Verified for 2026 Tax Year

Intercompany Management Fees

Charging fees between your own companies? Learn the "Market Value" rules and when you must charge GST on internal transfers.

Many business owners in New Zealand operate multiple corporate entities and frequently charge "Management Fees" between them to share overhead costs, move cash, or centralize administration. If those companies aren't officially joined in a "GST Group," you must treat them as complete strangers under tax law.

The "Separate Entity" Rule

Unless you have explicitly registered a "GST Group" with the IRD, Company A and Company B are entirely separate. Company A must issue a valid tax invoice and charge 15% GST on any services or management fees provided to Company B.

Common Intercompany Charges

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Shared Rent & Overheads: If the Operating Company pays the lease but bills the Holding Company for its desk space, that internal bill is a taxable supply and requires GST.
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Directors' Time: Management services, strategic consulting, or administrative work billed between entities must include GST.
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Asset Transfers: "Selling" a company vehicle from your construction firm to your property firm is a taxable sale.

The Traps to Avoid

The "Market Value" Trap

When two "linked" or "associated" companies trade, the IRD requires the price to be at Fair Market Value. You cannot charge $1 or an inflated $1,000,000 just to manipulate and shift GST credits between entities.

The "Timing" Trap

Intercompany fees are often only "journaled" at the end of the financial year by an accountant. Be careful: if you are on the Invoice Basis, you owe the GST to the IRD as soon as that journal or invoice is formally dated, regardless of whether actual cash changed hands.

The Ultimate Solution: GST Grouping

If your companies have 66% or more common ownership, you can formally register as a "GST Group." Inside a group, internal transactions are completely ignored for GST purposes, saving you from having to invoice, pay, and claim tax between your own entities.

Frequently Asked Questions

Do I have to charge GST to my other company?

Yes, unless the two companies have registered with the IRD as a 'GST Group', they must treat each other as completely separate businesses and charge GST on all taxable supplies, including management fees.

Can I claim GST on management fees?

Yes. If Company A charges Company B a management fee (plus GST), Company B can claim that GST back as an input tax credit, provided it is also GST-registered and using the services for business.

What is the Market Value rule for associated persons?

When two 'associated' companies trade, the IRD requires the transaction to be at Fair Market Value. You cannot arbitrarily charge $1 or an inflated price just to manipulate GST credits between entities.

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