New Zealand Tax Rates For Individuals, Trusts and Companies

New Zealand has several types of tax, including taxes levied on Goods and Services (GST) and specific excise taxes on petrol, tobacco and alcohol. In addition, individuals, companies and other entities are required by law to pay taxes on any income or profit they make.

Individuals

Every person in New Zealand who has an income is required to pay tax, and declare this with Inland Revenue.

New Zealand operates a graduated (or progressive) tax system for individuals. This means that the amount of tax you pay is dependent on the amount of income that you earn during the financial year.

Taxable IncomeTax
Up to $14,00010.5%
Over $14,000 and up to $48,00017.5%
Over $48,000 and up to $70,00030%
Remaining income over $70,00033%

Your first $14,000 is taxed at 10.5%, any income between $14,000 and $48,000 is taxed at 17.5%, income between $48,000 and $70,000 is taxed at 30% and any income over $70,000 is taxed at 33%. So if you earn over $70,000 you will pay $14,020 for the first $70,000 of income and then 33% on any further income you receive.

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In the example below, an individual earned a gross income of $78,000 during the 2016 financial year and paid tax of $16,660.00.

Income tax rateIncomeTax
Income up to $14,000, taxed at 10.5%$14,000$1,470
Income over $14,000 and up to $48,000, taxed at 17.5%$34,000$5,950
Income over $48,000 and up to $70,000, taxed at 30%$22,000$6,600
Remaining income over $70,000, taxed at 33%$8,000$2,640
Total$78,000$16,660

This progressive tax system is designed to ensure that tax is fairly distributed across individuals and to increase income equality within New Zealand. This supports the Kiwi culture that everyone should have a fair go, but also pay their fair share.

In addition to these main tax rates, New Zealand also has a no notification tax rate of 45%. This tax rate is used if a person starts employment and does not supply their employer an IR330 tax code declaration (IR330) form.

See the Inland Revenue website for more information on New Zealand’s tax rates.

What happens at the end of the financial year?

For most salary and wage earners their employer will deduct the appropriate amount of tax based on your projected income during the tax year. If your income changes, such as you stop working or you change jobs, this can result in an incorrect amount of tax being deducted by your employer.

To square up any potential tax overpayment you can file a return with Inland Revenue where they will check the total amount of tax your employer deducted versus the amount of tax that you should have paid.

I’m on a WT tax code is this different?

If an individual is a self-employed contractor and being paid with Withholding Tax deducted (schedular payments), these are taxed at flat rates depending on the industry they work in.

For example if a person is a cleaner and paid $50,000 on a WT rate, the Schedular tax for this industry is 20%, or 20c in the dollar.  This means this person would have had $10,000 of tax deducted during the tax year by their employer.  After performing a tax calculation we can see that this was too much and the person should only have paid $8,020, which means when they complete their end of year return with Inland Revenue they may receive a refund of $1,980.

Income tax rateIncomeTax
Income up to $14000 taxed at 10.5%$14,000$1,470
Income over $14,000 and up to $48,000, taxed at 17.5%$34,000$5,950
Income over $48,000 and up to $70,000, taxed at 30%$2,000$600
Remaining income over $70,000, taxed at 33%$0$0
Total$50,000$8,020

Companies

Companies are required to pay tax on any profit they make. The exception are Look Through Companies (LTC’s) which operate slightly differently and pass on any profit or loss to the shareholders).

The standard tax rate for a company in the 2016 financial year (01/04/2015-31/03/2016) is 28% or 28 cents in the dollar. Previous company tax rates are as follows:

  • 28 cents in the dollar for income years 2012 and later.
  • 30 cents in the dollar for income years 2009 to 2011.
  • 33 cents in the dollar for income years 2008 and earlier.

The company tax rate is a flat rate and is not graduated. For example if a company has $50,000 of taxable profits during the 2016 Financial Year, this means they would be required to pay $14,000 of tax.

The company tax rate applies to all:

  • Registered companies, except for those who elect to become an LTC
  • Cooperative companies
  • Life insurance companies deadline
  • Incorporated societies
  • Portfolio Investment Entities (PIEs) that are not portfolio tax rate entities (See Tax rules for portfolio investment entitiesfor a more detailed description.)
  • Specific savings vehicles defined as being taxed at this rate in Schedule 1 of the Income Tax Act 2007
  • Unit trusts
  • Statutory producer boards
  • Group investment funds (except for certain income)

At the end of the financial year Companies are required to complete a tax return with Inland Revenue called an IR4. This return advises Inland Revenue of the total amount of income the company received and its total profit which forms the company’s taxable income.

Once this has been filed this will become an assessment and the company will become liable to pay any residual income tax (RIT) owing.

Trusts

A Trust is another type of entity that needs to pay tax on income. Any income the trust earns (for example, through investment, business or rental income) is considered taxable and needs to be assessed by Inland Revenue.

The current tax rate for a Trust is 33 cents in the dollar or 33%.

Similar to companies, this is a flat tax rate and is not graduated.

At the end of the financial year Trusts complete an IR6 to declare any income and to determine any residual income tax to be paid. The Trustees are then liable to pay this amount.

What you can do now

We have a range of other useful tax and employment resources that can help navigate through your obligations working in New Zealand.
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