It doesn’t matter where we live in the world, we all have to pay tax on our income. The tax system in New Zealand isn’t too complicated, but it’s always good to know what to expect. For further in-depth information, it’s suggested you contact a New Zealand tax consultant.
In 2016, the New Zealand tax system was voted second in the developed world for its competitiveness and first for personal tax.
• No inheritance tax
• No capital gains tax – except on some highly technical, special investments
• No state or local tax – except council levied a property tax
• No payroll tax
• No social security tax
• No health care tax – except low levy for the accident compensation fund
It doesn’t matter which your income originates from, you are liable to pay tax on it in New Zealand, that includes pensions from other countries, rental income and interest on investments. You may be able to claim a credit for tax already paid in another country, to avoid you paying tax twice on the same income.
You will need to apply for an IRD number if you fall into one of the following categories: –
• You earn an income, no matter where it comes from
• You join KiwiSaver
• You apply for child support, a student loan or tax credits
• You file a tax return
• You buy or sell property in New Zealand
• You are self-employed
Details of how to apply for an IRD number, which varies depending on your status in New Zealand, can be found here. If you don’t have a tax number, you will be charged the highest tax rate.
Businesses and Employers
Details of tax laws and procedures for businesses and employers can be found here. This government site gives you detailed information on the tax implications and procedures for starting a business, running a business, doing business with Australia and the closing of a business.
The Inland Revenue site gives in-depth information on tax rates in New Zealand. The rates for the 2017-2018 tax year are as follows: –
Up to $14,000 – 10.5% Tax Rate
Over $14,000 and up to $48,000 – 17.5% Tax Rate
Over $48,000 and up to $70,000 – 30% Tax Rate
Remaining income over $70,000 – 33% Tax Rate
You must provide your employer with an R330 form. Failure to do so will mean that you’ll be taxed at a rate of 45%. What an incentive to get your IRD number.
Most companies pay tax at the end of the tax year at a flat rate of 28%. There are a few exceptions where tax is deducted directly from earning, such as those operating in agriculture, horticulture and the wine industry; companies involved in hired labour and non-resident contractors.
Four Years’ Tax Concession
Some new residents are eligible for transitional tax resident status which means they won’t pay tax on overseas pensions and investments for the first four years of living in New Zealand. Have a look at the New Zealand Government website to see all the options.
Government Sales Tax
GST, at a rate of 15%, is payable on most goods and services within New Zealand. Companies can claim back GST paid on input costs.
For detailed tax information, go to the Inland Revenue website.