How bout capital gain from sale of property? Any tax?
I assume that you are referring to investment properties.
The thing I like about NZ is no CGT, higher rate of depreciation (+1.5% over oz) and no stamp duty.
For people interested in comparing the tax of both countries (OZ Vs NZ)
http://www.ato.gov.au/businesses/content.aspx?doc=/content/50664.htm
(sample from the link)
Income tax
<TABLE><TBODY><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>The income tax treatment depends on residency status.
Residents of New Zealand are taxed on their worldwide income and non-residents are taxed on New Zealand-sourced income only.
It is possible to be a resident of both New Zealand and Australia. If this occurs, Article 4 of the Australia - New Zealand Double Tax Agreement (DTA) contains a "tie-breaker" provision which allocates residency to one of the jurisdictions.
</TD><TD vAlign=top width=323 colSpan=2>The income tax treatment is dependent on the residency status of the entity.
Residents of Australia are generally taxed on their worldwide income. Non-residents are generally only taxed on Australian sourced income. In most cases, temporary residents are only taxed on Australian sourced income.
It is possible to be a resident of both Australia and New Zealand. If this is the case, Article 4 of the Australia - New Zealand Double Tax Agreement (the DTA) contains a 'tie-breaker' provision which allocates residency to one of the jurisdictions for the purposes of the DTA.
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Income year
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>The standard New Zealand income year is from 1 April to 31 March.
You may adopt a different balance date if the nature of your business makes a 31 March balance date inappropriate. Other reasons for having a non-standard balance date include:
- wishing to align to your overseas company's balance date (i.e. 30 June in Australia)
- a subsidiary wishes to align its balance date with its parent company
- an estate wishes to adopt the deceased's date of death, or
- a shareholder-employee wants the same balance date as the company.
</TD><TD vAlign=top width=323 colSpan=2>The standard Australian income year is from 1 July to 30 June. Entities, with the leave of the Australian Commissioner of Taxation, are able to adopt a different income year period.
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Income tax rates for resident individuals
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New Zealand
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Australia
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</TD><TD vAlign=top width=323 colSpan=2>Income tax rates for resident individuals for the year ending 30 June 2007
</TD></TR><TR><TD vAlign=top width=207>Taxable income
</TD><TD vAlign=top width=127>Tax rate
</TD><TD vAlign=top width=202>Taxable income
</TD><TD vAlign=top width=121>tax rate
</TD></TR><TR><TD vAlign=top width=207>
Up to $38,000
$38,001 to $60,000
$60,001 and over
</TD><TD vAlign=top width=127>
19.5 %
33.0 %
39.0 %
</TD><TD vAlign=top width=202>$A
$0 - $6,000
$6,001 - $25,000
$25,001 - $75,000
$75,001 - $150,000
$150,001 +
</TD><TD vAlign=top width=121>
0%
15%
30%
40%
45%
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>An additional 1.3% of ACC earners' levy is placed on these tax rates.
Please note that the above rates are progressive, therefore, if you earn $61,000, the 39% rate will only apply to the last $1,000 of income.
</TD><TD vAlign=top width=323 colSpan=2>For more information, refer to
Individual income tax rates.
Generally, Medicare levy at the rate of 1.5% of taxable income is also payable. An additional 1% Medicare levy surcharge is sometimes payable.
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Income tax rates for non resident individuals
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2 rowSpan=3>The income tax rates for non-resident individuals are the same as the income tax rates for resident individuals.
</TD><TD vAlign=top width=323 colSpan=2>Income tax rates for non-resident individuals for the year ending 30 June 2007
</TD></TR><TR><TD vAlign=top width=202>Taxable income
</TD><TD vAlign=top width=121>tax rate
</TD></TR><TR><TD vAlign=top width=202>$A
$0 - $25,000
$25,001 - $75,000
$75,001 - $150,000
$150,001 +
</TD><TD vAlign=top width=121>
29%
30%
40%
45%
</TD></TR><TR><TD vAlign=top width=658 colSpan=4>
Income tax rates for companies (irrespective of residency status)
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>33% *
* Please note that this rate is set to change to 30% from the 2008 - 2009 income tax year, commencing on 1 April 2008.
</TD><TD vAlign=top width=323 colSpan=2>30%
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Capital gains tax (CGT)
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>New Zealand does not have capital gains tax.
</TD><TD vAlign=top width=323 colSpan=2>Capital gains tax (CGT) is payable on the capital gains you make when a capital gains tax event occurs - such as, the sale of an asset.
Any capital gains which are taxable should be included in your annual income tax return. CGT is not a separate tax - it is merely a component of your income tax.
Generally, capital gains made in relation to CGT assets acquired on or after 20 September 1985 are taxable.
Residents of Australia are liable for CGT on assets worldwide.
If a capital gains tax event occurred prior to 12 December 2006, a foreign resident was not liable to capital gains tax (nor was the foreign resident treated as having made a capital loss) unless the asset had a 'necessary connection with Australia'. This rule also applied to temporary residents from 1 July 2006 to 12 December 2006.
If a capital gains tax event occurs on or after 12 December 2006, a foreign resident or a temporary resident is not liable to capital gains tax (nor is treated as having made a capital loss) unless the asset is 'taxable Australian property'.
To work out whether you have to pay tax on your capital gains, you need to know:
- whether a CGT event has happened to you
- the time of the CGT event
- what assets are subject to CGT
- how to calculate the capital gain or capital loss
- whether there is an exemption or rollover that allows you to reduce or disregard the capital gain or capital loss
- whether the CGT discount applies, and
- whether you are entitled to any of the small business CGT concessions.
