New Zealand: Tax-Efficient Regimes and Sectors
Tax-Privileged Business Sectors
The New Zealand screen production industry has been subject to a special tax regime since the early 1980s. Film production expenditure incurred up to the completion of New Zealand films, including expenditure incurred in acquiring a “film right”, may be 100% deducted in the year a films is completed.
Since 2003, production companies filming large budget productions in New Zealand have also been offered an incentive known as the Large Budget Screen Production Grant (LBSPG), which provides a rebate of 12.5% of the qualifying New Zealand production expenditure (with a minimum of NZD15m) to film and television production companies. From July 2007, the incentive was enhanced to 15% and extended to post, digital and visual productions (with qualifying expenditure between NZD3m and NZD15m). A new grant for very large film productions came into effect in May 2011. Productions spending a minimum of NZD200m can apply for an additional grant providing a 15% rebate on expenditure for guaranteed deferments or participation payments. Applicants must be either a New Zealand-resident company or a foreign corporation operating with a fixed establishment in New Zealand for the purposes of lodging an income tax return.
In addition, from July 2008, a Screen Production Incentive Fund (SPIF) grant is available for film and other screen formats deemed to have significant New Zealand content. Grants are available of 40% or 20% of the qualifying New Zealand production expenditure on eligible feature films (minimum NZD4m) or television or other format screen productions, respectively. The qualifying expenditure of a film with an SPIF grant is deductible over two years, rather than qualifying for an immediate deduction incentive.
An income equalisation scheme is available to allow farmers, fishers and foresters, who are eligible taxpayers, to even out fluctuations in income by spreading their gross income from year to year.
While forestry has been a sector much supported in New Zealand, there are no industry-specific tax incentives. However, for investors with other New Zealand income sources, the costs of developing a forest can be deducted for tax purposes. Normally, it will be most effective to purchase and own a forestry investment in New Zealand using a corporate structure, particularly for a foreign investor.
A 15% tax credit on qualifying research and development expenditure was introduced for the 2009 income year, but was rescinded from 2010 onwards.
There are no special economic zones with tax incentives in New Zealand.