myIR, payments and more
- What income is taxable in New Zealand
- What to do if you're earning income in New Zealand
- How you pay tax in New Zealand
- Do you need to file an income tax return in New Zealand
- Your obligations if you're earning employment income
- Superannuation schemes in New Zealand
Go to the Immigration New Zealand website for information about being a New Zealand resident for immigration purposes.
New Zealand taxes income on both a residency and a source basis.
New Zealand residents
If you're a resident of New Zealand for tax purposes you'll pay tax in New Zealand on all your worldwide income. This is income you get from New Zealand as well as from all other countries.
Your worldwide income includes any income from another country, even if you don't bring the money into New Zealand. For example, your worldwide income could include:
- an amount of interest you derive from funds you have in an offshore bank account
- rental income
- salary and wages paid both by New Zealand companies and offshore companies
- foreign pensions
If you've received overseas income that's also been taxed in another country, you may be entitled to a credit for the tax already paid. The available credit is limited to the lesser of the tax:
- payable in New Zealand on the overseas income, or
- paid offshore.
This is an attempt to make sure the same income is not taxed twice.
Jodi is a New Zealand resident for tax purposes. During the 2016 income year, she worked for two months in the United Kingdom. Jodi is required to file an individual income tax return in New Zealand. She will be required to return her New Zealand income and her United Kingdom income. For the 2016 income year she received:
- $100,000 income from self-employment in New Zealand
- $25,000 income (in NZD) from her United Kingdom employer
Her income from the United Kingdom was taxed at a rate of 25%, so the tax she paid in the United Kingdom is $25,000 x 25% = $6,250. Based on her total annual income of $125,000, her tax to pay is $32,170. Her overseas income is 20% of her total income.
The amount of income tax to pay in New Zealand on her overseas income is $32,170 x 20% = $6,434. The amount of tax she paid in the United Kingdom is less than what she would pay on that income in New Zealand so she can claim a credit for the full $6,250 she paid in the United Kingdom. Her total tax to pay is $32,170 less $6,250 = $25,920.
Josh is a New Zealand resident for tax purposes.
During the 2016 income year he worked part-time in Australia for seven months and earned $15,000 (NZD). This was taxed at a rate of 35%. He paid $5,250 to the Australian Tax Office. When he was in New Zealand in the 2016 income year, he earned $30,000 working as a self-employed tradesman.
Josh files an individual income tax return declaring the income he earned in Australia, as well as the income he earned in New Zealand. Based on his total annual income of $45,000, his tax to pay is $6,895. His overseas income is 33.33% of his total annual income.
The amount of income tax to pay in New Zealand on this overseas income is $6,895 x 33.33% = $2,298.33. The amount of tax Josh paid in Australia is more than what he would pay on that income in New Zealand, so he can only claim a maximum tax credit of $2,298.33 in his return. His total tax to pay is $6,895 less $2,298.33 = $4,596.67
New Zealand will also tax income obtained by a non-resident if it has a New Zealand source. This is known as source based taxation.
Generally, income will have a New Zealand source if it has a connection with New Zealand. Examples of income with a New Zealand source include:
- income derived from employment performed in New Zealand even if the employer is a non-resident
- pensions paid by the New Zealand government
- dividends paid by New Zealand companies.
New Zealand's right to tax income as outlined above may change if a double tax agreement applies. A double tax agreement may remove New Zealand's right to tax a particular type of income.
New Zealand has a temporary exemption that may apply to you if you became a New Zealand tax resident after 1 April 2006.
If you're earning income in New Zealand you need to make sure you apply for an IRD number.
If the only income you get is from a PAYE income payment (eg, salary or wages, cash allowances, cash bonuses) and it has had the correct amount of PAYE deducted, you'll have no further tax obligations in relation to that income.
You may be required to file a New Zealand income tax return if you've received income from New Zealand which hasn't had tax deducted.
Short term visits
If you come to New Zealand to work and expect to be in New Zealand for less than 183 days, any income you earn from employment during your visit may not be liable for tax. There are two circumstances where this will apply:
Short term visit exemption
This exemption applies if:
- your stay in New Zealand is for 92 days or less, counting the days of your arrival and departure as a whole day each
- the total number of days that you're present in New Zealand in the tax year (1 April to 31 March) is 92 days or less
- you're working for an employer that isn't resident in New Zealand, and
- the income you earn while in New Zealand is taxed in your home country (the country where you're tax resident).
Double tax agreement exemption
This exemption applies if:
- you're a tax resident of a country that New Zealand has a double tax agreement with
- your stay in New Zealand is for no more than 183 days in any 12 month period or in any income year (depends on double tax agreement)
- the income you earn during this period is paid by an employer that isn't resident in New Zealand, and
- your employer doesn't have operations in New Zealand that takes a deduction for the income paid to you.
If you think this exemption may apply to you, check the double tax agreement carefully as the wording of each agreement is different.
