The tax system in New Zealand is administered by the Inland Revenue Department (IRD) with the financial year running from 1 April to 31 March.
All taxes are paid and collected by the New Zealand Government, known as the Inland Revenue Department (IRD). Every individual who works and earns income from New Zealand will need an IRD number. You will be taxed at the highest possible rate if you do not register for an IRD number. So, apply for one as soon as you arrive in the country, as this will serve as your unique tax identifier.
Register for a personal IRD number | Inland Revenue Department NZ
The income tax rates are generally based on your total income for the tax year. New Zealand has progressive or gradual tax rates, indicating that rates increase while your income increases. Your employer will subtract the tax from your wages before paying you and pay it to the inland revenue department on your behalf.
Taxable income includes income from working, including wages, interest from a bank account, benefits or if your child is receiving student allowances, assets and investments, and overseas income. Non-taxable income includes reimbursing someone for money they have spent, prize money, and inheritances.
It is essential to get a tax refund if you have been charged at the wrong rate or if you pay tax toward the end of the financial year. So, it is always important to look carefully and use the correct tax code.
The table below displays the five income tax brackets for the 2021-2022 tax year in New Zealand.
Income tax rates – from 1 April 2021
| Taxable income | Tax rate |
| Up to NZ $14,000 | 10.5c of every dollar for income up to NZ $14,000 |
| Over NZ $14,000 and up to NZ $48,000 | 17.5c of every dollar for income up to NZ $48,000 |
| Over NZ $48,000 and up to NZ $70,000 | 30c of every dollar for income up to NZ $70,000 |
| Over NZ $70,000 and up to NZ $180,000 | 33c of every dollar for income of NZ $70,000 and up to NZ $180,000 |
| Remaining income of over NZ $180,000 | 39c of every dollar for income of over NZ $180,000 |
Secondary tax rates – from 1 April 2021
| Estimate of the total annual income | Secondary tax rate (before ACC levies) |
| NZ $14,000 or less | 10.5% |
| Between NZ $14,001 and NZ $48,000 | 17.5% |
| Between NZ $48,001 and NZ $70,000 | 30% |
| Between NZ $70,001 and NZ $180,000 | 33% |
| Over NZ $180,000 | 39% |
The secondary tax rates only apply if you have more than one source of income. This also depends on the secondary tax code given to your employer.
Source: Tax rates for individuals (Inland Revenue Department NZ)
You are also able to use the taxable income calculator provided below:
Taxable income calculator (Inland Revenue Department NZ)
Filing a tax return
Engineers who move to New Zealand must file a tax return within their first year. If you are on a work visa or a non-resident, you may need to file a tax return towards the end of the financial year or when leaving the country. Click on the link below if you want to know more about non-resident taxpayers.
Goods and services tax (GST)
Also known as GST, Goods and Services Tax is a tax on most goods and services in New Zealand. This includes goods, certain imported services, and general things such as food, equipment, and activities. The GST has a flat rate of 15%, indicating that the rate is added to the price of goods and services purchased in New Zealand. The only exceptions when GST is not applied involve airfares for travelling, financial services, mortgage payments, and residential rents.
New Zealand tax system features
In 2019, New Zealand’s tax system placed second in the world tax system rankings and fourth for individual taxes. It is also known as having one of the best tax environments that are good for an individual’s earnings and assets. The system is fair and includes ways to avoid a lot of tax.
Tax exemptions for migrants
If you are a migrant Engineer coming to New Zealand, you may not have to pay tax on most of your overseas income for the first four years. However, you still may pay income tax on what you earn in New Zealand.
They are generally known as transitional tax residents, and this exemption can only be retrieved once. To see if you are a transitional tax resident, you will either be a new migrant, a New Zealander returning home, qualified as a tax resident after 1 April 2006 and if you were not a tax resident ten years before you qualified.
The exemption start date determines how you qualify as a tax resident. If you are eligible by living here for more than 183 days within any 12-month period, the exemption is always backdated to the first of those 183 days.
The exemption period will end on the earlier date of four years after, towards the end of the month in which you have been in the country for over 183 days. If you opt out of your exemption, become a non-resident taxpayer, or if you and your family apply for family tax credits, your transitional tax residency will automatically be terminated.
Avoiding double taxation
It is likely to be a tax resident in New Zealand and elsewhere. Hence, it is possible to get taxed twice on the same income. To limit these possibilities, credit for tax paid overseas on income is also provided by New Zealand, which is also subject to the tax.
Click on the link below to find out more about avoiding double taxation.
Double tax agreements | Inland Revenue Department NZ
