New Zealand tax codes

Your tax code is a letter (or letters) that tells your employer how much tax to deduct from your income over the year. It’s automatically deducted so that you don’t have to worry about putting the money aside to cover a terrifying tax bill at the end of the year! All you’ve got to do is fill out an IR330 and give it to your employer and they’ll do the rest. If you have multiple jobs you have to fill out a separate one of these forms for each one.

There are all kinds of job opportunities here in New Zealand, and these various income streams come with very specific codes. As good tax paying Kiwis, M is the most common code but there are codes for people with more than one job, temporary jobs and seasonal jobs too.

Even more complicated is the fact that your tax code can change if you get a second job, start paying off your student loan, get a new job or start receiving benefits or Kiwi Saver. Basically, each job or source of income you have requires a separate tax code. Of course, if you only have one job, it’s less complicated. That said, there are a lot of us Kiwis who have to work more than one job to make ends meet.

Just keep in mind that you really want to get your code right, otherwise you could be paying too much tax or too little. If it’s the latter, you’ll be facing an impressive tax bill and you definitely want to avoid that.

The primary tax codes

The below primary tax codes are selected for your main or highest source of income.

M

You use an M tax code if you meet a combination of the following criteria:

  • You receive an income tested benefit
  • This job is your main or highest source of income
  • You are a New Zealand tax resident
  • Your annual income is unlikely to be between $24,000 and $48,000
  • You or your partner receive Working for Families Tax Credits or an overseas equivalent or you receive NZ Super, veteran’s pension or an overseas equivalent
  • You don’t have a student loan

Example: Helen has an after-school job at a supermarket. She works three hours a day, five days a week for a total annual income of $13,000. This is Helen’s only job, so she uses the M tax code.

M SL

You use an M SL tax code if you meet the above criteria and HAVE a student loan.

Example: Helen has an after-school job at a supermarket. She works three hours a day, five days a week for a total annual income of $13,000. This is Helen’s only job, but she has a student loan, so she uses the M SL tax code.

ME

The ME and M tax codes have some distinct differences and it’s important that if you’re unsure about the two different codes that you seek professional advice to avoid a future tax bill. You can use an ME tax code if:

  • You do not receive an income tested benefit
  • This job is your main or highest source of income
  • You are a New Zealand tax resident
  • Your annual income is likely to be between $24,000 and $48,000
  • You and your partner DO NOT receive Working for Families Tax Credits or an overseas equivalent
  • You DO NOT receive New Zealand Superannuation, veteran’s pension or an overseas equivalent
  • You DO NOT have a student loan

Example: Mary has a job at a supermarket. She works 40 hours a week with a total annual income of approximately $39,000. Mary doesn’t have a partner and doesn’t receive any government support, so she uses the ME tax code.

ME SL

You use an ME SL tax code if you meet the above criteria for tax code ME but you HAVE a student loan.

Example: Mary has a job at a supermarket. She works 40 hours a week with a total annual income of approximately $39,000. Mary doesn’t have a partner and doesn’t receive any government support, but she has a student loan, so she uses the ME SL tax code.

 

Secondary Tax Codes

This is where things can get a little complicated. Like we’ve said before, if you have more than one job you need a secondary tax code because this income needs to be taxed too, but at a different rate than your main one. The rate of your secondary tax depends on the total amount of your income from all of your jobs, and whether or not you have a student loan. Let’s take a look at the codes:

SB and SB SL

You use an SB tax code if your annual income from ALL jobs is less than $14,000.

Example: Tom has just finished high school and is working a part-time job at his mum’s cafe earning $4,000 annually as well as a kitchen hand at his brother’s restaurant earning $6,000 annually. His total income for the year is $10,000. The higher income source uses a tax code from above and the lower source uses tax code SB.

If Tom has a student loan he would use SB SL.

 

S and S SL

You use an S tax code if your annual income from ALL jobs is between $14,001 and $48,000.

Example: Brad works full-time in his mum’s cafe for 40 hours a week with an annual income of $38,000. Brad has a lot of credit card debt and to pay it off faster he gets a second job at a supermarket earning $5,000 annually. His total income for the year is $43,000. The higher income source uses a tax code from the above and the lower income source uses the tax code S.

If Brad has a student loan he would use S SL.

 

SH and SH SL

You use an SH tax code if your annual income from ALL jobs is between $48,001 and $70,000

Example: Sally works full-time in a warehouse for 40 hours a week with an annual income of $51,000. Sally is saving for a holiday so she gets a second job at a supermarket earning $12,000 annually. Her total income for the year is $63,000. The higher income source uses a tax code from above and the lower source uses tax code SH.

If Sally has a student loan she would use SH SL.

ST and ST SL

You use an ST tax code if your annual income from ALL jobs is more than $70,000.

Example: Matt is a hot shot graphic designer. He makes $80,000 designing websites for major companies. He also has a secondary job that brings in an additional $6,000. His total income for the year is $86,000. The higher income source uses a tax code from above and the lower source uses tax code ST.

If Matt has a student loan he would use ST SL.

 

But wait, there’s more…Just when you thought that the Primary and Secondary tax codes were all you needed to know, we go and throw you a curve ball. Well, these next tax codes are quite particular and really only apply to temporary, casual and seasonal workers.

 

Other tax codes

CAE

Casual agricultural workers, shearers or shed hands engage in casual seasonal work on a day-to-day basis, for up to three months. They’re taxed through the PAYE system at a flat rate.

EDW

Election Day workers are employed on a casual basis immediately before, on, or after polling day. They’re taxed through the PAYE system at a flat rate.

NSW

Recognised seasonal workers work seasonally in the horticulture or viticulture industries and are employed by a registered New Zealand employer under the Recognised Seasonal Employers’ Scheme. They’re taxed through the PAYE system at a flat rate.

WT

Schedular payments (formerly known as Withholding Tax) are specifically for contract work, not salary or wages. For example, ACC personal service rehabilitation payments paid by ACC or an accredited employer are schedular payments.

STC

A special tax code is a tax deduction rate worked out to suit your individual circumstances. If you usually pay too much tax, or not enough, via the regular tax codes, you might want to apply for one. For example, an STC is ideal if you’re on a benefit and working at the same time.


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