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Paying income tax throughout the year
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New Zealand
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Australia
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Provisional tax
If your residual income tax ("tax to pay" figure on your last return) was more than $2,500 you'll be liable for provisional tax. The provisional tax you pay during the year is offset against your end of year tax payable figure.
For more information please refer to
Paying business income tax.
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Pay As You Go (PAYG) Instalments
The pay as you go (PAYG) instalments system is used for making instalment payments during the income year towards your
expected tax liability on your business and investment income. Your actual tax liability is worked out at the end of the income year when your annual income tax return is assessed.
Your PAYG instalments for the year are credited against your assessment to determine whether you owe tax or are owed a refund. The Tax Office will tell you if you have to pay PAYG instalments.
For more information refer to
PAYG instalment essentials
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The amount of income tax you have to pay at the end of the year
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>Residual income tax is the amount of tax you have to pay after subtracting any rebates and tax credits you may be entitled to (excluding other tax payments made during the year). It is calculated on your end of year tax return.
</TD><TD vAlign=top width=323 colSpan=2>Is the amount of tax you have to pay after subtracting any tax offsets, this includes rebates and tax credits you may be entitled to (excluding other tax payments made during the year). It is calculated on your end of year tax return.
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Company and imputation rules
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>Imputation is a system that allows companies to pass on to their shareholders the benefit of the New Zealand income tax they have already paid. Companies can do this by "imputing" (attaching to the dividends they pay out) credits for the income tax the company has already paid. The amount of "imputed" credits is called an imputation credit.
The Trans-Tasman imputation legislation was enacted on 25 November 2003 and allows:
- Australian companies to elect to maintain an Imputation Credit Account (ICA) in New Zealand
- Wholly owned groups of companies (either, Australian and/or New Zealand) to elect to form groups for imputation purposes only
- Both types of elections to be made for the 2004 imputation year (1 April 2003 to 31 March 2004) onwards.
For further information please refer to
trans-Tasman imputation.
</TD><TD vAlign=top width=323 colSpan=2>Since 1987, the imputation system has allowed Australian companies (and other entities taxed like companies) which pay Australian tax, to pass on to their Australian shareholders a credit for income tax paid on profits when distributing those profits. The tax paid by the company is allocated to shareholders by way of franking credits attached to the dividends they received.
Although shareholders are taxed on the full amount of the profit represented by their dividend distribution, they are allowed a franking credit for the tax already paid by the corporate entity.
This prevents double taxation - that is, the taxation of company profits when earned by a company, and again when a shareholder receives a dividend.
Foreign residents cannot claim a franking credit. However, if a franked dividend is paid to a foreign resident, the dividend will be exempt from Australian income and withholding taxes.
From 1 October 2003, a New Zealand company that has chosen to join the Australian imputation system may pay dividends franked with Australian franking credits. For instance, a New Zealand company might have paid Australian income tax and might pay dividends franked with Australian franking credits (as opposed to dividends franked with New Zealand franking credits). Australian residents who own shares in a New Zealand company or who receive a distribution from a partnership or trust that receives dividend income from the New Zealand company may be able to claim a tax offset for the Australian franking credits. This reform is known as the
Trans-Tasman imputation reform.
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Debt and equity rules
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>New Zealand does not have debt and equity rules.
</TD><TD vAlign=top width=323 colSpan=2>Australia has specific rules that determine what constitutes equity in a company and debt in an entity for certain tax purposes with effect from 1 July 2001. The debt and equity tests determine whether a return on an interest in an entity may be frankable and non-deductible (like a dividend) or may be deductible to the entity and not frankable (like interest).
These rules are also relevant for the thin capitalisation rules and for withholding tax purposes. A debt interest classification may also be important for the purposes of the consolidations measures (in identifying membership interests).
For more information refer to
Debt and equity tests: guide to the debt and equity tests.
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Trusts
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>In general, the initial amount of money you put into a trust is not taxed. Any income the trust earns (eg, through investment or business income) is taxed at a flat rate of 33 cents in the dollar. The trustee is liable for paying this income tax regardless of where they live in the world.
</TD><TD vAlign=top width=323 colSpan=2>Under Australian income tax law, most trust estates are
not taxed as companies.
Generally, if the income of the trust is distributed to the beneficiary, the beneficiary will include that income in their assessable income. If the beneficiary is a non-resident, under 18 years of age or under a legal incapacity, the trustee will be assessed on the trust income on behalf of the beneficiary.
Ordinarily, if no beneficiary is presently entitled to the income of the trust, the trustee will be assessed on the trust income.
Special rules apply to certain public trading trusts and certain corporate unit trusts which are treated as companies, and to superannuation funds.
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Depreciation
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>
New Zealand
</TD><TD vAlign=top width=323 colSpan=2>
Australia
</TD></TR><TR><TD vAlign=top width=334 colSpan=2>Depreciation is a deduction that business taxpayers can claim against their gross income. It's an allowance given in recognition of the fact that fixed assets decrease in value over their working life. Not all fixed assets can be depreciated. For further information refer to
Business income tax - Depreciation.
</TD><TD vAlign=top width=323 colSpan=2>Generally, a deduction is available for the decline in the value of certain depreciating assets which are used to earn assessable income. Some items, like land and trading stock, are specifically excluded from the definition of a depreciating asset.
For more information refer to
Guide to depreciating assets
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