The Inland Revenue Department provides service to all New Zealanders, by collecting the bulk of the revenue government needs to fund its many programs.
The IRD works within the Inland Revenue Acts and other relevant laws.
Income tax on earnings is required to be paid to the New Zealand government. There are no local or regional income or sales taxes. All taxes are collected by the Inland Revenue department.
Most people pay their income tax as they earn their income. Employers deduct tax based on salary and wages. This is known as PAYE (Pay As You Earn) tax. Banks and other financial institutions deduct Resident Withholding tax on interest as it is earned.
People who do not pay tax on all of their income as it is earned are required to settle their taxes with Inland Revenue at the end of the tax year (31 March). In most cases Inland Revenue will send you all the material you need to do this. If you are in this category may be required to pay 'provisional tax' in which case you must pay your tax in three instalments through the year.
If you receive any income you need an IRD number – find out how to apply by contacting Inland Revenue. You will need your IRD number before you start a job, or if you want to open a bank account.
What types of income are taxed?
- salary and wages
- business and self-employed income
- most social security benefits
- income from investments
- rental income
- profit from selling capital assets – but this does not usually apply to personal assets
- income you earn from overseas
All New Zealand tax residents are liable for income tax on their world-wide income. See the Business Regulations page for more information on individual taxation including the definition of a New Zealand tax resident and the current personal income tax rates .
You may be a tax resident in New Zealand and another country. If both countries tax their residents on world-wide income, you could be taxed twice. New Zealand has negotiated double taxation agreements with many other countries so that this does not happen.
Goods and Services Tax (GST)
Goods and services tax (GST) is charged at the rate of 12.5% for virtually all goods and services, excluding exports, financial services, and some other items.
If you are self employed (or a business) and your annual turnover is above a certain amount you must 'register' for GST purposes and charge GST on all your services. You can then claim back the GST paid on any business-related purchases and expenses.
