NZ Company Tax Calculator
Calculate company tax at 28%, imputation credits on dividends, and compare company vs sole trader structures.
Key Takeaway
NZ companies pay a flat 28% tax rate. Imputation credits prevent double taxation when profits are distributed as dividends — the company tax already paid is credited against the shareholder's personal tax.
28%
Flat company rate
28/72
Imputation ratio
10.5%-39%
Partnership rates
$60,000
GST threshold
How NZ Company Tax Works
NZ companies are separate legal entities taxed at a flat 28% rate on taxable income. This is simpler than the progressive personal rates (10.5% to 39%) that apply to sole traders and partnerships.
Company vs Sole Trader
As a sole trader, all business profit is taxed at your personal marginal rates — up to 39% for income over $180,000. A company pays a flat 28% on profit, but profits must eventually reach you as salary (taxed at personal rates) or dividends (with imputation credits).
The company structure becomes advantageous when your personal marginal rate exceeds 28% — typically around $70,000-$78,000 of income where the 30% bracket begins. The more profit you retain in the company (taxed at 28% rather than 33-39%), the greater the saving.
The Imputation System
New Zealand uses an imputation system to avoid double taxation. When a company pays 28% tax, it earns imputation credits. These credits attach to dividends — shareholders include the grossed-up dividend (cash + credits) in their income, then subtract the credits from their personal tax.
Example: Company earns $10,000 profit, pays $2,800 tax.
Distributes $7,200 cash dividend with $2,800 imputation credits.
Shareholder declares $10,000 grossed-up dividend.
Tax at 33% marginal rate: $3,300
Less imputation credits: -$2,800
Additional tax payable: $500
When Does a Company Make Sense?
A company structure is worth considering when:
- Your taxable income exceeds $70,000-$78,000 (where personal rates exceed 28%)
- You can retain profits in the company for reinvestment
- You want limited liability protection
- The additional compliance costs (~$2,000-$5,000/year for accounting) are justified by tax savings
Partnerships
A partnership is not a separate tax entity. Income flows through to individual partners and is taxed at their personal marginal rates. This means partnership income is taxed the same as sole trader income — no flat 28% rate applies.
Frequently asked questions
What is the NZ company tax rate?
New Zealand companies pay a flat 28% tax rate on taxable income. This applies to all NZ-resident companies regardless of size or profit level. The rate has been 28% since 2011.
How do imputation credits work?
When a company pays 28% tax on its profits, it earns imputation credits. These credits attach to dividends paid to shareholders, offsetting their personal tax. The maximum credit ratio is 28/72 of the cash dividend. This prevents double taxation — the company tax already paid is credited against the shareholder's personal tax.
When is a company better than being a sole trader?
A company structure typically saves tax when your personal income exceeds roughly $70,000-$78,000, where personal marginal rates (30-33%) exceed the 28% company rate. However, you must also consider compliance costs, legal obligations, and that retained profits are taxed at 28% rather than your personal rate.
How are partnerships taxed in NZ?
Partnerships are not separate tax entities in New Zealand. Business income flows through to each partner and is taxed at their individual marginal rates (10.5% to 39%). Partners file their share of partnership income on their personal tax returns.
Do companies need to register for GST?
Companies must register for GST if their taxable supplies exceed $60,000 in any 12-month period. Voluntary registration is available below this threshold. The GST rate is 15%.
How should I set my director salary?
Director salary is a deductible expense for the company, reducing company taxable income. The optimal salary depends on your total income, desired KiwiSaver contributions, and ACC cover. Generally, setting salary up to the 28% marginal bracket threshold maximises tax efficiency, then distributing additional profits as imputed dividends.
Related Calculators
Sources: IRD — Company tax rates, IRD — Imputation. Last updated April 2026.