Wellington

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Taxation

Overview of the tax system, including income tax, GST, and obtaining an IRD number in New Zealand.

Sections

1. Overview of the Tax System in New Zealand

New Zealand has a centralized tax system managed by the Inland Revenue Department (IRD). Taxes are uniform across the country, so Wellington does not have region-specific tax rates. However, local resources and community support in Wellington can assist with tax-related matters.

The main types of taxes in New Zealand include:

  • Income Tax
  • Goods and Services Tax (GST)
  • Property Tax (Rates)
  • Other Taxes (e.g., Fringe Benefit Tax, Resident Withholding Tax)

2. Income Tax

Income tax is the primary tax for individuals and businesses in New Zealand.

a. Tax Rates for Individuals (2023-2024)

Income tax is progressive, meaning higher income is taxed at higher rates:

  • Up to NZD 14,000: 10.5%
  • NZD 14,001 to NZD 48,000: 17.5%
  • NZD 48,001 to NZD 70,000: 30%
  • NZD 70,001 to NZD 180,000: 33%
  • Over NZD 180,000: 39%

b. Tax Rates for Businesses

  • Company Tax Rate: 28%
  • Trust Tax Rate: 33%

c. Who Pays Income Tax?

  • Employees: Income tax is deducted at the source by employers under the Pay As You Earn (PAYE) system.
  • Self-Employed Individuals: Must calculate and pay their own taxes, often through provisional tax payments.
  • Businesses: Pay tax on profits.

d. Filing Procedures

  • Most employees do not need to file a tax return unless they have additional income (e.g., rental income, investments).
  • Self-employed individuals and businesses must file an Individual Tax Return (IR3) or Company Tax Return (IR4) online via the IRD’s myIR portal.
  • Tax returns can also be filed with the help of tax agents or accountants.

e. Key Deadlines

  • 31 March: End of the tax year.
  • 7 July: Deadline for filing individual tax returns (if required).
  • 28 August, 15 January, and 7 May: Provisional tax payment dates for self-employed individuals and businesses.

f. Resources in Wellington

  • IRD Wellington Office: While most services are now online, you can visit the IRD office for assistance.
    • Address: 12-26 Ballance Street, Wellington Central
    • Website: www.ird.govt.nz
    • Phone: 0800 775 247 (for general inquiries)

3. Goods and Services Tax (GST)

GST is a consumption tax applied to most goods and services in New Zealand.

a. GST Rate

  • The standard GST rate is 15%.

b. Who Pays GST?

  • Businesses registered for GST must collect and remit GST on taxable supplies.
  • Consumers indirectly pay GST as part of the price of goods and services.

c. GST Registration

  • Businesses earning over NZD 60,000 annually must register for GST.
  • Registration is done through the IRD’s myIR portal.

d. Filing and Payment

  • GST returns are typically filed monthly, bi-monthly, or six-monthly, depending on the business’s turnover.
  • Filing is done online via myIR.

e. Key Deadlines

  • GST returns are due on the 28th of the month following the end of the GST period (e.g., for a bi-monthly period ending 31 March, the return is due 28 April).

4. Property Tax (Rates)

Property tax in New Zealand is referred to as rates, and it is managed by local councils, including the Wellington City Council.

a. What Are Rates?

Rates are levied on property owners to fund local services such as water, waste management, and public infrastructure.

b. How Are Rates Calculated?

Rates are based on the capital value (CV) of the property, which is assessed by the council. The rates bill includes:

  • General Rates: Based on property value.
  • Targeted Rates: For specific services (e.g., water supply).
  • Regional Council Rates: Charged by the Greater Wellington Regional Council for regional services.

c. Who Pays Rates?

  • Property owners are responsible for paying rates.

d. Payment Options

  • Rates can be paid in full or in installments (quarterly).
  • Payment methods include online banking, direct debit, or in person at the Wellington City Council office.

e. Key Deadlines

  • Rates are typically due quarterly, with specific dates set by the council.

f. Resources in Wellington

  • Wellington City Council Rates Office:

5. Other Taxes

a. Fringe Benefit Tax (FBT)

  • Employers providing non-cash benefits (e.g., company cars) must pay FBT.
  • The rate varies depending on the benefit and the employee’s income.

b. Resident Withholding Tax (RWT)

  • Tax on interest earned from bank accounts or investments.
  • Banks automatically deduct RWT at rates between 10.5% and 33%, depending on your tax rate.

c. KiwiSaver Contributions

  • KiwiSaver is a voluntary retirement savings scheme.
  • Employees contribute 3%, 4%, 6%, 8%, or 10% of their salary, and employers contribute a minimum of 3%.
  • Contributions are deducted automatically through PAYE.

6. Tax Benefits and Deductions

New Zealand’s tax system offers limited deductions for individuals, but some key benefits include:

  • Working for Families Tax Credits: For families with dependent children.
  • Donations Rebate: A 33.33% rebate on donations to registered charities.
  • Business Deductions: Self-employed individuals and businesses can claim expenses related to earning income (e.g., office rent, utilities).

7. Filing Assistance and Community Resources in Wellington

a. Tax Agents and Accountants

  • Wellington has many tax professionals who can assist with filing and compliance. Look for registered tax agents through the New Zealand Institute of Chartered Accountants (NZICA).

b. Community Resources

  • Citizens Advice Bureau (CAB): Offers free advice on tax and financial matters.

    • Address: Level 1, 101 Wakefield Street, Wellington Central
    • Website: www.cab.org.nz
    • Phone: 0800 367 222

  • Wellington Budget Service: Provides financial advice and budgeting support.

8. Tips for Newcomers to Wellington

  • Get an IRD Number: You must apply for an IRD number to work or open a bank account. Apply online at www.ird.govt.nz.
  • Understand PAYE: If you’re employed, your employer will handle most of your tax obligations.
  • Keep Records: If you’re self-employed or own a business, maintain detailed records of income and expenses for at least seven years.
  • Use Online Tools: The IRD’s myIR portal is user-friendly and allows you to manage all tax matters online.

By understanding these key aspects of taxation in Wellington, you’ll be well-prepared to meet your obligations and take advantage of any benefits available. For further assistance, don’t hesitate to contact the IRD or local resources in Wellington.