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Tax Income
in New Zealand

The department of income tax in New Zealand is called the Inland Revenue or Te Tare Taake if you prefer it in Maori language. Just like any income tax in the world, it has an insatiable hunger for money from the taxpayer. The difference is that the money raised from Tax in NZ goes back to the citizen in the form of services and social guarantees, excellent public education and medical care. Everyone who works pays taxes, with very low percentage of tax evasion. The fines are very heavy and process includes a strong chance to be cough plus a fraud process and long years in prison.


Any person receiving income has to pay tax, no matter how many hours you have worked, or the type of work. (example casual or seasonal work). You will need to register in the Inland Revenue and get an IRD number or taxpayer identification number. This applies to anyone, including students, visitors, working holiday and any person who has worked or gained some money in NZ.


To register, simply download the PDF form by clicking here, then print and complete the form. Attach a photocopy of any identity document such as your passport and mail it to the nearest Inland Revenue office (It can not be done online). Between 8 and 10 days you will receive your number by post, may have been spending their pocket money in taxes.


Note: ACC (Acident Compensation Corporation) is a fee to ensure coverage against accidents for everybody. Additional to the Income Tax, the worker pays NZ $ 1.70 for each ACC NZ $ 100 profit, and it is not included in the calculation of taxes. The rate of the ACC (including GST) for the period 04/01/2012 to 31/03/1013 is 1.70% ($ 1.70 per $ 100).


Other tax in New Zealand beyond the Income Tax rate is the GST (Goods and Services Tax) which applies in almost all products and services purchased with the exception of financial services such as banks, life insurance and export products. The GST is 15% and is usually built into the price or discriminated on the products and services, so if you are in doubt ask if it is or it's not included. Tax for companies have different rates according to the type (LTD, PTY, etc. ..), being the average 33%. A business with income above NZ $ 60 000 must register for GST. An accountant is essential to calculate taxation of companies. There are many other types of fees charged for different types of business, such for autonomous investment, dividends, etc.and rental properties and overseas pension.


Note:Visitors and workers in New Zealand must pay GST on all goods and services that they buy in New Zealand. There is no refund of GST available when you leave New Zealand.


PAYE (tax rebates) - your salary will have a tax rebate at source IR (= Inland Revenue or income tax). If in the end of the fiscal year, the amount deducted is greater than the amount of tax paid, a refund may be pled by the worker. (PAYE = pay as you earn). But with the PAYE system in general should not be much return at year end rates or tax refund in the case to leave the country.
To Calculate tax in NZ - The rate of current income taxes (excluding ACC and discounts): Rates are per year up to 2013. The end of financial year in NZ is 31/03. The tax brackets are as follows:

Tax on annual earnings  
up to $14,000 10.5%
between $14,001 and $48,000 17.5%
between $48,001 and $70,000 30.0%
over $70,000 33.0%
No-notification rate 45%

45 %

Practical example of calculation of tax on income in NZ: a specialist earning NZ $ 100,000 a year would pay tax as follows:

14000 * 0.105 = $1470
(14 000- 48000) * 0.175 = $5950
(48000-70000) * 0.30 = $6600
(70000-100000) * 0.33 = $9900
 pay   

$23920

The total to pay is calculated within tax brackets and then applies an overall sum. If the worker has been deducted at the source and have paid taxes above what it should, he will be glad to receive a check for the difference in the mail. Another example, if a person earning $ 70,000 will pay only 30% of the amount between $ 48,001 and $ 70,000 instead of paying over the total of $ 70,000. Consequently, the corresponding income tax of that salary will be NZ $ 14,020 - a rate of 20.02% of the total.

Big David is trying calculate how much he spent eating Fish& Chips, so he can save money and pay his tax.

 

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