Profit and Loss Statement (New Zealand)

A Profit and Loss Statement in New Zealand — also called an income statement or statement of thorough income — is a financial document that summarises a business's total revenues, cost of goods sold, gross profit, operating expenses, and net profit or loss over a specified reporting period, expressed in New Zealand dollars (NZD). The P&L statement is one of the three core financial statements used by New Zealand businesses alongside the balance sheet and cash flow statement.

For New Zealand companies incorporated under the Companies Act 1993, the preparation of financial statements is governed by the Financial Reporting Act 2013 and the accounting standards issued by the External Reporting Board (XRB). Large companies must comply with NZ IFRS (New Zealand equivalents of International Financial Reporting Standards). Non-large companies may use simplified standards (NZ IFRS RDR or NZ GAAP).

Inland Revenue (IRD) requires all businesses — including sole traders, partnerships, and companies — to maintain financial records that support their income tax returns. The profit and loss statement is the foundation for calculating taxable income under the Income Tax Act 2007. IRD may request supporting records and financial statements during a tax audit.

For businesses registered for GST under the Goods and Services Tax Act 1985, the P&L should be prepared on a GST-exclusive basis (recording revenue and expenses net of GST). Depreciation of business assets is calculated in accordance with the depreciation rates set by IRD under the Income Tax Act 2007.

Banks and lenders in New Zealand routinely require two to three years of profit and loss statements as part of a business loan or overdraft application. The IRD number — assigned by Inland Revenue to every registered New Zealand taxpayer — should be included on all P&L statements used for tax purposes.

The forms-legal.com Profit and Loss Statement (New Zealand) template is designed for New Zealand businesses, sole traders, and partnerships and includes all fields required by Inland Revenue, banks, and investors.

Section 45 of the Financial Reporting Act 2013 defines when a company is 'large' and therefore subject to mandatory audit and full NZ IFRS compliance. Section 17 of the Financial Reporting Act 2013 requires large companies to prepare and file financial statements with the Companies Office. Section 194 of the Companies Act 1993 requires companies to make their financial statements available to shareholders. Under Section 20 of the Tax Administration Act 1994, businesses are required to keep records sufficient to explain and verify their income tax returns filed with Inland Revenue. The Goods and Services Tax Act 1985 requires GST-registered businesses to maintain records supporting their GST returns, which must be consistent with the P&L. The IRD number assigned by Inland Revenue under the Tax Administration Act 1994 must appear on all tax returns and financial documents submitted to IRD. New Zealand's standard balance date is 31 March, meaning the profit and loss statement covers the period from 1 April to 31 March for most businesses.

A Profit and Loss Statement is needed by New Zealand businesses in the following key situations.

Annual tax return: Every business operating in New Zealand — whether a sole trader, partnership, or company — must file an income tax return with Inland Revenue (IRD) at the end of each financial year (standard balance date 31 March). The P&L statement is the basis for calculating net taxable income and the income tax liability payable to IRD under the Income Tax Act 2007.

GST returns: Businesses registered for GST under the Goods and Services Tax Act 1985 file regular GST returns with Inland Revenue. Accurate revenue and expense records maintained in the P&L support GST reconciliation.

Bank and finance applications: Banks, credit unions, and non-bank lenders in New Zealand require profit and loss statements — typically for the past two to three financial years — when assessing applications for business loans, overdraft facilities, trade finance, or commercial mortgages. Lenders assess profitability, revenue trends, and expense levels to determine creditworthiness.

Investor presentations: Businesses seeking equity investment or venture capital funding in New Zealand are expected to present audited or management-prepared financial statements including a P&L as part of their due diligence package.

Government grants and support: Applications for Callaghan Innovation R&D grants, Regional Business Partner Network support, and other government programmes typically require recent financial statements.

Business sale: A P&L statement is an essential document in any New Zealand business sale process. Prospective buyers and their advisers will scrutinise the P&L as part of due diligence before executing a Sale and Purchase Agreement.

ACC levies: The Accident Compensation Corporation (ACC) calculates its levies on self-employed persons and employers based on liable earnings derived from the IRD income tax return, which in turn is based on the P&L.

