What is IR4 Company Income Tax Return (New Zealand)?
The IR4 is the annual income tax return filed by New Zealand companies. It reconciles accounting profit to taxable income by adjusting for non-deductible items and IRD depreciation differences. Due 7 July for standard 31 March balance date companies, or 31 March following year via a tax agent.
Current Rate (1 April to 31 March (standard). Non-standard balance dates allowed.)
N/A. Return used to calculate 28% company tax liability.
Example
A company has accounting profit of NZD 300,000. Add back: NZD 10,000 non-deductible entertainment (50% of NZD 20,000 total), NZD 5,000 accounting depreciation in excess of IRD depreciation, NZD 3,000 private portion of director vehicle. Taxable income = NZD 318,000. Tax = NZD 89,040 at 28%.
How IR4 Company Income Tax Return (New Zealand) works in New Zealand
The IR4 is lodged via myIR (IRD's online portal) and must be accompanied by the financial statements and an imputation credit account (ICA) return (IR4J) if the company has paid dividends or maintained an ICA during the year.
**Key Reconciling Items** Accounting profit and taxable income diverge for several common reasons. Non-deductible entertainment: only 50% of meal and entertainment expenses are deductible (see Section DB 6-7 of the Income Tax Act 2007). The non-deductible 50% must be added back. Depreciation differences: accounting systems use various methods (straight-line, reducing balance) and asset lives, while IRD prescribes specific rates in its general depreciation determination (IR265). The difference between accounting and tax depreciation creates a timing difference that must be adjusted on the return. Private use of company assets: any proportion of company asset use (vehicles, phones, computers) that benefits the director or shareholder personally is either a fringe benefit (subject to FBT) or a deemed dividend, not a deductible business expense. Capital expenditure: legal fees and other costs relating to capital transactions (acquisitions, business sales, major restructurings) must be capitalised, not expensed, for tax purposes.
**Thin Capitalisation** For companies owned 50%+ by non-residents, thin capitalisation rules may limit interest deductions. Where the company's debt-to-asset ratio exceeds 60%, interest deductions are denied on the excess debt portion. This is relevant for NZ subsidiaries of foreign multinationals.
**Loss Carry-Back** From the 2020-21 income year, companies can elect to carry back losses to the immediately preceding year, generating a tax refund. The carry-back is limited to the amount of tax paid in the prior year and is subject to 49% shareholder continuity being maintained.
**Due Dates and Extensions** For the standard 31 March balance date, the IR4 is due on 7 July. Companies using a registered tax agent benefit from an extension to 31 March of the following year. Companies with non-standard balance dates have a due date 7 months after their balance date. If the due date falls on a weekend or public holiday, the deadline moves to the next working day.
**myIR Filing** All companies must file electronically through myIR. IRD discontinued paper IR4 returns for most companies. The myIR system pre-populates some fields from prior year returns and from data IRD holds about withholding taxes and interest income.
Related terms
New Zealand companies pay a flat 28% corporate income tax rate on net taxable income. Maori authorities pay 17.5%. The imputation system prevents double taxation by attaching tax credits to dividends paid to shareholders.
Provisional tax is income tax paid in instalments during the year rather than all at once after filing. The standard method sets each instalment at one-third of 105% of the prior year's residual income tax. Three instalments fall due on 28 August, 15 January and 7 May.
Imputation credits represent the company tax already paid on profits before they are distributed as dividends. Shareholders receive the credit and offset it against their personal tax, preventing the same income from being taxed at both company and personal level.
IRD prescribes specific depreciation rates for tax-deductible assets. Two methods are available: diminishing value (DV, rate approximately 1.5x the straight-line equivalent) and straight-line (SL). Assets costing NZD 1,000 or less can be written off immediately. Buildings have been depreciated at 0% since 2011 (with limited exceptions).
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