PAY TAX
What Taxes Do I Need to Pay?
A straightforward guide to income tax and GST for new NZ businesses — what you owe, when it’s due, and how to avoid getting caught short.
What Taxes Does a New Business Need to Pay in New Zealand?
For a new business, there are two main taxes to be aware of: Income Tax and GST.
Income Tax
You pay income tax on your profit — that’s your income minus your expenses. The tax year runs from 1 April to 31 March. You can only file your return after 31 March, which means you’re always paying tax in arrears.
As a starting point, get into the habit of setting aside around 20% of every dollar you earn for income tax. It’s hard to do when cash is tight, but getting behind on tax is one of the hardest holes to climb out of.
GST
Once your income is going to exceed $60,000, you need to register for GST through your MyIR account (or ask your accountant to do it). Most businesses file GST on a two-monthly basis and start on the Payments Basis, which means you only pay or claim GST once cash has actually changed hands.
A note on filing your own returns
I don’t recommend new business owners file their own income tax returns. There are too many moving parts, and errors made early on can be expensive to fix later. I regularly work with business owners cleaning up historical years that were filed incorrectly — and the cost is almost always more than it would have been to get it right the first time.