Ka haere au ki te mahi, ki te ako rānei ki Aotearoa I am coming to work or study in New Zealand

If you're earning salary or wages, your employer is responsible for deducting income tax from your pay and sending it to us during the tax year. You'll need to give your employer:

• your IRD number
• the right tax code. 

When you get paid, your employer must give you a pay slip showing how much you were paid and any deductions they made. Your employer will deduct 'PAYE' which stands for 'pay as you earn'. It includes the:

• income tax you need to pay 
• Earners' levy for New Zealand's Accident Compensation Corporation (ACC).

In New Zealand, anyone who gets injured in an accident is covered by the ACC insurance programme, which is owned and operated by the New Zealand government. You can check the current rate for the Earners' levy on the ACC's website.

Levy results (Accident Compensation Corporation)

By not paying too much or too little tax while working, you can avoid a large expense or refund at the end of the tax year. If you work without an IRD number or a tax code, you'll be charged the highest rate of tax, called a 'no-notification' rate. Your tax code depends on your estimated income and you'll need to work it out.

Tax codes for individuals

Self-employed people carry out activities on their own, earning their own income. Self-employment can be known by many names, such as being a:

• contractor
• freelancer
• sole trader
• consultant
• small business.

If you're earning income from self-employment, you do not need to set up a formal company. Instead, you'll need to:

• use your individual IRD number to pay income tax
• pay income tax on net profit by filing a tax return.

If you're earning income in a partnership, you're still considered self-employed. However, you'll need to file some more paperwork and consider other points about your situation.

Income tax for partnerships

If you choose to form a company, then you'll pay income tax using a completely different process. You can work out which type of business is right for you at the business.govt.nz website.

Income tax for companies

Business structure overview (business.govt.nz)

While getting started in New Zealand, you might come across information about New Zealand Business Numbers (NZBNs). These are not required for your work as a self-employed person, but you might decide it helps you in your business activities.

About the NZBN (New Zealand Business Number)

Other responsibilities for self-employed people

If you employ staff to work for you, you'll need to register with us as an employer. You'll need to make sure you meet your tax responsibilities when hiring workers. This includes deducting PAYE from your employees' salaries or wages and sending it to us during the tax year.

Employers

In any 12-month period, if you earn more than $60,000 in turnover from taxable activities, you'll need to register for New Zealand's goods and services tax (GST). You'll need to charge your clients and customers GST, collect it and send it to us during the tax year.

GST

Being considered in business, you'll need to keep track of receipts, invoices and other types of documents. You must keep these records for 7 years and they must be in English or Māori. Having these documents organised can also help you efficiently and accurately meet your tax responsibilities during and at the end of the tax year.

Record keeping

Paying tax during your first year in business

Generally, in your first year in business, you will not need to pay income tax until the end of the tax year. However, you can choose to make voluntary payments in order to help spread the cost. If you meet the criteria, you might be able to get an early payment discount in your first year in business.

There are some situations where the person or business contracting your services may set up schedular payments with you. These payments have a standard tax code and the contracting person or business will deduct income tax from your earnings at the rate set for the type of work you do. You may also have extra income tax to pay at the end of the year. To avoid this, you can choose a tax rate that fits your situation.

Unlike PAYE for people earning salary or wages, deductions from schedular payments do not include levies for New Zealand's Accident Compensation Corporation (ACC). You'll need to pay these at the end of the tax year to ACC.

Paying tax in your first year in business

Schedular payments

Paying tax at the end of the tax year

Whether you receive schedular payments or not, you must file an end-of-year tax return. You'll need to tell us your income and may claim certain expenses for running your business. You'll pay income tax on your net income. When filing your tax return, you'll need to give us either a:

• Financial statements summary - IR10 form
• set of financial statements.

Complete a Financial statements summary - IR10

This is also when you pay ACC levies to ACC. In addition to the Earners' levy that people getting salary or wages pay, you'll also pay the:

• Work levy
• Working Safer levy.

Understanding levies if you work or own a business (Accident Compensation Corporation)

When you file your tax return, you'll need to include your business industry classification (BIC) code. We send this along with your income information to ACC to calculate your levies. You can check all the information you'll need at ACC's website. Once ACC gets your information from us, they'll send you an invoice for your levies.

Calculating your levies (Accident Compensation Corporation)

When you file your tax return, you'll also find out whether you'll need to pay provisional tax during your second year of business. If you do need to, you'll be paying your income tax during the tax year. You can make adjustments to your provisional tax payments if your income changes.

Provisional tax

There are some situations where, even though you're being paid a salary or wage, you'll need to pay your own tax on it during the tax year. Normally, an employer deducts income tax and the ACC Earners' levy from employees' salaries or wages. If you're an IR56 taxpayer, you'll need to register and do this yourself.

You're an IR56 taxpayer if you're:

• embassy staff
• a New Zealand-based representative of an overseas company
• a United States Antarctic Program worker
• a part-time private domestic worker, such as a home helper, caregiver, nanny or gardener.

You'll need to make sure you're not considered self-employed or an employee.

IR56 taxpayers

Depending on your role at an embassy, some of your income may be exempt. You'll need to check if you qualify as diplomatic personnel.

Diplomatic personnel

If you're an international student, you'll need an IRD number to work in New Zealand. You'll also need to know whether your student visa allows you to work and, if so, for how many hours. You cannot be self-employed on a student visa.

See Immigration New Zealand's website for more details about working while studying in New Zealand. Depending on your situation, you may also be able to apply for a student loan.

Working on a student visa (Immigration New Zealand)

Coming to New Zealand to study (StudyLink - Ministry of Social Development)

There are some special tax rules for experts and trainees visiting from overseas. You'll need to check if your situation matches any of these criteria.

Experts and trainees visiting from overseas