Management reporting: Monthly or quarterly P&L statements allow business owners and directors to monitor performance against budgets and make timely decisions about costs, pricing, and investment.

Section 20 of the Tax Administration Act 1994 requires businesses to keep sufficient records to verify their income tax returns filed with Inland Revenue. The Income Tax Act 2007 determines how business income and deductions are calculated for tax purposes. Section 17 of the Financial Reporting Act 2013 requires large companies to file audited financial statements. Under Section 76 of the Goods and Services Tax Act 1985, GST-registered businesses must keep records supporting their GST returns, which must reconcile with the P&L. For ACC purposes, Section 168 of the Accident Compensation Act 2001 requires self-employed persons to file an earnings declaration based on their taxable income from the prior year's income tax return, derived from the profit and loss statement. The P&L also supports applications for wage subsidy schemes and business support grants administered by the Ministry of Business, Innovation and Employment (MBIE), and Callaghan Innovation research and development grants.

A Profit and Loss Statement for a New Zealand business should include the following key elements to comply with Inland Revenue requirements, support financial reporting obligations under the Financial Reporting Act 2013, and meet the expectations of banks, investors, and auditors.

Business identification: The business name (or registered company name as recorded with the Companies Office), IRD number assigned by Inland Revenue, GST registration number (if applicable), and the reporting period (e.g., year ended 31 March, or a specific quarter).

Revenue section: Total revenue (gross sales) in NZD, broken down by revenue stream where relevant — for example, product sales, service fees, rental income, and interest income. Revenue should be stated exclusive of GST for GST-registered businesses.

Cost of goods sold (COGS): Direct costs of producing or purchasing goods sold during the period — including raw materials, direct labour, manufacturing overheads, and freight costs. Gross profit = Total Revenue minus COGS.

Gross profit: Total revenue less COGS, expressed as a dollar amount and as a gross profit margin percentage.

Operating expenses: Itemised list of all indirect business expenses incurred during the period, including: wages and salaries (net of PAYE remitted to IRD); employer KiwiSaver contributions; ACC levies; rent and occupancy costs; utilities (electricity, telecommunications); insurance premiums; marketing and advertising; vehicle expenses; professional fees (accounting, legal); bank charges and interest on business borrowings; repairs and maintenance; and depreciation (calculated at IRD-prescribed rates under the Income Tax Act 2007).

Net profit before tax: Gross profit less total operating expenses. The figure used to calculate provisional tax and income tax payable to Inland Revenue.

Income tax provision: Estimated income tax payable at the applicable rate — 28% for companies, or marginal personal tax rates for sole traders.

Net profit after tax: Net profit before tax less the income tax provision. The amount available for distribution as dividends (subject to the solvency test under section 52 of the Companies Act 1993) or retention as retained earnings.

Preparer details: Name and contact details of the accountant, chartered accountant, or business owner who prepared the statement.

The forms-legal.com Profit and Loss Statement (New Zealand) template includes all of these elements and is formatted for annual and management reporting by New Zealand businesses, sole traders, and partnerships.

Statutory references: Section 20 of the Tax Administration Act 1994 requires adequate business records. Section 45 of the Financial Reporting Act 2013 defines large companies and their reporting obligations. Section 194 of the Companies Act 1993 requires companies to make financial statements available to shareholders. The External Reporting Board (XRB) issues New Zealand financial reporting standards (NZ IFRS and NZ GAAP). IRD depreciation rates determined under the Income Tax Act 2007 determine how fixed assets are written down in the P&L.

GST presentation: For GST-registered businesses, all revenue and expense figures in the P&L must be presented exclusive of GST under the Goods and Services Tax Act 1985. The P&L does not include GST collected from customers or GST paid to suppliers — these flow through the GST return filed separately with Inland Revenue. Non-registered businesses present figures inclusive of all costs. The forms-legal.com Profit and Loss Statement (New Zealand) template is formatted for New Zealand businesses, sole traders, and partnerships and complies with the record-keeping requirements of Section 20 of the Tax Administration Act 1994.