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Tax
Inland Revenue is the government department that collects taxes on income. It’s often referred to as the IRD. When you work in New Zealand you’ll need an IRD
number to give to your employer, so that the correct amount of tax can be deducted from your salary or wages with each pay. This system is called PAYE,
or pay-as-you-earn. It means that the pay you get from your employer has already had tax deducted.
Everyone who earns money in New Zealand must pay their share of tax. The government uses taxpayers' money to pay for services we all need - such as
healthcare, education and roads to environmental protection and recreation.
If you earn salary, wages or schedular payments (formerly withholding payments), your tax will be taken out of your pay during the income year by your
employer.
It’s best to get your IRD number before you start a job or open a bank account, otherwise you may be taxed at a higher level than usual.
You can learn more about applying for an IRD number here. www.ird.govt.nz/
Goods and Services Tax (GST)
Goods and services tax (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 amount 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.
Income Tax
Income tax on earnings is required to be paid to the New Zealand government. There are no local or regional income or sales taxes.
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.
You will need your IRD number before you start a job, or if you want to open a bank account.
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 world-wide income.
You may be a tax resident in New Zealand and another country. If both countries tax their residents on world-wide income, you could be taxed twice. New Zealand
has negotiated double taxation agreements with many other countries so that this does not happen.
Accident Insurance
All businesses and individuals pay premiums to fund New Zealand’s accident compensation system (ACC), which pays for treatment, rehabilitation and earnings lost
if you have an accident.
Your employer will deduct your ACC premiums from your pay at the same time as your PAYE tax. If you are self-employed, you pay ACC premiums when you pay any tax
you owe at the end of the financial year.
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