New Zealand Tax Basics: Paying Your Income Tax

Taxes in Auckland

In New Zealand, if you have earnings from salaries, taxable pensions, or benefits, your tax would be deducted automatically under the ‘Pay As You Earn’ or PAYE system. This means that your tax has already been taken out of your monthly, fortnightly, or weekly earnings when you receive it.

What You Should Do

First off, know that PAYE is a tax that your employer deducts from your wages and salary. This includes your ACC earner’s levy and your income tax rate. To make certain you’re paying taxes on your wage or salary income, you are responsible for the following:

  • Providing your payer or employer your IRD or Inland Revenue Department number. In case you have yet to get an IRD number yet, you must complete the necessary application form — the IR595 resident individual form.
  • Completing the IR330 tax code declaration form, signing it and giving it to your payer or employer.

If you utilise the tax codes ME SL or M SL and your income is higher than the pay period repayment limit, your employer will deduct your student loan (if applicable) from your gross income. On the other hand, if you utilise secondary tax codes, including ST SL, SH SL, S SL, or SB SL, your employer would deduct your student loan (if applicable) from your gross income at 12% rate.

It’s extremely crucial to note that if you failed to complete the IR330 form, your tax would be deducted at 45 cents per dollar, which is the no-notification rate, warns Accounting North Ltd and other accountants in Auckland.

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Some Important Things to Keep in Mind

Check if you’re on the accurate tax code. If you find that you’re not, inform your employer to modify it. While the majority of those who pay taxes give the right amount every year, in the event that you don’t work year-round or have been working multiple jobs, you could qualify for tax refunds every year.

If you registered for the Inland Revenue’s ‘Look at Account’ service, you could easily see your income details online, or call to request for an income summary. This summary shows your exact income amount and how much your employer deducted from your taxes.