Tax In New Zealand

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in New Zealand is complying with the country’s tax system. As well as paying tax in New Zealand, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income: 

If you’re working in New Zealand under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in New Zealand for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in New Zealand, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in New Zealand through PAYE is left with the prospect doing everything themselves.

Do you know much about New Zealand Tax Law? Does New Zealand have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in New Zealand can range from 10.5 to 33 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in New Zealand, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax : 

Contractors in New Zealand are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A New Zealand umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in New Zealand taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the New Zealand tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in New Zealand, many of whom are experts in tax and immigration laws. If you have any questions about tax in New Zealand, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their New Zealand work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in New Zealand but without the overhead of directly dealing with the New Zealand tax authorities. Get in touch with us today for some reliable advice on tax in New Zealand!

When Do You Need to Lodge Your Tax Return?: 
7 July
Tax Filing Deadline : 
7 July
Can you file it online? : 
Yes, http://www.ird.govt.nz/online-services/ir-online-services-register.html
Currency: 
New Zealand Dollar (NZD)
Tax-free Threshold in: 
None
Grossed Income: 
0-14,000
Tax Rate: 
10.5%
Grossed Income: 
>14,000-48,000
Tax Rate: 
17.5%
Grossed Income: 
>48,000-70,000
Tax Rate: 
30%
Grossed Income: 
>70,000
Tax Rate: 
33%
How long does it take to set up: 
0.5 days
How much does it cost: 
NZD160.22
Is it easy? : 
Starting a Business Rank: 1/190 (Source: World Bank)
How to File Taxes in: 

Tax Year-End: 31 March

You are required to file taxes if:

  • You are a resident and you have income that does not have tax withheld at source, or you are a non-resident for part of the income year; or
  • You are a non-resident and you have New Zealand-sourced income that does not have tax withheld at source.

Step 1: Prepare the Relevant Documents and Information

To file taxes, you will need:

  • Your IRD Number (call 000 227 774 if you don’t have one)
  • Your summary of earnings (this will be sent to you in May or you can use the Account Information service on the IRD website)
  • Any other income details e.g. overseas, rental property, farming or business income
  • Any interest or dividend statements
  • Any taxable Maori authority distribution statements
  • Any portfolio investment entity investor statements

Step 2: Register for myIR (if filing online)

If you’re filing online, register for myIR Secure Online Services here. This is a 3-step process and you will need your IRD Number.

Request a Taxpack (if filing by paper)

Use the Request an IR3 taxpack service on the Inland Revenue Department (IRD) website. A “Get Started” button at the bottom of the page directs you to a form via which you can request a taxpack.

Your taxpack will be posted to you and should arrive in approximately 10 working days.

Step 3: File Taxes

To file taxes online, use your myIR Secure Online Services account.

To file by paper, complete the forms sent to you in the taxpack and post them to:

Inland Revenue

PO Box 39090

Wellington Mail Centre

Lower Hutt 5045

You can find comprehensive guides on how to complete your tax forms on the IRD website. Click here for the 2016 individual income tax return guide.

Once you file your IR3 return, the IRD will process it and send you an acknowledgment confirmed your assessment within 10 weeks.

Notes: 

Non-Resident Withholding Tax (NRWT): The rates above apply to employment income for both non-residents and residents. Non-residents are subject to NRWT at 15% of interest income and 30% of dividend income.

Tax Exemptions for Non-Residents

A non-resident’s personal services income earned in New Zealand is exempt from tax if:

  • Their visit(s) do not exceed 92 days in the income year; and
  • They are liable for income tax on New Zealand-sourced income in their country of residence; and
  • The services are performed on behalf of a person (i.e. their employer) who is not resident in New Zealand.

Accident Compensation Corporation (ACC) Earners’ Levy: Employment income of up to NZD122,063 is subject to an ACC Earners’ Levy of 1.39% to fund the accident compensation scheme for the 2017 income year.

Does the 183 day rule apply in: 

Yes

When do you become a tax resident in: 

You become a tax resident in New Zealand when you:

  • Have a permanent place of abode i.e. have an available dwelling in New Zealand;
  • Are personally present in New Zealand for more than 183 days in any 12-month period.

There are 2 considerations in determining whether the dwelling is a ‘permanent place of abode’:

  1. Continuity and duration of the individual’s presence in New Zealand; and
  2. The permanence of the individual’s connection with the property.

The following factors are used in assessing (ii):

  • Nature and use of the dwelling
  • Intentions
  • Family and social ties
  • Employment, business and economic ties
  • Personal property
  • Other relevant factors e.g. receipt of government assistance, whether holidays are spent in New Zealand
Am I taxed on my global income in: 

Residents are taxed on their worldwide income.

Non-residents are taxed on New Zealand-sourced income only.

Client comment

"Great advice and excellent service on contracting and immigration solutions in the UK. I would highly recommend Tim and the team to assist you with accurate, clear and concise contracting advice in the UK or any other country for that matter."

Prishen Pillay,Global DBA Operations Lead

Shell International Trading & Shipping