Taxation

How does the New Zealand Tax System work?

Income tax on earnings is required to be paid to the New Zealand government. There are no local or regional income or sales taxes. All taxes are collected by the Inland Revenue Department.

Most people pay their income tax as they earn their income. Employers deduct tax based on salary and wages. This is known as PAYE (Pay As You Earn) tax. Banks and other financial institutions deduct Resident Withholding tax on interest as it is earned. People who do not pay tax on all of their income as it is earned are required to settle their taxes with Inland Revenue at the end of the tax year (31 March). In most cases Inland Revenue will send you all the material you need to do this. If you are in this category you may be required to pay 'provisional tax' in which case you must pay your tax in three instalments through the year.

If you receive any income you need an IRD number - find out how to apply by contacting Inland Revenue. You will need your IRD number before you start a job, or if you want to open a bank account.

For more Information on tax for those moving to New Zealand permanently, visiting, or on a working holiday please visit the IRD website.

What types of income are taxed?

• salary and wages
• business and self-employed income<
• most social security benefits
• income from investments
• rental income
• profit from selling capital assets - but this does not usually apply to personal assets
• income you earn from overseas

All New Zealand tax residents are liable for income tax on their worldwide income. See the Business Regulations page for more information on individual taxation including the definition of a New Zealand tax resident and the current personal income tax rates.

Goods and Services Tax (GST)

GST is charged at the rate of 15% for virtually all goods and services, excluding exports, financial services, and some other items. If you are self-employed (or a business) and your annual turnover is above a certain threshold you must 'register' for GST purposes and charge GST on all your services. You can then claim back the GST paid on any business-related purchases and expenses.

Taxation (Personal)

You pay Goods and Services Tax (GST) of 15% on everything you buy in New Zealand except for financial services and the rent or purchase price of residential property. Price tags you see in shops always include GST, so you needn’t add anything to the display price.

If you are in New Zealand in 2013, you will pay tax on your personal income as follows:

$0 – $14,000: 10.5%
$14,001 – $48,000: 17.5%
$48,001 – $70,000: 30% (on earnings above the $48,001 threshold only)
$70,001 upwards: 33% (on earnings above the $70,001 threshold only)

 

Table Calculated on A Range of Different Hourly Rates

Dollar	Hours	Total	Weeks	Gross	Tax Net	Income	Weekly Take Home Pay
$23.00*	45	$1,035	*52	$53,820	$9,165.52	$44,654.48	$858.74
$25.00*	45	$1,125	*52	$58,500	$10,569.00	$47,931.00	$921.75
$23.00*	50	$1,150	*52	$59,800	$10,959.52	$48,840.48	$939.24
$25.00*	50	$1,250	*52	$65,000	$12,519.52	$52,480.48	$1,009.24

For example a Person earning $75,000 would pay tax as follows:

Annual earnings Tax

10.5 % up to $14, 000 $1,470
17.5 % between $14,001 and $48, 000 $5,949.82
30.00 % between $48,001 and $70,000 $6,599.70
33.00% $70,001-75 000 $1,649.67
Gross Income $75,000
Total tax $15,669.19
Net Income $59,330.81

Capital Gains Tax

New Zealand has no tax on capital gains at this time. If however, you buy and sell shares or property, gains may be taxed as income.

Taxation (Local)

Towns and regions raise money by levying property taxes. Each house or building has a “rateable value.” The rateable value determines the amount of local tax the owner of the building pays. These local taxes are called “rates.”

Owners of modest houses in rural areas will pay rates of a few hundred dollars each year. An average to above average suburban home will attract rates in the region of $1,500 – $3,000 each year. Houses with very high values will attract higher rates.