New Zealand’s tax system is easy to use compared with many other countries.
The New Zealand Government relies on taxes to help fund services that benefit all New Zealanders. All taxes are paid to Inland Revenue — the Government’s tax department, which is also known as IRD.
This page helps you learn about our tax system and how it works. It is just a summary — we suggest you seek professional advice if you need more information or help with paying tax.
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Types of tax
Individuals and businesses in New Zealand must pay tax on their income. The Government also collects tax from the sale of some goods and services.
- Income tax — tax on what you earn —is commonly known as Pay-As-You-Earn or PAYE.
- Goods and Services Tax — tax on things you buy — is commonly known as GST.
There are other types of taxes too. You can find out what they are on the Inland Revenue website.
How to pay income tax
Your employer will take PAYE tax from your salary or wages before they pay you and pay it to Inland Revenue on your behalf.
Inland Revenue works out how much personal tax you have to pay automatically. But some people have to file an individual tax return (IR3) to declare their income.
An IR3 is a statement of how much income you have earned over the tax year (1 April to 31 March). It includes money earned from a range of sources, like salary and wages, overseas income, superannuation, investments and rental income.
Filing a tax return
Most new arrivals will need to file a tax return in their first year here.
Non-residents, like people on work visas, may need to file a tax return at the end of the tax year or when they leave New Zealand.
There are other situations when you must file a tax return.
Inland Revenue’s website has information about migrants’ tax obligations and a handy ‘Top 10 facts’ guide you should check.
Get an IRD number
If you earn income in New Zealand, you will need an IRD number (tax number). If you do not have an IRD number, you will be taxed at the highest possible rate.
So apply for an IRD number as soon as you arrive here — it is free to get one and easy to apply online.
If you are buying or starting a business, make sure you know your tax obligations.
Inland Revenue’s website has tax information and videos for businesses. They also run regular workshops for business owners.
New Zealand’s personal income tax rates depend on your income increases.
- The top personal tax rate is 33% (for income over NZ$70,000).
- The lowest personal tax rate is 10.5% (for income up to $14,000).
Companies and corporates are taxed at a flat rate of 28%.
Our GST system is simpler than similar systems in many other countries.
GST is a flat rate tax of 15%. It is added to the price of most goods and services when you buy them, including some you buy from overseas suppliers.
Things that do not have GST applied include residential rents, airfares for overseas travel, financial services and mortgage payments.
Businesses can claim back GST that they have had to pay for goods and services.
Features of our tax system
If you are considering living in NZ, you may be eligible for the tax concession on overseas income for your first 4 years of living here.
New Zealand’s tax system is fair and has few loopholes (ways to avoid paying tax). Our tax environment is also good for your earnings and assets. In 2019, the US based Tax Foundation ranked New Zealand’s overall tax system as second in the developed world for competitiveness and fourth for individual (personal) taxes.
Key attractions of New Zealand’s tax system include:
- no inheritance tax
- no general capital gains tax
- no local or regional taxes (property owners do have to pay ‘rates’ to councils and local authorities)
- no payroll tax
- no social security tax
- no general healthcare tax.
Tax exemption for new migrants
If you are a new migrant you may not have to pay tax on most of your overseas income for your first 4 years living here. This means you may only have to pay income tax on what you earn in New Zealand.
For more information visit Inland Revenue’s website.
Avoiding double taxation
You might be a tax resident in New Zealand as well as somewhere else. If both countries tax their residents’ worldwide income, you could be taxed twice on the same income.
To limit that possibility, New Zealand provides credits for tax paid overseas on income that is also subject to New Zealand tax.
New Zealand also has agreements with 40 of our main trading and investment partners that stop double taxation.
NZ Tax at a glance
33% from $70,000
30%: $48,001 to $70,000
17.5%: $14,001 to $48,000
10.5%: $0 to $14,000
|Tax credits||Working for Families credits for low and middle income earners.|
|Social security & insurance levies etc||
Social security and health: Covered by general tax, though many people have private health insurance.
Generally not on New Zealand investments, but applies to foreign debt and equity investments.
|Dividends||Imputation system to avoid double tax.|
|Gift duty||Not since 2011.|
|Tax on savings||
Little tax relief on contributions to New Zealand retirement schemes, but saving is not compulsory. Tax paid at normal income levels at source, but distributions are tax free. No mortgage interest tax benefits, except for investment property.
|Fringe benefit tax (FBT)||
Paid by employer, up to a rate of 49.25% for employer provided cars, low interest loans, medical insurance premiums, foreign superannuation contributions etc. FBT is tax deductible so employer cost is effectively the same as paying cash remuneration.
|Sales & excise tax||
Goods and services tax (GST) of 15% on most things.
Tax is a complex area and this information is only a summary. You can find more information on the Inland Revenue website.