If you aren't sure how long you'll be in New Zealand, it's important that you contact us as soon as possible after you arrive - if you're in New Zealand for more than 183 days, any income you receive is liable to tax from the date you first arrived in New Zealand.
New Zealand has a pay as you earn (PAYE) system for people on salary and wages. This means tax is deducted by your employer before payments are made to you. Your employer then pays the tax deducted to us on your behalf.
You give your employer your IRD number and tax will be deducted from your salary and wages and paid to us on your behalf.
Tax will be deducted from your salary or wage payments at the applicable marginal tax rate.
Rental or business income
When you receive rental or business income, you need to:
- keep records
- fill in an Individual tax return (IR3) every year.
Goods and services tax
Goods and services tax (GST) is a tax imposed on most goods and services in New Zealand, most imported goods and certain imported services. GST is added to the price of taxable goods and services at a rate of 15%.
You need to register for GST if you carry out a taxable activity with turnover above $60,000 over a 12 month period.
Offshore income and investments
As a New Zealand tax resident, there are tax implications on your income from offshore sources such as:
Residential land withholding tax
Residential land withholding tax (RLWT) is tax that may be deducted at the time of your residential property sale if:
- you're an offshore RLWT person selling your property within two years, and
- the property was purchased on or after 1 October 2015.
You're entitled to claim the RLWT deducted as a tax credit in your end-of-year income tax return.
Provisional tax isn't a separate tax but a way of paying your income tax in instalments during the year, based on what you expect your tax bill to be.
If you had income tax of more than $2,500 to pay at the end of any tax year you may have to pay provisional tax for the following year. The amount of provisional tax you pay is then deducted from your tax bill at the end of the year.
Not everyone who recieves income in New Zealand and/or is a New Zealand tax resident is required to file an income tax return.
If you only receive income from salary, wages, interest, dividends, and/or taxable Māori authority distributions (with the correct tax deducted at source) you aren't required to file an annual income tax return.
Marnie works for the New Zealand Government. She receives a salary of $50,000 per annum.
When she receives her fortnightly salary payment, PAYE has already been deducted. Marnie also receives interest from her bank on the savings she has accumulated. Before the interest is paid to Marnie, the bank deducts withholding tax at the correct rate.
These are the only two income streams Marnie has. Accordingly, Marnie isn't required to file an annual income tax return in New Zealand.
Most payments you receive from your employer will be subject to tax in New Zealand. How this tax is collected will depend on whether or not:
- the payment is a PAYE income payment
- you're a New Zealand tax resident
- your employer is a New Zealand tax resident, and
- the services are performed in New Zealand.
It doesn't matter if your employer is based overseas.
PAYE income payments
If you receive a PAYE income payment from your employer, your employer must deduct the tax and pay it to us on your behalf. This is administered through our PAYE system.
The above PAYE rules apply if you're:
- a New Zealand tax resident and perform services in New Zealand
- not a New Zealand tax resident and you perform services in New Zealand, or
- a New Zealand tax resident employed by a New Zealand-based employer and you perform services overseas (you may be able to apply for a reduced or zero rate certificate if you have to pay tax overseas)
Your employer has an obligation to withhold PAYE from any PAYE income payment you receive, however if this isn't done you'll be liable.
Our IR56 taxpayer registration (IR359) form lets you register if you're paying your own PAYE.
Unlike other countries, New Zealand doesn't have a compulsory superannuation scheme. New Zealand has a voluntary superannuation scheme known as KiwiSaver. KiwiSaver is a voluntary employment-based savings initiative to help you with your long-term saving for retirement.
You can only join KiwiSaver if you're:
- currently living or normally live in New Zealand, and
- a New Zealand citizen or are entitled to live in New Zealand indefinitely, in terms of the Immigration Act 2009.
Your ability to join KiwiSaver doesn't depend on your tax residency status but on your residency for immigration purposes.
If you're eligible to join KiwiSaver you'll automatically be enrolled when you start a new job. If you don't want to be in KiwiSaver you'll need to opt out. Your employer should be able to help you with this.
Your employer may also administer its own superannuation scheme.
Retirement savings in your home country
If you're a New Zealand tax resident and have foreign retirement savings, these savings may be taxable in New Zealand. There are many types of foreign retirement savings and these may include:
- an interest in an employment related foreign pension plan or retirement savings scheme
- an interest in a non-employment related foreign pension plan or retirement savings scheme
- amounts set aside in an individual retirement savings account
- an entitlement to receive a pension from the Government or some other statutory body.
How these are taxed in New Zealand will depend on how we classify the retirement savings for New Zealand tax purposes (eg, foreign investment fund, company, unit trust, or foreign trust). It's possible that you may be taxed on one or all of the following:
- any contributions you make
- any growth in your savings
- any distributions you receive.
If you're a transitional resident your foreign retirement savings won't be taxable until you stop being a transitional resident.
This is a very complicated area so if you have foreign retirement savings, you may want to seek professional advice.