If you’re planning to work and live in New Zealand, the country’s tax system is something that you should familiarise yourself with. Don’t worry, it isn’t complicated. New Zealand has developed a simple and clear tax system and you might be surprised to find out that it is the second-most competitive and is amongst the most beneficial in the world for earners and tax payers.
To pay taxes in NZ, first you must get an IRD number. The IRD number is valid for life and you won’t have to get a new one in case you need to leave and then return to the country later on. Tax year in New Zealand starts on April 1 and ends on March 31.
Biggest Advantages of the New Zealand tax system:
• No payroll tax in New Zealand
• No Social Security tax
• No Inheritance tax
• No state or local taxes. Only the property rates are levied by local authorities.
• No gain tax (it applies only to some particular forms of investments)
• No health care tax (there’s only a very low levy for New Zealand accident compensation scheme).
• Four-year tax concession on the overseas investment income and pensions for the first year of residency in New Zealand.
New Zealand tax rates
If you’re earning over NZ$70,000, a 33% tax rate, which is the highest, is applicable to you. The lowest tax rate, meanwhile, is 10.5% for income up to $14,000. For income starting from $14,001 to $48,000, the tax rate is 17.5%; and for income from $48,001 to $70,000, the applicable tax rate is 30%.
1. New Zealand has a flat goods and services tax (GST), which is at 15%. GST is added to almost all purchases. Financial services and residential rents are exempted from GST.
2. New Zealand is one of three countries that don’t impose capital gains tax (CGT), which is a tax on capital gain of assets like shares, bonds, and property. Take note, however, that there are situations where capital gains can be taxed as income.
3. In NZ, there’s a tax called the ACC (Accident Compensation Corporation) levy. This unique tax scheme provides 24-hour no-fault comprehensive coverage in case you injure yourself while visiting or living in New Zealand.
4. For foreign residents eligible for the so-called “transitional tax resident” status, there’s a temporary four-year tax exemption they can avail themselves of. This will allow them to pay taxes only on their NZ-sourced income. The exemption starts on the day of their arrival and is valid until the last day of that month four years later.