Definition of taxable income

Taxable income for individuals includes all assessable income less allowable deductions and losses claimed. Individuals with negative income, because of losses, are recorded as having no taxable income in the tables. It is calculated on a March tax year basis.

The coverage of income included in the tables has changed from the 2019 tax year, as is indicated below:

This table lists the sources of taxable income included in the data tables and graphs and the change in coverage because of the structural break occurring from 2019 onwards. The definition of taxable income up to and including 2018 included salary and wages, income tested benefits, superannuation, business income, losses, and interest and dividends if a IR3 was filed or Personal Tax Summary was issued. From 2019, the definition taxable income also includes all interest and dividends as well as income from portfolio investment entities (PIE) if taxed at the incorrect rate.

Income source	2001-2018	2019 onwards
PAYE earnings such as: wages and salaries income tested benefits New Zealand Superannuation earnings-related accident compensation income student allowances schedular payments parental leave	Included	Included
Income sources specifically returned on the IR3 form such as: self-employment shareholder salaries estate or trust income overseas income partnership income look through company income Māori authority distributions rental income (including bright-line property income) income from taxable sale/disposal of property government subsidy other taxable income	Included if IR3 filed	Included if IR3 filed
Deductions such as: brought forward losses loss attributing qualifying companies (LAQC) losses received from companies look-through losses received from companies partnership losses deductible expenses such as return preparation fees schedular expenses	Included if IR3 filed	Included if IR3 filed
Interest and dividends	Included only if IR3 filed or personal tax summary issued	Included for all
PIE income (for example KiwiSaver earnings)	Excluded	Included if PIE used the wrong tax rate

Widening the definition of taxable income changed the overall distribution of taxable income from the 2019 tax year by:

introducing more low-income individuals into the distribution
increasing the taxable income of individuals whose interest, dividend and PIE income was not previously included.

A new income group of individuals with income between $0.01 and $100 was added to the tables from the 2019 tax year onwards to help identify the impact of including more low-income individuals into the time series.