxable income is governed by Income Tax Act 2007 and is administered by Inland Revenue department. Income tax is filed once in a year, for individuals and most businesses the accounting year begins on 1 April and ends the following 31 March, but businesses can choose a different balance date. Income tax returns are due on 7 July each year, unless you have a tax agent, in which case you get extension of time.
All income is taxed in New Zealand, like many other countries tax-free threshold. But individuals can get rebates and credits depending upon their situation.
New Zealand Tax residents are required to declare their worldwide income.
Who is required to file Income Tax returns?
Besides business owners, sole traders, companies, trusts and related organisation, anyone involved in earning income not deducted at source must file income tax return and declare their taxable income. If you are a full-time employee but at the same time you run Airbnb/holiday house, drive uber, owns a rental property, are shareholder of a company or receive overseas income you need to file income tax return. In addition to above, Inland Revenue Department may ask you to file income tax return for any reason.
How Income Tax Return is prepared
Income from all sources, taxed and untaxed is added up and gross income is considered to calculate income tax.
For businesses and organisations
After the balance date, your accountant will prepare a set of annual financial statement. There is different rule that govern financial reporting requirement of small and large businesses.
Income tax return is prepared on the basis of outcome of the financial reports. Small businesses need to file only financial statement summary along with income tax return.
Any provisional tax already paid and tax credits are adjusted at this stage and final income tax payable amount is calculated.