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Business the New Zealand Way
The three main forms of business in New Zealand are:
Sole traders
A sole trader owns all the assets of the business and is solely responsible for all the business's risks, obligations and debts.
Business partnerships
If you want to operate a business with other people in New Zealand, you can establish an ordinary or special partnership under the guidelines established by the Partnership Act 1908. Companies
The Companies Act 1993 provides the basic rules for establishing and operating a company in New Zealand. Any person may, either alone or together with another person, apply for registration of a company.
What constitutes a company?
a registered name
one or more shares
one or more shareholders with limited or unlimited liability for the obligations of the company
one or more directors
Freephone: 0508 266 726 (O508 COMPANIES)
Visit New Zealand Companies Office
BUSINESS CONDUCT
Business in New Zealand is not strictly controlled. However, all businesses have to follow some standard principles. Business conduct is overseen by three government agencies – the Commerce Commission, Securities Commission and Takeovers Panel.
Commerce Commission
The Commission is an independent organisation that promotes healthy competition, informed consumer choice and sound economic regulation. It is responsible for ensuring that businesses meet the provisions of a number of regulatory Acts, including the Commerce Act, the Fair Trading Act and the Credit Contracts and Consumer Finance Act.
The Commission undertakes a range of activities including:
Consumer Finance Act
The Commerce Act 1986
The Commerce Act promotes competition in markets within New Zealand by:
The Fair Trading Act 1986
The Fair Trading Act protects the public from misleading conduct and unfair trading practices. The Act applies to all aspects of the promotion of goods and services – from advertising and pricing to sales techniques and finance agreements.
The Act prohibits:
The Act also provides for:
The Credit Contracts and Consumer Finance Act 2003
This Act promotes consumer protection while allowing credit products to be flexible and innovative.
The Act covers:
The Act also allows the Court to reopen contracts if they are oppressive.
The Consumer Guarantees Act 1993
The Consumer Guarantees Act makes traders responsible for guaranteeing the quality of the goods and services they provide. The Act describes certain standards and obligations manufacturers and retailers must meet to protect customers against poor quality. It also covers such issues as prices, parts and representations.
Business and consumer complaints
Suspected instances of anti-competitive business practices, or unfair or misleading trading practices, can be reported to the Commerce Commission Contact Centre. The Centre provides advice and investigates if necessary. A range of handy booklets on business and consumer topics is also available. There is no charge for these services.
Freephone: 0800 94 3600
Health and safety
The Department of Labour is the main organisation responsible for setting occupational health and safety standards.
The Department provides guidance to employers on issues such as:
It also publishes a range of booklets on health and safety in the workplace designed for both employers and employees.
The Health and Safety in Employment Act 1992
This legislation aims to prevent harm to employees while they are at work. It requires employers to ensure that employees work in a safe and healthy environment.
Employment Relations
The Department of Labour provides up-to-date information on all aspects of employer/employee responsibilities under the Employment Relations Act 2000.
The department maintains a well-designed website with comprehensive information about all aspects of employer/employee relationships. It provides a handy series of booklets in English and other languages, dealing with the concept of good faith relationships and explaining how the various provisions of the Employment Relations Act 2000 influence employer/employee responsibilities. All publications are downloadable in whole or in part.
If problems arise in an employment relationship, employers can get help from the Department of Labour Infoline.
Freephone: 0800 20 90 20
The Employment Relations Act 2000
The Employment Relations Act 2000 recognises that good employment relationships are built on good faith behaviour. It promotes collective bargaining through unions, but also protects the rights of individuals who choose not to join a union and who wish to negotiate their own individual Employment Agreement.
Resource management
If your business activity either uses or affects a natural resource, you may need to apply for a resource consent from your local authority. Application forms are available from your local council. You will need to provide an assessment of the effects your business activity will have on the local environment. Land use consents are dealt with by city and district councils. Consents for the use of air, water or coastal areas are managed by regional councils.
The Resource Management Act 1991
Provides for the sustainable management of New Zealand's natural resources and establishes compliance standards for both private and business activities.
