Taxes are collected in New Zealand by the national organization of the Inland Revenue Department, or IRD. National taxes are levied on personal and business income, as well as on the supply of goods and services. Local property taxes (rates) are managed and collected by councils. Some goods and services carry a specific tax, referred to as an excise or a duty eg Alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service.
All goods and services are subject to a 12.5% Goods and Services Tax (GST), included in the displayed price. Visitors cannot claim this tax back, but if a supplier ships a major purchase to your home address the GST won't be charged.
Income tax is dependent on income levels in any specific tax year (personal tax years run from 1 April to 31 March).
The income is taxed by the amount that falls within each tax bracket. If a person earns $70,000, they will only pay 33% on the amount that falls between $48,001 and $70,000 rather than paying this on the full $70,000. The corresponding income tax for that specific income will accumulate to $16,150 or about 23% of the entire amount. In most cases employers deduct the relevant amount of income tax from salary and wages prior to these being paid to the individual. This system, known as Pay-as-you-earn, or PAYE, was introduced in 1958, prior to which employees paid tax annually.
As a New Zealand resident you will be required to pay tax on all the income you receive, whether this is generated in New Zealand or overseas. To do so you will need to apply to Inland Revenue for an IRD number. This is generally issued within a few days and is required to start a job or open a bank account. It also ensures that personal tax records are recorded properly.
Where an individual is tax resident in more than one country they may be liable to pay tax more than once on the same income. New Zealand has double taxation agreements with various countries that set out which country will tax specific types of income. The following countries have such an agreement with New Zealand: Australia, Indonesia, Sweden, Belgium, Ireland, Switzerland, Canada, Italy, Taiwan, China, Japan, Thailand, Denmark, Malaysia, The Netherlands, Fiji, Norway, The Philippines, Finland, Republic of Korea, United Arab Emirates, France, Russian Federation, Germany, Singapore, United States of America, India, South Africa, Mexico, Austria, Poland, Spain, and Chile.
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