Taxation & SuperannuationThe New Zealand Taxation System New Zealand’s laws require people and organisations to pay taxes. The government uses these taxes to pay for government expenditure, including public services in New Zealand such as education, hospitals and healthcare, roads and welfare. Almost all New Zealanders make a contribution to these services through the taxes they are required to pay by law. Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD) on behalf of the Government of New Zealand. National taxes are levied on personal and business income, as well as on the supply of goods and services. There is no capital gains tax, although certain "gains" such as profits on the sale of patent rights are deemed to be income Income tax varies dependent on income levels in any specific tax year (personal tax years run from 1 April to 31 March. Internal Revenue Department Numbers (IRD number) An IRD number is a unique number issued to you by Inland Revenue. The number will be in the range of 10-000-000 to 999-999-999, so some people will have an 8 digit number and others a 9 digit number. Once issued number will never change, even if you move to another country and then return to New Zealand some time in the future. The IRD does not reallocate old numbers or issue every number in the range. This ensures the uniqueness of every individual or organisation's number. You should apply for an IRD number if: It is not compulsory for every individual (eg baby, child) to have an IRD number, but if you or your children are earning income you have to pay tax. If you do not have an IRD number, tax will be deducted at a no-declaration rate, which is higher than the normal deduction rate. You can also apply for an IRD number for your child so a lower rate of withholding tax is deducted from interest earned on their bank balance. Tax Rates for 2007 – 2008 Taxable income Tax rate for every * The earners' levy rate for the tax year 1 April 2007 to 31 March 2008 is 1.3% ($1.30 per $100) The ACC Scheme KiwiSaver is a government initiative involving employers, KiwiSaver scheme providers and several government agencies. It's open to all New Zealand citizens and people entitled to be in New Zealand indefinitely, aged up to 65. New Zealand’s 2007 Budget supports saving by providing a contribution of up to $40 a week in tax credits - $20 per week for each KiwiSaver and another $20 a week via a tax credit for employer contributions. Under new regulations, the New Zealand government will pay $40 a year into members’ accounts to subsidise the fees charged by scheme providers. KiwiSaver also has a mortgage diversion facility that allows members to divert up to half their contributions to repaying the mortgage on their home, so long as the mortgagee and the scheme provider agree As from 1st April, 2008 all employees contributing to KiwiSaver (and complying superannuation funds) will also be entitled to matching employer contributions as follows: From Minimum Employee Contribution (% of Gross Salary) Employer Contribution (% of Gross Salary) Total Employee & Employer Contribution (% of Gross Salary) More Information about KiwiSaver can be found at www.kiwisaver.govt.nz Goods and services tax (GST) GST is an indirect tax introduced in New Zealand in 1986. This represented a major change in New Zealand taxation policy as until this point almost all revenue had been raised via direct taxes. GST now makes up 19% of the New Zealand Government's core revenue. You pay GST of 12.5% on everything you buy in New Zealand except for financial services, the rent or purchase price of residential property and the export of goods and services overseas. Price tags you see in shops always include GST in display price. |