New Zealand companies pay income tax at a flat rate of 28% on their net taxable income. This rate has not changed since 2011 and applies to all NZ-registered companies regardless of size. Understanding how company tax works — and how it interacts with personal income tax through imputation — is essential for any NZ business owner.
NZ companies pay 28% income tax on net profit. File the IR4 return by 7 July (or 31 March with a tax agent). Shareholders pay personal income tax on dividends received — but company tax already paid attaches as imputation credits, preventing double taxation. The effective total tax rate depends on your personal tax rate minus the 28% already paid at company level.
The 28% Company Tax Rate
New Zealand has a flat company income tax rate of 28% on all taxable income. There is no graduated rate for smaller companies — all companies pay 28% regardless of profit size.
| Company profit (net) | Tax at 28% | After-tax profit |
|---|---|---|
| $50,000 | $14,000 | $36,000 |
| $100,000 | $28,000 | $72,000 |
| $250,000 | $70,000 | $180,000 |
| $500,000 | $140,000 | $360,000 |
What Is Taxable Company Income?
Taxable company income = Revenue − Deductible Expenses
Deductible expenses include:
- Salaries and wages (including shareholder-employee salaries)
- Cost of goods sold
- Rent and office costs
- Marketing and advertising
- Professional fees (accountants, lawyers)
- Depreciation on business assets
- Interest on business loans
- Insurance for business assets
- KiwiSaver employer contributions (net of ESCT)
Non-deductible expenses:
- Drawings and personal expenses
- Capital expenditure (added to asset base, depreciated instead)
- Fines and penalties
- Income tax itself
Company Tax vs Personal Tax — The Combined Effect
A company’s 28% tax rate only covers the company. When the company pays dividends to shareholders, those shareholders also pay income tax — but imputation credits prevent double taxation.
Example with a 33% tax rate shareholder:
- Company profit: $100,000
- Company tax (28%): $28,000
- After-tax profit: $72,000
- If paid as a fully imputed dividend to a 33% shareholder:
- Grossed-up dividend: $100,000
- Shareholder tax at 33%: $33,000
- Less imputation credit: −$28,000
- Top-up tax paid by shareholder: $5,000
- Total tax paid: $33,000 (the shareholder’s marginal rate on the original income)
Example with a 17.5% tax rate shareholder:
- Shareholder tax at 17.5%: $17,500
- Less imputation credit: −$28,000
- Refund due: $10,500
- Total tax paid: $17,500 (refund received from IRD)
This is why imputation credits matter — the company essentially pre-pays tax that is credited to shareholders.
Key Dates for Company Tax
| Event | Date |
|---|---|
| Tax year end | 31 March |
| IR4 due — no tax agent | 7 July |
| IR4 due — with registered tax agent | 31 March of following year |
| Provisional tax — 3 instalments | August, January, May (standard uplift) |
| Terminal tax due | 7 April (or 7 February if large taxpayer) |
Provisional Tax for Companies
Like self-employed individuals, companies that expect to owe more than $5,000 in income tax must pay provisional tax in three instalments throughout the year.
Three methods to calculate provisional tax:
- Standard uplift: 105% of prior year’s residual income tax
- Estimation: Pay based on your own estimate of current year income
- Ratio option: Tie provisional tax to GST filing periods
Most small companies use the standard uplift method — simpler and avoids use-of-money interest if prior year data is used.
Company vs Sole Trader Tax Rate Comparison
| Income | Sole trader tax (marginal) | Company tax | Advantage |
|---|---|---|---|
| $50,000 profit | 30% (on amounts above $48k) | 28% | Company — minor |
| $100,000 profit | 33% | 28% | Company — meaningful |
| $180,000 profit | 33% | 28% | Company — significant |
| $180,000+ profit | 39% | 28% | Company — very significant |
However, company structure adds compliance costs (IR4, shareholder current accounts, minutes) and the tax saving only occurs if profits are retained in the company. If the profit is immediately paid as salary or dividends, the shareholder pays personal income tax anyway — so the effective advantage requires retained earnings.
Frequently Asked Questions
Does NZ have a small company tax concession?
No. Unlike Australia (which has a 25% rate for small companies), NZ has one flat 28% rate for all companies regardless of size.
Can a company carry losses forward?
Yes — if a company makes a loss in a tax year, the loss can be carried forward to offset future profits (subject to continuity of ownership rules — at least 49% common shareholders required).
Do non-resident companies pay 28% in NZ?
Non-resident companies pay tax only on NZ-sourced income. The rate is 28% for branch profits, though non-resident withholding tax (NRWT) applies to dividends, interest, and royalties paid offshore.
What is a look-through company (LTC)?
An LTC is a special company type that passes income and deductions directly to shareholders’ personal returns (like a partnership). See Look-Through Companies NZ for details.