GSL / Foreign Companies Audit / Audit New Zealand

New Zealand company audit, financial statements, accounting, consulting in New Zealand

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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Service packages Legislation Tax System Audit Services
Preparation of annual financial statements and tax returns, audit

(according to the actual time spent; the rate depends on the complexity of the work and the qualifications of the person employed)

USD 100-400 per hour
Liquidation of a company
from 2 665 USD
Apostille of financial statements (if necessary)
from 830 USD

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General requirements

Financial statements of companies of New Zealand must comply with the Generally Accepted Accounting Principles (GAAP NZ) and include:

  • statement of financial results or profit and loss statement;
  • statement of changes in equity;
  • statement of financial position or balance sheet;
  • statement of cash flows;
  • accounting policy;
  • notes to financial statements;
  • auditor’s report.

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:

  • the company is not in a group of companies;
  • income is under 30,000 NZD (New Zealand dollars);
  • expenses are under 30,000 NZD.

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.

Audit of accounts

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):

  • total annual income of the company and its subsidiaries (if any) is more than 33,000,000 NZD or total assets of the company and its subsidiaries (if any) exceed 66,000,000 NZD in each of the last two reporting periods – for large New Zealand companies;
  • total income of the foreign company and its subsidiaries (if any) is more than 11,000,000 NZD or total assets of the company and its subsidiaries (if any) exceed 22,000,000 NZD in each of the last two reporting periods – for large overseas companies or subsidiaries of an overseas company.

The following companies have the same obligation:

  • public companies;
  • companies with 10 or more shareholders (there are some exceptions);
  • any other company with fewer than 10 shareholders if shareholders holding at least 5% of voting shares in such a company have resolved to file accounts.

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.

Time frame for preparation and submission of financial statements and tax accounts

Financial statements must be prepared within:

  • 4 months after the date of the end of the reporting period – for FMC reporting entities, and
  • 5 months after the date of the end of the reporting period – for large companies.

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.

Liability for late filing

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:

  • 25 NZD for financial statements filed up to 25 workdays later than the due date;
  • 100 NZD for financial statements filed more than 25 workdays later than the due date.

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:

  • a penalty notice is handed over to the Judiciary for collection;
  • the company’s information can be handed over to the investigation group;
  • the company and its directors can also be held accountable in accordance with section 209G of the Companies Act, which will result in a penalty of up to 50,000 NZD.

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).

Consolidated financial statements

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:

  • file a tax return on income of the group of companies;
  • pay income tax of the group on behalf of all members.

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.

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