Fantail Finances

Goods and Services Tax (GST) is a 15% tax added to most goods and services in New Zealand. It is completely separate and unrelated to Income Tax. Registered businesses and sole-traders add GST to the price of their products/services and collect it from customers. They then pay this GST to the government, while also reclaiming any GST they've paid on their own business expenses.

You must register for GST if your business turnover exceeds NZD $60,000 in any 12-month period. If your turnover is less than NZD $60,000 you can still choose to register voluntarily if you wish.

Pros: You can claim back GST on business expenses and appear more established to clients. Cons: You need to keep detailed records and file regular GST returns, which can be time-consuming.

You can register for GST on myIR (or we can do it for you). Filing frequencies are monthly, two-monthly, or six-monthly, depending on your turnover and preference. Monthly filing generally suits larger businesses whereas two-monthly or six-monthly is usually better for smaller businesses. It’s always a good idea to have a chat with us about your planned activities so that we can confirm the best set up.

Income tax (INC) is paid on your taxable income, which is your gross taxable earnings (turnover) minus your claimable expenses.

Revenue: Money earned from sales, services, or work done. Production/Project Funding: Funds specifically for creating projects. International Earnings: Income from overseas work, if you’re a tax resident of NZ then this needs to be declared in NZ. Any international tax deducted from these earnings can generally be claimed back as an international tax credit, depending on the country of origin, to avoid double taxation. Investment and Interest Earnings: Returns from investments such as shares (dividends or sales) and interest received, residential property rental income, proceeds of cryptocurrency sales.

Business Overheads: Anything that helps you operate or grow your business. As well as core operating costs, in the creative industry you might also be able to claim professional development costs relevant to the type of creative work you do eg. Netflix, Spotify, Movie/Theatre Tickets. Job specific costs are also claimable - for example an actor might be able to claim haircuts/gym fees if they were required for a specific role, and film crew working on-set might be able to claim a warm jacket if shooting on location in the snow. Travel is claimable as long as the main purpose of the trip is business related. For all of the above, keep good records to support the claims along with documentation such as receipts for anything over $50. Production Expenditure/Direct Costs: The direct costs attached to a production or project. Home Office: You can claim a portion of household costs if you work from home. Private Motor Vehicle: You can claim a business use % of your private vehicle. This is done either by keeping a 3-month log book to show the business/personal split (once completed this can be used for a period of 3 years before a new log book is required). Alternatively you can claim a default 25% of all motor vehicle costs if you don’t have a log book. Assets: Any items you purchase over $1000 such as equipment, instruments, furniture or website are classed as assets and go on your asset register. These items add value to your business, and are treated differently for tax purposes, whereby only a % of the cost is claimed in the first year of purchase, with more claimed in subsequent years. This is called depreciation. Non-Claimable Items: Personal expenses, fines and penalties.

In NZ, individual tax rates are incremental and range from 10.5% to 39%, so that you pay a higher rate of tax for each band of income that you earn. Companies pay a flat rate of 28% for any profit left in the business.

There are various ways you might pay your income tax such as PAYE, WT, Provisional Tax & Terminal Tax, these all affect the timing of the tax payments but the total amount of tax you pay for the year will be the same regardless.

Pay As You Earn (PAYE) is the tax that your employer will deduct from wages and salaries for any non-contractor employment. It includes income tax and ACC levies and your employer is responsible for paying the income tax to the IRD on your behalf. You can’t deduct expenses from this type of income.

If you’re a sole trader in the screen/music industry then its mandatory for withholding tax to be deducted from all labour fees that you charge unless you have a certificate of exemption. The default rate is 20% but you can elect to increase this. It’s a good idea to consider 25% if you think your taxable income (after expenses deducted) is likely to be over $100,000, or 30% if you think it will be over $150,000).

Provisional tax helps manage your tax payments by spreading them throughout the year. If you owe more than NZD 5,000 in residual tax at the end of the year (after any incremental tax such as PAYE or WT is counted), you’ll likely need to pay provisional tax moving forward. This is usually paid in three instalments in Aug, Jan & May. Provisional tax obligations are usually calculated by IRD based on your previous years’ performance, so it’s always a good idea to chat with us if know your income is likely to be significantly different.

Terminal tax is the balance of tax you owe for the year after accounting for provisional tax payments and any other incremental tax paid during the year. It’s due by the following year's April 7th and ensures your total tax liability is covered.

Simple setup for individual freelance workers. No need to register, though you can do so if you need to provide confirmation of being a registered sole trader. You can be a GST registered or a non-GST registered Sole Trader. If you work in the screen industry then generally you will have WT deducted from your earnings which helps you stay on top of your tax obligations.

This is the most common business structure. It offers some benefits not afforded to sole traders such as limited liability and is a better option if you intend to hire staff. There are a few more regulatory requirements, however in NZ they are fairly easy to set up and maintain.

Less commonly used, a partnership provides shared ownership and liability among partners. Any profit/losses flow to the individuals.

Combines company benefits with partnership tax treatment. All profit/losses flow to the individuals.

This is just a ltd company set up for the purpose of running a project/production. It’s a helpful structure when you have other stakeholders in a production and don’t want to run it through your normal Ltd company. It is also mandatory for many funded productions, especially anything funded by NZFC, or where you are going for any of the screen industry rebates.

Yes, for certain types of work. For all screen or music/event services you must deduct withholding tax from any labour services, unless the contractor operates under a Ltd company or has a Certificate of Exemption. If you’re hiring someone in a permanent role then you should treat them as an employee and deduct PAYE.

PAYE: Pay As You Earn (PAYE) is the tax you deduct from the wages and salaries of your permanent employees, who also receive employment benefits like holiday/sick pay and are eligible for Kiwisaver. This tax includes income tax and ACC levies. Employers are responsible for deducting PAYE and paying it to the IRD on behalf of their employees. WT: Withholding Tax on Schedular Payments (WT) is the tax you deduct from sole trader contractors (unless they have a certificate of exemption). These employees are hired on an ad hoc or project basis and don’t receive employment benefits like PAYE earners. WT is a fixed percentage tax deduction on all payments for labour services and is mandatory in certain industries such as screen services to ensure that contractors meet their tax obligations. Employers are responsible for deducting WT and paying it to the IRD on behalf of their contractors.

Register as an employer with the IRD online (or we can do this for you). Ensure all individuals you pay complete an IR330 (for employees) or an IR330C (for contractors). For employees you must deduct PAYE from wages and pay employer contributions to KiwiSaver unless they have opted out. For contractors you must deduct WT at the rate specified on their IR330C. Regularly file employer monthly schedules, keep accurate records and pay the deductions to the IRD on time to avoid interest and penalties.