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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 correct 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 rate the  RWT (resident withholding tax) to be deducted RWT will be deducted at 19.5%.
earn between $40,000 and $70,000 you should elect the 33% rate as it will help you pay the right amount of tax during the year.
earn over $70,000 you should elect the 39% 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 (go to "Forms and guides") 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 correct tax code

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 correct tax code.

If the tax code is for ... then ...
your highest source of income you should use the "M" tax code.
income from other sources

you should choose:

  • "S" if your total income for the year is $40,000 or less (taxed at 21 cents in the dollar)
  • "SH" if your total income for the year is between $40,000 and $70,000 (taxed at 33 cents in the dollar)
  • "ST" if your total income for the year is over $70,000 (taxed at 38 cents in the dollar).


Note  

If your New Zealand Superannuation is not your highest source of income, or if you have a student loan, you may want to apply for a special tax code.

Find out more about special tax codes or see our guide How to tell if you need a special tax code or deduction rate (IR23G) - go to "Forms and guides" .

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 private pensions (IR257) booklet - go to "Forms and guides".

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: 09 Jun 2009

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