NZ Company Tax Return Guide: IR4, IR3, Provisional Tax & Key Dates

Filing your NZ tax return is a core obligation for every business in New Zealand. Whether you operate as a company, sole trader, or partnership, understanding which return to file and when to file it is essential.

This guide covers IR4 (companies), IR3 (individuals/sole traders), provisional tax, and all the important dates for the 2024 tax year.

Which Return Do You Need to File?

| Business structure | Tax return | |-------------------|-----------| | Company (Ltd) | IR4 — Company Income Tax Return | | Sole trader | IR3 — Individual Income Tax Return | | Partnership | IR7 — Partnership and Look-Through Company Return | | Look-through company (LTC) | IR7 | | Trust | IR6 — Trust or Estate Return |

Company Tax Rate

New Zealand companies pay a flat 28% company tax rate on net taxable income. This applies to all companies regardless of size.

The IR4 Return (Companies)

The IR4 must be filed by 7 July (or later if you use a tax agent — typically 31 March of the following year).

Your IR4 covers:

• Total income (revenue)
• Allowable deductions (expenses)
• Net profit/loss
• Tax payable

Key deductions include: salaries and wages, rent, business travel, depreciation, interest on business loans, professional fees, and marketing costs.

Provisional Tax: What It Is and How It Works

Provisional tax is tax paid in advance installments during the year. Rather than paying a large lump sum at the end, you pay throughout the year.

Who needs to pay provisional tax? If your residual income tax (RIT) in the previous year was over $5,000, you'll need to pay provisional tax in the current year.

Standard method (most common): Three installments based on 105% of the prior year's RIT:

• 28 August (first installment)
• 15 January (second installment)
• 7 May (third installment)

Estimation method: You estimate what you'll owe and pay that amount. Useful if your income varies significantly year to year.

Ratio method: For businesses with monthly GST returns, provisional tax can be paid monthly as a ratio of GST turnover.

Terminal Tax

Terminal tax is the top-up payment you make after filing your return if you underpaid provisional tax. It's due on 7 February (or 7 April if you use a tax agent).

If you overpaid provisional tax, IR refunds the difference (with interest if the overpayment was significant).

Key Tax Dates for NZ Companies (March 31 Balance Date)

| Date | Obligation | |------|-----------| | 28 August | First provisional tax installment | | 15 January | Second provisional tax installment | | 31 March | Balance date (financial year end) | | 7 May | Third provisional tax installment | | 7 July | IR4 due (without tax agent) | | 7 February | Terminal tax due |

If you use a tax agent, most deadlines extend to 31 March of the following year.

Allowable Business Deductions

To reduce your taxable income, you can deduct expenses that are "necessarily incurred" in earning your income:

• Business premises: rent, rates, insurance, utilities (proportioned if home office)
• Vehicle expenses: fuel, registration, maintenance (business portion only)
• Employee costs: wages, KiwiSaver contributions, ACC levies
• Professional services: accountant fees, legal fees, consulting
• Equipment: depreciation on assets used for business
• Marketing: advertising, website, social media
• Travel: flights, accommodation, meals (50% entertainment rule applies)

Depreciation

Capital assets (equipment, vehicles, furniture) are not deducted in full in the year of purchase. Instead, you claim depreciation over the asset's useful life using IR's prescribed rates.

Low-value asset rule: Assets costing $1,000 or less can be fully deducted in the year of purchase.

Using Accounting Software

Accounting software simplifies tax preparation significantly:

• All income and expenses tracked throughout the year
• Profit and loss statement ready for your accountant
• GST and PAYE records linked to your tax return
• Provisional tax estimates based on current-year data

Finsori gives your accountant a clean set of books, reducing tax preparation time and fees.

Frequently Asked Questions

What is the NZ company tax rate? 28% on net taxable income.

When is my IR4 due? 7 July if you file yourself. If you use a tax agent, extensions are typically granted to 31 March of the following year.

Do I need to pay provisional tax? If your residual income tax in the prior year was over $5,000, yes. First-year businesses are generally exempt from provisional tax.

What happens if I miss provisional tax? IR charges use of money interest on late payments. Missing installments can also result in penalties.

Can I carry forward a tax loss? Yes. Companies can carry forward net losses indefinitely to offset future taxable income, subject to shareholder continuity rules (49% ownership continuity required).

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Also see: How to File a GST Return in NZ · NZ Invoicing Requirements 2024