NEW ZEALAND’S STOCKMARKET
New Zealand Exchange Limited (NZX)
New Zealand Exchange Limited (NZX) was established as a company on 31 December 2002 after members of the New Zealand Stock Exchange (NZSE) voted to demutualise the organisation. NZX is now a revenue-generating corporate. Through its listing rules, NZX is responsible for the frontline regulation of companies listed on its three securities markets: the NZSX, NZDX and NZAX Markets. NZX also regulates the conduct of a wide range of market participants, including NZX Firms (sharebroking firms), dealing and clearing participants, and futures and options dealers. In June 2003, NZX listed on its own NZSX Market. A special division of NZX Discipline (a body set up to determine breaches of NZX's rules) regulates the conduct of NZX as a listed company.
Trading on NZX's markets is conducted through NZX Advisors who are accredited by NZX to give investment advice and enter orders into the market. NZX operates a screen-based trading system called FASTER (Fully Automatic Screen Trading and Electronic Registration) that replaced the trading floors in 1991. NZX has a user-pays data service that provides a number of products based on trading data. Email for more information. The NZX website contains a directory of NZX Firms (sharebroking firms) and a useful 'Education' section that includes information on how to get started in sharemarket investing.
Listing on NZX's markets
To be listed on the NZSX Market a company must have:
Once a company is listed on any of NZX's markets, it must follow the NZX Listing Rules that apply to the relevant market. These rules are designed to protect shareholders and investors and ensure companies comply with continuous disclosure obligations. For more information, visit NZX.
BUSINESS ORGANISATIONS
Finding helpful information and expert advice is very important when entering a new business environment. In these early stages, the following organisations may prove particularly helpful.
Business Development Programmes
Business Development is supported by a wide range of organisations providing services to help improve the management skills and ability of small- and medium-sized businesses. The range of services includes assessment, skills training, coaching and networking, business incubation. Government grants and loans are also available. There are 29 BIZ Centres nationwide – all are listed in The White Pages.
Technology New Zealand
Technology New Zealand provides a comprehensive range of programmes that promote the business community's development and adoption of advanced technologies. A wide range of government-funded research grants is available.
These grants focus on specific technical developments rather than general business development.
New Zealand Trade and Enterprise
New Zealand Trade and Enterprise is the government’s overseas trade and business enterprise development agency. It provides market intelligence and market development services through a network of 48 offices in New Zealand and around the world. This global capability is aligned with local strategies to develop sectors from a national and regional perspective, while assisting individual firms to improve their capabilities to take up these new opportunities.
Economic Development Association of New Zealand (EDANZ)
The Association represents 74 Economic Development Agencies and Economic Development Units run by regional, district and city councils. It provides a range of services for business migrants.
New Zealand Chambers of Commerce & Industry (NZCCI)
The Chambers of Commerce are voluntary, membership-based organisations. Membership is open to all types of businesses, and this is a particularly effective way to establish new business contacts and find out about local business conditions. Chamber services include:
The Chamber network includes 29 Chambers representing about 22,000 businesses. About 75% of the members in New Zealand are small- and medium-sized businesses and more than one-third are involved in international trade. The New Zealand Chambers website provides links to Chambers of Commerce throughout the country.
Small Business Enterprise Centres
There are 52 Small Business Enterprise Centres throughout New Zealand. They specialise in helping small businesses and offer:
Some Centres provide specialist services for new migrants who want to start a business.
BUSINESS TAX
Tax is an important part of being in business. Getting the right information and advice and setting up the right systems from the start will help your business meet its obligations.
Basic business tax rules
Businesses in New Zealand must follow certain tax laws. Inland Revenue Department (IRD) provide information that is relevant to business owners and also if they employ staff. It outlines what they must do to pay income tax, GST and meet certain other obligations. Information is also provided on other topics including payments to non-residents, the implications of e-commerce and provisional tax.
There are a number of taxes that businesses will have to consider. For all of these taxes your business will need to:
You may also need to:
Your IRD number
If you already have an IRD number for non-business income and you are a sole trader, you use the same number for your business. You would also use this number if, as a sole trader, you need to register either for GST or as an employer.
If you are going to operate your business as a company, partnership or trust, you will need to get a separate IRD number. See Inland Revenue Department- Businesses & Employers for information on getting an IRD number.
