NZ Sole Trader Tax Calculator
Calculate your complete tax picture as a NZ sole trader — income tax, ACC levy, GST, provisional tax, and take-home pay in one place.
Employment, investments, etc. Used for correct marginal rate.
PAYE on employment income above; deducted when calculating RIT.
Resident withholding tax on interest or dividends above.
Enter RIT from the relevant prior return; leave blank if unknown.
Sole Trader Tax in New Zealand
As a sole trader in New Zealand, you have multiple tax obligations to manage. Unlike PAYE employees who have tax deducted automatically, sole traders must calculate and pay their own income tax, ACC earner's levy, and potentially GST and provisional tax.
Your taxable income is your gross business income minus allowable business expenses. Common deductible expenses include home office costs, vehicle expenses, professional fees, equipment, insurance, phone, internet, and marketing costs.
If your annual turnover exceeds $60,000, you must register for GST. You can voluntarily register if you are below the threshold. GST-registered sole traders collect 15% GST on their sales and claim back GST paid on business purchases.
If your residual income tax exceeds $5,000, you are required to pay provisional tax — tax paid in advance during the year in three installments. The standard method calculates this as 105% of your prior year's tax.
Sole Trader vs Company vs LTC
As your business grows, the choice of structure changes your tax rate and your compliance burden. Here's the headline comparison:
| Structure | Tax rate on profit | Key characteristic |
|---|---|---|
| Sole trader | 10.5%–39% (personal marginal rates) | Simplest structure; unlimited personal liability; no separate legal entity. |
| Limited company | 28% flat, on retained profit | Liability protection; imputation credits on distributed dividends; more compliance (IR4, Companies Office). |
| Look-through company (LTC) | 10.5%–39% (flows to owner) | Company legal structure, but profit and losses "look through" to be taxed at the owner's personal rate — useful when a company shell is wanted without the 28% flat rate. |
The 39% top personal rate versus the 28% company rate only becomes a real saving if profit is retained in the company rather than paid out — distributed dividends carry imputation credits that largely equalise the two paths. Run the numbers with the Company Tax Calculator, or read the full Sole Trader vs Company comparison and our structure-choice insight.
Worked Example: $120,000 Revenue Sole Trader Business
A GST-registered sole trader earns $120,000 in annual revenue (GST-exclusive) with $30,000 of deductible business expenses, for 2025-26:
| Revenue | $120,000 |
| Business expenses | −$30,000 |
| Taxable profit | $90,000 |
| Income tax (2025-26 brackets, marginal rate 33%) | $19,577.50 |
| ACC earner's levy (1.67%) | $1,503.00 |
| Total tax obligations | $21,080.50 |
| Effective tax rate | 21.75% |
| Annual take-home | $68,919.50 ($5,743.29/mo) |
Because this business is GST-registered, GST is a separate pass-through, not a cost: 15% is collected on the $120,000 of sales ($18,000), offset by GST paid on the GST-eligible portion of expenses ($3,600.00), leaving $14,400.00 net GST payable to IRD across the year — on top of, and separate from, the $21,080.50 income tax and ACC shown above.
With $19,577.50 residual income tax — well above the $5,000 threshold — this sole trader will move onto provisional tax instalments from the following year, paid in three installments (28 August, 15 January, 7 May).
Business Deductions Overview
| Category | Rule |
|---|---|
| Home office | IRD's published square-metre rate — $57.30/m² for 2025-26 — or actual apportioned costs. Compare both with the Home Office Expense Calculator. |
| Vehicle — kilometre rate | IRD's simplified Tier 1 rate for petrol vehicles is $1.20/km for the first 14,000km of total travel (2025-26 rates), falling to $0.37/km beyond that. See the Kilometre Rate Calculator for all vehicle types. |
| Vehicle — logbook method | Alternative to the kilometre rate: keep a logbook for a representative 90-day period to establish your business-use %, then apply that % to actual running costs. |
| Client entertainment | Only 50% deductible for meals, functions, and similar entertainment with a private element — not the full cost. |
| Tools & equipment (low-value assets) | Assets costing $1,000 or less can be fully expensed in the year of purchase. Above that, claim depreciation over the asset's useful life. |
Record-Keeping & Key Dates
Keep invoices, receipts, and mileage/floor-area records for at least 7 years. The key annual dates for a March balance date sole trader:
- 7 July 2026: 2025-26 income tax return (IR3) due (no tax agent or extension of time).
