Business Tax Rates

Partnerships Tax Rates
In a partnership, two or more people run a business together. Each partner contributes something to the business and, in return, each partner shares in any profit or loss. Each partner is also liable for any debt within the partnership.

Partners share responsibility for running the business, and share the profits and losses equally, unless the agreement says otherwise. The partnership itself does not pay income tax. It distributes the partnership income to the partners, who each pay tax on their own share.

When partnership profits or losses are distributed to a relative or an associated person and IRD consider the distribution to be excessive or unreasonable, IRD may reallocate the distribution for tax purposes.

The partnership itself does not pay tax on its profits. Instead:

  • At the end of each year the net profit (without taking into account partners' drawings) is distributed between each partner

  • Each partner then pays income tax on their share of the profit in their individual tax return, along with any other income they may have received.

Taxable income ($)Rate of tax (for every $1 of taxable income)
$0 to $38,00019.5 cents
$38,001 to $60,000 inclusive 33 cents
$60,001 and over 39 cents

Companies Tax Rates

A company is a formal and legal entity in its own right, separate from its shareholders (or owners). It is formed when a group of people exchange money and/or property for shares in an enterprise registered under the Companies Act.

To establish a company, you have to pay for a legal registration process.

The company owns the assets and liabilities of the business and is responsible for any debts. The shareholders' liability for losses is limited to their share of ownership in the company.

Companies can distribute money in 3 ways:

  1. Shareholder-employees can periodically draw money from the company. At the end of the year, the company calculates a salary amount on which the shareholder will have to pay income tax.

  2. Shareholders who are also employees of the company can be paid a salary with PAYE taken out in the normal way. These salaries are deductible as a business expense for the company.

  3. The company can pay dividends to shareholders out of the profits that remain after tax. It may also attach tax credits to these dividends called imputation credits. Profits derived by a company are taxed at the company tax rate of 33 cents in the dollar.