New Zealand, a kingdom in the Pacific region, leads the way in ease of doing business, including a high level of government services, and has a stable and transparent economic system. Most small and medium-sized companies are exempt from filing financial statements and mandatory annual audits.
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Financial statements of companies of New Zealand must comply with the Generally Accepted Accounting Principles (GAAP NZ) and include:
Financial statements must be signed by the company’s director before the auditor’s report is signed or on the same day when the auditor’s report is signed and dated.
A company is not obliged to prepare financial statements if during the reporting year all the following conditions are met:
Nevertheless, the company will still be obliged to keep tax accounts to calculate taxable income, expenses and Goods and Services Tax / VAT, as well as tax records for employment (if the company has employees).
All companies incorporated in New Zealand end their financial and tax year on 31 March, but the reporting date can be changed by the company’s application submitted to the Companies Office.
Most of small and medium-sized companies use exemption from audit and are not obliged to file their financial statements with official authorities.
According to provisions of section 11 of the Companies Act, a company must prepare and file audited financial statements if it is large (criteria for such companies are prescribed in section 45 of the Financial Reporting Act 2013):
The following companies have the same obligation:
All companies that must report transactions on financial markets of New Zealand and foreign countries (Financial Markets Conduct reporting entities / FMC reporting entities), such as credit unions and building societies, must annually file audited financial statements irrespective of their size.
Financial statements must be prepared within:
The company’s tax return must be filed before or on the seventh day of the fourth month after the end of the reporting period. The time period for submission of a tax return in the case of a standard reporting period is from 31 March to 7 July.
If financial statements are not filed in accordance with the Companies Act within the prescribed period, fines will be imposed on the company. The late payment fee is:
If the company fails to present audited financial statements, a fine of 7 000 NZD can be imposed on each director of the company.
If audited financial statements have not been presented by the due date and the 7 000 NZD fine has not been paid:
The Inland Revenue Department can impose penalties and fines for late payment of income tax of 5% of the unpaid tax (it can be decreased to 1% if the tax is paid within one week after the due date).
Financial statements of a group must be filed for companies that on the reporting date have one or more subsidiaries.
The consolidated group shall file one tax return on the company’s income that includes profits of all companies of the group. This return shall be filed under an IRD (Inland Revenue Department) tax number that is different from numbers of separate companies. One member of the group must be appointed to:
Each member of the group is liable for its share of any tax obligations while it is a member of the group.
Taxable income of the group is the sum of the aggregate taxable income of member companies.