NZ Company First Year Tax: What Every New Director Needs to Know
New directors often miss their first provisional tax payment or get GST wrong in year one. Here is exactly what to expect and how to avoid the most common mistakes.
Your First Tax Year as a NZ Company Director
Incorporating a company in New Zealand is straightforward. The tax obligations that follow are less so. Most new directors are surprised by how many separate tax registrations and payment schedules apply from year one.
This guide covers the main obligations so you can plan your cash flow and avoid the most common first-year mistakes.
Income Tax: Company Rate 28%
New Zealand companies pay income tax at a flat rate of 28% on net profit. Your first tax return is due by 7 July of the year following your balance date (most NZ companies have a 31 March balance date).
Example: if you incorporated in October 2025, your first balance date is 31 March 2026, and your first tax return is due 7 July 2026 (or later if you use a tax agent with an extension).
Provisional Tax: Pay as You Earn (Not at Year End)
Once your residual income tax (RIT) exceeds $5,000, IRD expects you to pay tax in instalments during the year, not just at filing. This is provisional tax.
Most new companies avoid provisional tax in year one because they have no prior-year income to base instalments on. But if your first year is profitable, you may face a large tax bill at year end -- and provisional tax obligations for year two starting immediately.
Solution: work with your accountant to estimate year-one profit early and set aside 28% as you go.
GST: Register Early if You Expect $60k Turnover
GST registration is compulsory once your turnover exceeds NZ$60,000/year. You can also register voluntarily from day one, which lets you claim GST on startup costs (equipment, software, professional fees).
Voluntary early registration is usually worth it if you have significant startup costs or if your customers are GST-registered businesses who can claim it back anyway.
GST returns are filed monthly, two-monthly, or six-monthly depending on your expected turnover. Late returns incur penalties and use-of-money interest.
PAYE: Register as an Employer When You Hire
If you pay yourself a salary as a director (rather than drawings or dividends), or hire any employees, you must register as an employer with IRD and file payday returns within two working days of each pay run.
Payday filing replaced the old monthly employer return in 2019. It is mandatory and the most common compliance failure for new employers who are not aware of the change.
KiwiSaver: Employer Contributions
Employers must contribute a minimum 3% of gross salary to KiwiSaver for eligible employees (and to themselves if they take a salary). This is on top of the employee contribution and comes out of business cash flow.
KiwiSaver obligations start from the first payrun. They are processed through PAYE, so if your payroll is set up correctly, this should be automatic.
ACC Levies: Expect an Invoice in Year Two
ACC charges levies based on your business type and payroll. In year one, you pay a minimum levy. In year two, IRD provides ACC with your actual payroll and the levy is recalculated -- often higher than the year-one minimum. Budget for this.
Annual Return to the Companies Register
Every NZ company must file an annual return with the Companies Office by the anniversary of incorporation. The fee is NZ$43 (as of 2025). Failure to file results in a reminder, then removal from the register.
Get Help Early
The cost of a good accountant in year one is almost always less than the cost of getting these obligations wrong. Most accountants offer a fixed-fee package for new company setup and first-year compliance.
To find an accountant who specialises in new companies in your region, visit our Connect with a Professional page.