If you live in New Zealand and your overseas employer does not have an obligation to register as an employer in New Zealand, you have an obligation to register as an IR56 taxpayer.
You will not need to register as an IR56 taxpayer if your employer registers as an employer with Inland Revenue or arranges for another person to undertake employment-related tax obligations for you.
From 1 April 2023, if you are a New Zealand-based employee of an overseas employer and received non-cash benefits (also known as a fringe benefit), you will have to include these benefits as gross income in your Employment Information – IR348 (EI) return. You will also need to include any employer superannuation contributions.
60-day grace period
From 1 April 2024, if you are required to deduct tax and have not done it, you will have 60 days to file the required return and make the payment before penalties are applied if certain criteria are met.
Non-resident employers filing employment information
Calculating non-cash benefits from your employer
If you receive any kind of non-cash benefit, for example health insurance, you must include the value of the benefit as part of your gross income in your EI return.
If the non-cash benefit is paid regularly, for example monthly, simply include the value of the non-cash benefit as gross income in your EI return and tax accordingly. You can use the PAYE calculator to do this.
If it is a lump sum, you will need to calculate the PAYE on it separately to your salary. Then you will need to combine these in your EI return.
Calculate your PAYE on your lump sum
Any shares or share options you get from your employer for free or below market value are employee share scheme (ESS) benefits and are employment income. You must include the taxable value of the ESS benefit in your EI return.
Filing employment information about employee share scheme (ESS) benefits
If you receive a Working for Families entitlement and receive any kind of non-cash benefit, you will need to complete an Adjust your income - IR215 form. Any non-cash benefits received are not adjustable in your student loan obligation.
Calculating superannuation
If your employer contributes to a superannuation scheme or fund, you need to account for Employer superannuation contribution tax (ESCT).
Employer superannuation contribution tax
There are two options:
- add this in the EI ESCT field
- opt for it to be taxed as PAYE. This means your income is increased and now included for Working for Families, child support, independent earner tax credit and any student loan payments.