New Zealand tax system

Retail Job, Christchurch

New Zealand offers a very comprehensive tax system. It's called Pay As You Earn (PAYE).

First things first, as a working holiday maker you will only pay taxes on the income that you earn in the country. Every other income from overseas will be tax free in New Zealand.

The tax rates are as follow:

  • If you earn up to NZ$14000 you will pay 11.95%
  • If you earn from NZ$14001 to NZ$48000 you will pay 18.95%
  • If you earn from NZ$48001 to NZ$70000 you will pay 31.45%
  • If you earn from NZ$70001 and over you will pay 46.45%

Be careful, your employers are legally required to use the no notification rate of 46.70% when an employee does not fully complete the Tax Code Declaration (IR330) form. A completed form must include name, IRD number and tax code. The form must also be signed.

More information about the tax rate in New Zealand.

You will notice on the page linked above that they have used the column including "ACC earners levy". The ACC stands for Accident Compensation Corporation. This covers you in case of injury in New Zealand. It is an obligation in New Zealand. However, your visa requires you to hold comprehensive medical and travel insurance.

In order to pay those taxes you will need to fill in a bit of paperwork.

Your IRD number

The IRD number is a unique number issued to you by Inland Revenue. Your number will be in the range of 10-000-000 to 999-999-999, so some people will have an 8-digit number and others a 9-digit number. Your number will never change, even if you move to another country and then return to New Zealand later. Old IRD numbers are never reallocated and not every number in the range is issued. This ensures the uniqueness of every individual or organisation's number.

Don't worry about that, it's included in your Starter Pack. We'll do the paperwork for you and we will apply for it during our introduction session. It will be quick and painless!

Your Tax Code

For each job, each employer will give you a Tax Code Declaration (IR330) form to fill out. We will teach you how to fill those out during our work session included in your Starter Pack.

Generally use the tax code M for your main source of income.

KiwiSaver

We are almost there! KiwiSaver is the last thing that you should worry about. KiwiSaver is a saving plan to help New Zealanders retire. It deducts 2%, 5% or more from your earnings and saves it for you in a government trust fund.

Your employer HAS TO enrol you for KiwiSaver. You can opt out automatically, just fill the second form "KiwiSaver Opt Out". You will not be deducted anymore and your previous deductions will be reimbursed.

Like the other forms, we will take the time to go over them during the work session included in your Starter Pack.

Getting a tax refund

Once the New Zealand tax year is over (April 1st and March 31st), you can apply for a tax refund of any tax you paid during the tax year. That's just one more good reason to have an IRD number, because it will be extremely difficult to get a tax refund without it!

Check out our page on how to get a tax refund in New Zealand.

 
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