Income tax
You will need to complete an income tax return each tax year. The tax year for most businesses is 1 April to 31 March. As a New Zealand resident you will be taxed on your worldwide income. When you complete a tax return, you must include your income from all sources (including that from overseas). If you are operating your business as a company, partnership or trust, you will need to file a separate tax return for your business. Income tax is payable on the net profit from your business, which is the income earned less any business expenses. Some expenses that can be deducted from the income are:
Paying personal income tax
Income tax rates can vary from time to time. For the year ended 31 March 2006 they are:
| Income Tax rates | ||
| Income ($NZ) | Tax rate for individuals, sole traders and partners in a partnership | Tax rates for Companies |
| $0 – $14,000 | 10.55% | 28% |
| $14,001 – $48,000 | 17.5% | 28% |
| $48,001 -70,000 | 30% | 28% |
| over $70,000 | 33% | |
A business usually needs to pay income tax through the year in three instalments (known as Provisional Tax). When you send in your tax return, you pay or receive the difference between what you have already paid in Provisional Tax and the actual tax payable for the year.
Tax Residency
New Zealand residents are liable for income tax on their worldwide income. If you are a New Zealand tax resident, you will need to pay income tax on all income you receive from both New Zealand and overseas. If you have a taxable activity in New Zealand, you will need to pay Goods and Services Tax (GST).
You are a New Zealand resident for tax purposes if:
To decide whether you have an enduring relationship with New Zealand, Inland Revenue considers things such as:
whether you are here for continuous periods from time to time
whether you own, lease or have access to property in New Zealand
your social ties (where your immediate family lives, if you have children being educated here, if you belong to any New Zealand associations)
your economic ties (if you have bank accounts, credit cards, life insurance, investments or superannuation funds here)
your employment (if you work here)
your personal property (if you own or keep possessions here)
whether you intend to live in New Zealand
whether you receive welfare benefits, pensions and other payments.
Note: you can keep similar ties, or even a home, in other countries, but still be a New Zealand resident for tax purposes. If you have an enduring relationship with New Zealand, you will always be a tax resident. You may be a tax resident in New Zealand and another country. This means you are resident in two countries under the tax laws of each of those countries. If both countries tax their residents on worldwide income, you could be taxed twice on the same income. To prevent this, New Zealand has double tax agreements with many other countries. These agreements establish which country has the first or sole right to tax certain types of income. Inland Revenue provides expert advice on these issues.
Goods and Services Tax (GST)
GST is New Zealand's form of indirect value-added tax. It is a tax on the goods and services provided by a GST-registered person in their business. It is charged at the rate of 15% to the person (including other businesses) who buys the goods or services. It is not a tax on the business. Anyone with a business turnover of $60,000 or more (excluding GST) must register for and charge GST. Registration is optional if the annual turnover is less than $60,000. When registered, the business completes regular GST returns (every one, two or six months) and pays or receives the difference between the GST charged and GST paid on business expenses. If a business is not registered for GST, it cannot charge or claim back GST. Some goods and services, such as rent from domestic accommodation and income from financial services, are exempt from GST.
Employing people
Your business is an employer if it:
Your business will need to register with Inland Revenue as an employer and make pay-as-you-earn (PAYE) and other deductions (such as student loan repayments) from its employees' wages each pay day. Each month your business lets Inland Revenue know who its employees are, how much they earned and what was deducted from their wages, and pays those deductions to Inland Revenue. Your business will also need to keep wages records, such as a wage book.
Getting help
Inland Revenue has all the information your business needs on tax.
Inland Revenue's website has information about starting up and running a business.
Inland Revenue also offers a free business tax information service to help new businesses meet their tax obligations. You can find out more about this service and make an appointment through Inland Revenue's website, or by Freephone: 0800 377 774 when you arrive in New Zealand.
You can also get Inland Revenue's book Smart Business – a guide for businesses and non-profit organisations (IR 320) from the website or by phoning:
Remember, keeping good records will help your business meet its tax obligations, and means your business can deduct the right expenses from its income.
BUSINESS AND GOVERNMENT WEBSITES / FREEPHONES
Administers New Zealand's accident compensation scheme which provides personal injury cover for all New Zealand citizens, residents and temporary visitors.
For Workplace Injury Prevention information, freephone: 0800 844 647 (0800 THINKSAFE)
For information about Employer Levies, freephone: 0800 222 776