Tax & Companies

About Companies for Tax
For tax purposes a company is defined in the Tax Act as; “Any body corporate whether incorporated in New Zealand or elsewhere” and includes anything deemed to be a company for the purpose of the Act.

This definition of a company is added to by additional legislation which was enacted in 1994 as part of the wider reforms to company tax.

These were:

  • Close company: A close company for tax purposes is one where there are five or less natural person shareholders whose total voting interest or total market value in the company is greater than 50%.

  • Closely held company: A closely held company is a company where there are five or less persons (associated persons of an individual will count as one individual) whose total direct voting interest or total direct market value interest is greater than 50%.

  • Widely held company: A widely held company is any company which as no less than 25 shareholders and is not a closely held company.

  • Limited Attribution Company: This type of company is a building society or a co-op company. So this type of company is either; a building society, or a co-op company, a listed company, a widely held company, or a limited attribution foreign company.

  • Other companies: include limited attribution foreign company, listed company, qualifying and loss attributing qualifying companies, special corporate entities.

Any company that is a New Zealand resident becomes one if it is incorporated, or has its head office or central management in New Zealand, or is controlled by its directors and that control is exercised in New Zealand.

This requirement brings more companies within the New Zealand tax jurisdiction because it includes in the company’s gross income all attributed foreign income from other sources.

Any company resident in New Zealand or which has income from New Zealand is subject to tax in this country.