simple tax query

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › simple tax query

markh14

95 posts

Master Geek
Inactive user

#67109 27-Aug-2010 23:17

The owner of geekzone maybe able to answer this.
If i have a website hosted overseas where i sell advertising space to people from all around the world, and i live in new zealand and transfer the ad funds into my new zealand bank account i have to pay income tax in new zealand right? so is all i have to do is report my income from advertising revenue and pay the tax? i don't need to worry about gst right?
Is there anyway that all this can be done automatically like when i receive my ad revenue the ird deducts the tax automatically?

Oblivian

7345 posts

Uber Geek
+1 received by user: 2117

ID Verified

#373803 27-Aug-2010 23:20

Only need to be registered if you earn more than 60K/yr as your own business/primary income.
http://www.ird.govt.nz/gst/gst-registering/register-who/

But as its a dividend, I suspect it counts.

sleemanj

1514 posts

Uber Geek
+1 received by user: 315

#373887 28-Aug-2010 10:56

Yes you need to pay income tax on your profit, by filing a tax return each year, don't forget that you have expenses in creating that profit, which may well turn your profit into a loss

No you do not need to be GST registered unless you are making over the threshold (gross income), which is unlikely

If you are registered for GST no you probably don't have to collect it anyway because the customers are overseas

I expect you really are not making enough profit off the advertising (given the expenses of running the site in order to provide the advertising) to bother with any of this.

---
James Sleeman
I sell lots of stuff for electronic enthusiasts...

Marmion

59 posts

Master Geek

#373940 28-Aug-2010 15:12

Your situation is not as clear cut as one might imagine.

a) you need to determine where the income is sourced.
b) if not sourced in NZ (I assume as overseas webserver that not NZ sourced), then another country will probably have rights to tax - the web server may create a 'permanent establishment' (PE) in another country.
c) look at double tax agreements for primary right to tax (assuming a PE is established in other country)
d) complete other country tax filing obligations
e) return as overseas income for NZ purposes. Claim foreign tax credits on overseas income.

If the amounts are material, you may want to seek specialist tax advice
Cheers

sleemanj

1514 posts

Uber Geek
+1 received by user: 315

#373944 28-Aug-2010 15:26

Marmion:
the web server may create a 'permanent establishment' (PE) in another country

Hah. That would mean practically all businesses with online sales would have to pay foreign tax simply because their website is hosted in the US. The vast majority of sites, at least NZ sites, are hosted in the US.

In fact that could be seen as tax avoidance if it was beneficial, a'la the way Google etc, "yes, our Ireland "branch" does basically all our business, so we pay Ireland tax, not US, oh what's that, we're hardly paying any tax, well, you'll have to talk to Ireland about that".

If the US started demanding income tax from foreign businesses that hosted their site in the US, can you imagine what kind of hell would break loose?

---
James Sleeman
I sell lots of stuff for electronic enthusiasts...

Marmion

59 posts

Master Geek

#373960 28-Aug-2010 16:04

I said MAY create a PE in other country, I didn't say WILL.
As I said, these things aren't as clear cut as one imagines and several factors contribute to which country gets to tax what.
Anyway I'm not getting into a technical argument here as I'm not being paid to :)
But, FWIW, most countries tax based on source and residence.
i.e., if a NZ tax non-resident derives income sourced in NZ, they are obliged to declare the income and complete a NZ tax return and pay the respective taxes (source based tax).
If a NZ tax resident derives income from overseas, they must declare the income and complete a NZ tax return and pay the respective taxes (residence based tax).
Double Tax Agreements help to determine primary rights to tax, but if there's double tax occuring, most countries allow tax credits for tax paid in other countries.

Kyanar

4089 posts

Uber Geek
+1 received by user: 1684

ID Verified

Trusted

#374017 28-Aug-2010 19:48

Off the top of my head, leasing a server in another country does not constitute a permanent establishment in another country, however a colocated server may.