Wellington

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Taxes

Understanding GST (Goods and Services Tax) and its impact on prices in Wellington, as well as tax refunds for tourists.

Sections

1. Income Tax in New Zealand (Including Wellington)

Overview

Income tax in New Zealand is administered by the Inland Revenue Department (IRD). It applies to individuals, businesses, and trusts. Wellington, as the capital city, follows the same national tax laws as the rest of the country.

Tax Rates for Individuals (2023)

Income tax in New Zealand is progressive, meaning the rate increases as your income rises. The rates for individuals are as follows:

  • 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%

Tax Residency

  • Residents: Taxed on worldwide income.
  • Non-residents: Taxed only on income earned in New Zealand.
  • You are considered a tax resident if you are in New Zealand for more than 183 days in any 12-month period or have a permanent place of abode in the country.

Filing and Payment

  • Most employees have their taxes deducted automatically through the Pay As You Earn (PAYE) system.
  • Self-employed individuals and contractors must file an Individual Income Tax Return (IR3) annually.
  • Tax returns are due by July 7 of the following tax year unless you have an extension or a tax agent.

Associated Costs

  • No direct fees for filing taxes, but late payments or filing may incur penalties and interest.
  • Tax agents or accountants may charge fees for their services.

Local Considerations

  • Wellington has several IRD offices, but most tax-related tasks can be completed online via the myIR portal (https://www.ird.govt.nz/).
  • IRD Wellington Office: Level 5, 12-26 Ballance Street, Wellington Central.

2. Goods and Services Tax (GST)

Overview

GST is a value-added tax applied to most goods and services in New Zealand, including Wellington. It is currently set at 15%.

Who Pays GST?

  • Consumers pay GST on most purchases.
  • Businesses registered for GST collect it on behalf of the government.

GST Registration

  • Businesses must register for GST if their annual turnover exceeds NZD 60,000.
  • Voluntary registration is allowed for businesses below this threshold.

Filing and Payment

  • GST returns are typically filed monthly, bi-monthly, or six-monthly, depending on the business's turnover.
  • Payments are made through the myIR portal or directly to the IRD.

Exemptions

  • Certain goods and services, such as financial services and residential rent, are exempt from GST.

Local Considerations

  • Wellington businesses should ensure compliance with GST rules, especially if operating in the tourism or hospitality sectors, which are subject to strict GST regulations.

3. Property Taxes

Overview

Property taxes in New Zealand are managed at the local government level. In Wellington, this is handled by the Wellington City Council.

Rates (Local Property Tax)

  • Property owners in Wellington pay rates, which fund local services such as water, waste management, and public infrastructure.
  • Rates are calculated based on the rateable value (RV) of the property, which includes land and improvements.
  • The average residential rates in Wellington are approximately NZD 3,000โ€“4,000 per year, but this varies depending on the property value and location.

Payment

  • Rates are billed quarterly and can be paid online, via direct debit, or at the Wellington City Council office.
  • Late payments may incur penalties.

Local Considerations

  • Property owners should check their rateable value regularly, as it is reassessed every three years.
  • Wellington City Council Office: 113 The Terrace, Wellington Central.

4. Other Common Taxes

Fringe Benefit Tax (FBT)

  • Employers providing non-cash benefits (e.g., company cars, subsidized housing) to employees must pay FBT.
  • The rate varies depending on the employee's income and the type of benefit.

Resident Withholding Tax (RWT)

  • Tax on interest earned from bank accounts or investments.
  • The rate depends on your declared tax rate (10.5%, 17.5%, 30%, or 33%).

Accident Compensation Corporation (ACC) Levies

  • ACC levies are not technically a tax but are mandatory payments to fund New Zealand's no-fault accident compensation scheme.
  • Employees pay ACC levies through PAYE, while self-employed individuals pay directly to ACC.

5. Procedures for Paying Taxes

Online Payments

  • Most taxes can be paid through the myIR portal (https://www.ird.govt.nz/).
  • Payment methods include bank transfers, credit cards, and direct debits.

In-Person Payments

  • Payments can be made at IRD offices or through some banks.
  • Wellington IRD Office: Level 5, 12-26 Ballance Street, Wellington Central.

Tax Agents

  • Many individuals and businesses in Wellington use tax agents or accountants to manage their taxes. These professionals can help with filing, compliance, and tax planning.

6. Local Considerations for Wellington

Cost of Living and Tax Implications

  • Wellington has a relatively high cost of living compared to other New Zealand cities, which can impact disposable income after taxes.
  • Be mindful of GST when budgeting for goods and services.

Government Support

  • The New Zealand government offers various tax credits and benefits, such as the Working for Families Tax Credits for low- to middle-income families.
  • Check eligibility for these programs through the IRD website.

Language and Cultural Support

  • The IRD provides resources in multiple languages and offers support for newcomers to New Zealand.
  • Wellington has a diverse population, and local community centers often provide tax workshops for immigrants.

7. Key Contacts and Resources

Inland Revenue Department (IRD)

  • Website: https://www.ird.govt.nz/
  • Wellington Office: Level 5, 12-26 Ballance Street, Wellington Central
  • Phone: 0800 775 247 (within New Zealand)

Wellington City Council

Tax Agents and Accountants

  • Many accounting firms in Wellington specialize in helping individuals and businesses with tax compliance. Examples include Deloitte, PwC, and local firms like Enable Business.

Conclusion

Understanding taxes in Wellington, New Zealand, is essential for residents, workers, and business owners. The system is straightforward, with most processes handled online through the IRD. However, itโ€™s important to stay compliant with filing deadlines and payment requirements to avoid penalties. If youโ€™re new to Wellington, consider consulting a tax professional to ensure you meet all obligations and take advantage of any available tax credits or benefits.