- 28 August 2026: Provisional tax 1st instalment for 2026-27 (standard method, March balance date).
- 15 January 2027: Provisional tax 2nd instalment for 2026-27 (standard method, March balance date).
- 7 May 2027: Provisional tax 3rd instalment for 2026-27; GST for period ended 31 March 2027.
See the full NZ Tax Deadlines calendar for GST and terminal tax dates too.
Losses & Offsetting Future Income
If your business makes a loss in a given year, sole traders can generally carry that loss forward to offset against future years' income (there's no carry-back for individuals). Losses don't expire, but continuity and ring-fencing rules can restrict how they're used — see our tax loss carry-forward guide for the detail.
Frequently asked questions
What taxes do sole traders pay in NZ?
Sole traders pay income tax on their net profit (at the same rates as employees: 10.5% to 39%), ACC earner's levy (1.67% up to the cap for 2025-26), and GST at 15% if registered. You may also need to pay provisional tax if your residual income tax exceeds $5,000.
When do I need to register for GST?
You must register for GST if your taxable supplies (turnover) exceed $60,000 in any 12-month period, or if you expect them to exceed $60,000 in the next 12 months. You can voluntarily register if you are below the threshold.
What's the difference between a sole trader and a contractor?
The terms overlap heavily — a sole trader is a business structure (unincorporated, one owner), while "contractor" describes how you're engaged (project/fixed-term work rather than employment). Many sole traders work as contractors. The distinct case is contractors on schedular payments — see our Self-Employment Tax Calculator for the withholding-tax (IR330C) mechanics that apply there.
How do I pay myself as a sole trader?
You don't run payroll for yourself — a sole trader's business profit IS their personal income, taxed directly on your IR3. Many sole traders transfer money from a business bank account to a personal one for cashflow management, but that transfer itself isn't a taxable event; tax is calculated on total net profit regardless of what you draw out.
What is provisional tax and when do I need to pay it?
Provisional tax is income tax paid in advance during the year. If your residual income tax (total tax minus tax credits) exceeds $5,000, you must pay provisional tax. Under the standard method, payments are due on 28 August, 15 January, and 7 May.
Is KiwiSaver compulsory for sole traders?
No. KiwiSaver is only compulsory via employer/employee PAYE deductions. As a sole trader you can choose to contribute voluntarily to a KiwiSaver scheme, and may still be eligible for the annual Government contribution — check the KiwiSaver Government Contribution Calculator.
When should I switch from sole trader to a company?
A common trigger point is when net profit consistently exceeds the point where your marginal income tax rate is well above the flat 28% company rate — commonly cited around $80,000–$100,000 profit — combined with wanting liability protection. The saving only materialises if you retain earnings in the company rather than drawing it all out as salary or dividend. See our Sole Trader vs Company comparison for the full breakdown.
What is ACC CoverPlus for sole traders?
CoverPlus is the default ACC cover for self-employed people — if you can't work due to injury, ACC pays up to 80% of your taxable income based on your most recently completed financial year, and your annual levy invoice (issued around September) is based on that same declared income. CoverPlus Extra is an optional alternative letting you agree a fixed level of cover in advance, giving predictable levies instead of income-based ones.
Related Calculators
Income Tax Calculator
NZ income tax by bracket with effective and marginal rates.
ACC Levy Calculator
ACC earner's levy at 1.67% up to the annual cap.
GST Calculator
Add or remove GST at 15%. Registration threshold check.
Provisional Tax Calculator
Compare Standard, Estimation, and AIM methods.
Company Tax Calculator
Company income tax at 28% with imputation credits.
Sole Trader vs Company
Personal marginal rate vs 28% company tax — full structure comparison.
Home Office Expense Calculator
IRD square-metre rate vs actual-cost home office deduction.
Kilometre Rate Calculator
IRD Tier 1/Tier 2 vehicle expense rates for business use.
Self-Employment Tax
Contractor-focused view: schedular payments, WT, and IR330C.
Sources
Tax rates from Inland Revenue (IRD). ACC levy rates from ACC. GST rules from IRD — GST. Provisional tax from IRD — Provisional Tax. Business expense rules from IRD — Business Expenses.
Last updated July 2026. Rates sourced from IRD and ACC.