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This information may affect you if you're thinking about moving to New Zealand and staying here for the long term.
You need an IRD number when you work in New Zealand so the right amount of tax is deducted from your income. You can apply for your IRD number online after you arrive in New Zealand if you hold a resident visa or an Australian passport.
You can use our paper forms if you can't apply for an IRD number online.
If you're a New Zealand citizen or hold a resident visa or Australian passport, complete our IRD number application - resident individual (IR595) form.
If you have a student or work visa or if you're residing offshore, complete our IRD number application - non-resident/offshore individual (IR742) form.
We'll send your IRD number within 8-10 working days of receiving your completed application form. You can start work without your IRD number but you'll need to give it to your employer as soon as you receive it from us.
Once you have an IRD number you'll need to fill in a Tax code declaration (IR330) form and give this to your employer. This will tell them the correct amount of tax to take out of your pay.
New Zealand tax rates are:
If you don't have an IRD number when you get paid, 45 cents in every dollar you earn will be deducted for tax. You may be able to get a refund if you've overpaid your taxes after the end of the tax year (31 March).
Most New Zealand residents and people entitled to be in New Zealand indefinitely (who are 18 years or older) are automatically enrolled in KiwiSaver when they start a new job.
KiwiSaver is voluntary - you can opt out any time from the end of week 2 to week 8 of starting your employment. Go to the KiwiSaver website for more information.
When you receive rental income you need to:
If you set up a business in New Zealand you will be subject to income tax on any profits you make. There are a number of ways that you can choose to run your business (eg as a sole trader, company or partnership) and each of these has specific tax obligations that must be met.
Working for Families Tax Credits is financial help for families who have children, aged 18 years or under, who are financially dependent. The amount of Working for Families Tax Credits you get depends on:
There are different payment types and you may qualify for more than one. The payment types are:
If your child was born before 1 July 2018, but had an expected due date after 1 July 2018, you may be entitled to either parental tax credit or Best Start tax credit, but you cannot receive both. You'll need to decide which payment is best for you.
Call us on 0800 227 773 if you need more information to help you decide which payment to receive.
On or after 1 April 2006, people who become a tax resident in New Zealand may qualify for a temporary tax exemption on some of their foreign income.
If you choose to claim Working for Families Tax Credits, neither you or your partner will be entitled to claim the temporary tax exemption now or in the future.
If you pay tax on this benefit overseas you may be able to claim a foreign tax credit.
The amount you have to include in your tax return will depend on your New Zealand tax residency status.
If you are a New Zealand tax resident you must include any benefits from overseas employment as foreign income in your New Zealand tax return and pay tax on this. You may be able to claim a foreign tax credit for any taxes paid.
You can apportion the benefit to exclude the amount of income which relates to your period of employment while you weren’t a New Zealand tax resident and when any services that you perform give rise to foreign sourced income. You may be able to claim a foreign tax credit for any taxes paid relating to the portion of the benefit that is taxable.
Nick is employed by Eagle Limited. On 1 June 2017 he was granted an option to buy 1000 shares for $500. The option vests one year after it was granted (1 June 2018). He can exercise the option at any time between 1 June 2018 and 1 June 2020.
Nick is sent on secondment to Eagle Limited’s Australian parent company, Philly Limited, on 30 June 2017 for two years. He does not return to New Zealand throughout his secondment and loses his New Zealand tax residence from the day he left New Zealand, as he has been away for more than 325 of 365 days, and does not have a permanent home in New Zealand.
Nick returns to New Zealand at the end of his secondment (30 June 2020). On 1 December 2018, Eagle Limited shares are worth $2 per share. Nick decides to exercise his option for $500. He therefore earns income of $1500 on 1 December 2018.
Nick’s income of $1500 is apportioned based on the date when the options vested (1 June 2018), not the share scheme taxing date (1 December 2018):
$1500 × 336 days (offshore period) ÷ 365 days (earning period) = $1380.82
The earning period is from 1 June 2017 to 31 May 2018. The offshore period in this case would be from 30 June 2017 to 31 May 2018– the number of days in the earning period when Nick was not resident in New Zealand.
Therefore $1380.82 is treated as non-residents’ foreign-sourced income and is not taxed in New Zealand. Nick will be taxable on the remaining $119.18 of his employee share scheme benefits.
The earning period ends when the option vests, not when it is exercised. However, that does not affect the principle that the amount of income that must be apportioned is determined by the value of the shares when the option is exercised.
If you are not a New Zealand tax resident, and you received a benefit from an employee share scheme, you will only pay tax in New Zealand if the benefit relates to New Zealand employment. An apportionment similar to that above would be required to calculate the New Zealand-related benefit.
New Zealand does not have a capital gains tax. Therefore, if the shares do not fall into the foreign investment fund (FIF) rules, there will be no tax on the disposal of the shares in New Zealand unless the shares:
If the shares do fall into the FIF rules, treatment of dividend income and capital gains, even if the foreign shares form part of a profit making activity, need to be considered under these rules.
Any dividends received from New Zealand shares must be returned as dividend income in your tax return.
A foreign superannuation scheme is a superannuation scheme created outside New Zealand to provide retirement benefits to individuals. You may know this by another name, for example, a UK pension.
Under the new rules foreign superannuation schemes are generally no longer subject to the foreign investment fund (FIF) rules. Instead lump sums will only be taxed when they are:
The amount of tax to be paid on the lump sum will generally be calculated depending on the length of time you have been resident in New Zealand.
The rules do not apply to any amount of overseas pension paid regularly or periodically. These will continue to be taxed, on receipt, at your marginal tax rate. The new rules do not apply to a foreign superannuation scheme that was acquired while you were a New Zealand tax resident. This will generally continue to be taxed under the FIF rules.
Most periodic pensions received from foreign superannuation schemes are taxed in full and you need to include the before-tax (gross) income in your Individual tax return (IR3).
However, in a very small number of cases, your periodic pension may be taxable in the other country which holds the taxing rights under a double tax agreement (DTA).
If you receive a social security pension our Overseas social security pensions (IR258) guide explains how this is taxed in New Zealand.
How the payments you receive from your foreign superannuation scheme (retirement lump sums and periodic pensions) are treated depends on whether:
Each DTA and TIEA is different and may treat periodic pensions and foreign superannuation withdrawals (lump sums) differently. It is important to check the terms of the appropriate DTA or TIEA to make sure that you pay the right amount of tax and claim the right amount of foreign tax credits in your New Zealand tax return.