First Timer: What Is The IRD & Why Do I Have To Pay Them?Categories News & Updates
If you’ve never had to file a tax return before, doing so can seem like a daunting task. But never fear! We’ve put together a beginners’ guide to personal tax in New Zealand, including helpful links to the relevant Inland Revenue resources and the forms that you’ll need.
Of course, if the thought of doing your taxes bores you and you’d much rather we do it all for you, please get in touch!
What is the IRD?
IRD stands for Inland Revenue Department. The Inland Revenue collects tax on behalf of the Crown and distributes social support payments. It also provides the New Zealand government with policy advice.
If your income is from salary, wages, benefits or pensions, tax will automatically be deducted under the PAYE (pay as you earn) system and paid directly to the IRD.
Do I Need To File A Return?
If you have overseas income, or arrived part way through a tax year, you need to file a return. The New Zealand tax year runs from 1 April to 31 March.
There are other circumstances under which you must file a return including if you earned income other than salary, wages, interest, dividends, and/or taxable Māori authority distributions.
Why Do I Need To Pay Tax?
There is a saying that goes “there are two certainties in life: death, and taxes”. And another saying “Taxes are the price we pay for civilisation”. There have been taxes, in one form or another, since 3000–2800 BC in Ancient Egypt.
No one really wants to pay taxes, but few people would be prepared to go without the benefits taxation provides. The state collects taxes to pay for services such as the police, roads, health, welfare and education. Of course, the level of taxation is always a hotly debated issue, but the main thing to remember is that you must pay the taxes you are required to under law, but certainly no more!
It is legitimate to make sure you aren’t paying too much tax and, if you are, to claim the overpayment back. Many people don’t realise they are overpaying tax and are owed a refund.
So, what should I do?
First, you’ll need an IRD number.
How Do I Get An IRD Number?
If you earn any money, you need an IRD number. You also need one to open a bank account, buy property, receive certain benefits or file tax returns.
It’s easy enough to get one. If you’re a New Zealand citizen you can apply for an IRD number here. After providing a few forms of ID, which are outlined on this page, you’ll receive your IRD number in 8 to 10 working days.
If you have a residency visa, a work visa or student visa you can apply online.
If you’re applying from outside New Zealand, you can apply here.
Find out more about getting an IRD number here.
How Do I Make My First IRD Claim?
You may receive a Personal Tax Summary (PTS) in the mail. If your personal tax summary shows a refund of more than $600, you’ll need to confirm that the details are correct before receiving your refund.
Refunds of $600 or less are paid to you automatically. You should receive your refund 15 days after the date of your PTS.
What Is A Personal Tax Summary?
A Personal Tax Summary (PTS) is a summary of the tax that has been deducted from your income. This is a useful piece of paper as it tells you if you have overpaid your tax and are due a refund, or perhaps less usefully, underpaid your tax and have tax to pay!
The IRD will typically send you a PTS if you fall into certain tax categories. These are outlined on their website. You can also request one, but first you need to work out if a PTS applies to you. The IRD provides various calculators to help you do this.
You’ll need your income details to use the Personal Tax Summary calculator. You can get this information from:
Looking at Account Information:
You need to first register for myIR to use this service. You can create an IR account using this online process.
0800 self-service line on 0800 257 778.
Request a “summary of earnings”, or you can also get this information from your end of year payslip from your employer.
If the result is a refund, you’ll need to request a PTS in order to get your refund.
Find out more about personal tax summaries here.
How Long Will The Process Take?
Like all things tax-related, it depends.
Some payments are made automatically. For other refunds, you need to apply. If you’re missing any documentation or the form hasn’t been filled in correctly, this can, of course, delay matters.
As tax can be tedious and time consuming, some people like to leave it to the experts. MyTax take the stress out of getting a tax refund by doing all the work for you – and there is no charge to find out if you’re owed any tax. If you are owed tax, we will get the refund for you, take a low fee for our service then pop the rest into your nominated bank account.
Dealing with tax can be confusing, even for those who must deal with the Inland Revenue Department on a regular basis. In addition, tax law changes constantly, so you also must keep up to date with the new rules and regulations. However, we want to make getting a refund much easier so if your eyes are glazing over at this point, why not let us take care of your tax returns and claims for you!
MyTax are 100% New Zealand owned and operated, with a team of people that have vast experience in accountancy and taxation.
Because we’re an IRD-approved tax agent, we can prepare and file tax refunds electronically with the IRD, making it easier and faster for you to get your tax refund sorted. It’s how we provide New Zealand with safe, fast and reliable tax refunds. And even provide the bonus of Fly Buys!