For individuals & families: When you retire
Tax on your income when you retire
There are some tax matters that may affect you when you retire:
- tax on investment and other income
- using the right tax code
- tax on overseas pensions.
Tax on investment and other income
If you receive New Zealand Superannuation and interest or investment income, you need to ensure that the correct amount of tax is deducted from the interest or investment income.
| If you ... | then ... |
|---|---|
| have not elected the RWT (resident withholding tax) you wish to use | RWT will be deducted at 17.5% for existing accounts and 33% for accounts opened from 1 April 2010. |
| have not supplied your IRD number to your interest payer | RWT will be deducted at 33%. |
| earn $14,000 or less | you should elect the 10.5% rate as it will help you pay the right amount of tax during the year. |
| earn from $14,001 to $48,000 | you should elect the 17.5% rate as it will help you pay the right amount of tax during the year. |
| earn from $48,001 to $70,000 | you should elect the 30% rate as it will help you pay the right amount of tax during the year. |
| earn over $70,000 | you should elect the 33% rate as it will help you pay the right amount of tax during the year. |
| have a joint account |
you'll need to decide the appropriate rate of RWT to be deducted, as the account can only be under one IRD number. If one account holder earns more than the other account holder, we recommend that you use the RWT rate for the higher earner. This avoids the higher earner ending up with a tax bill at the end of the year, when the interest is split between both of your accounts. |
| Note | |
|---|---|
|
If you need to change the RWT rate on your interest or investment income, complete the Choose your RWT deduction rate (IR456) form and give it to your interest payer, so they can deduct the correct amount of RWT. Some interest payers will change your RWT rate over the phone or internet. |
|
Using the right tax code
Your main source of income
If you receive New Zealand Superannuation and income from another source (excluding interest or investment income), you need to ensure that you are using the right tax code.
Your secondary source of income
If your New Zealand Superannuation is not your main source of income or you have a secondary source of income, you need to use a secondary tax code.
Find out about secondary tax codes
Tax on overseas pensions
Social security pensions
If you are receiving an overseas pension, generally you must include a social security pension in your tax return as a New Zealand tax resident, even if that pension is paid into a bank account outside New Zealand.
If your overseas pension is less than the New Zealand Superannuation rate (and you are entitled to receive a New Zealand benefit or pension), Work and Income will top up your overseas pension to equal the New Zealand Superannuation rate.
For more information, see our Overseas social security pensions (IR258) booklet - go to "Forms and guides".
Overseas private pensions
There are a number of different tax requirements which may apply to overseas private pensions. For more information, see our Overseas pensions and annuity schemes (IR257) booklet - go to "Forms and guides".
Receiving portable superannuation or Veterans' Pension
If you receive portable superannuation or Veterans' Pension (with no tax deducted), while travelling overseas (for more than 26 weeks) but not living in an overseas country you'll have to pay New Zealand tax on the payments you receive.
You'll be required to file an Individual income tax return (IR3) as you have received income that has not been tax at source. You may also be required to make provisional tax payments.
If you don't already receive an IR3 return please call us - see "Contact us" and ask for one be sent to you.
Change of address or phone number
If these have changed, please contact us so we can update your details, and keep you up to date with information that may affect you. Go to "Get it done online", "Changed your address and phone number?" or "Forms and guides" to use our form "Have you changed your name, address or phone number? (IR238)".
Date published: 30 Jan 2012
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