As with other countries, residents of New Zealand are required to pay tax, tax rates have been decreased which has attracted people in doing many investments due to the global downturn.
Expat’s who have been in the country for 183 days in one year, will be required to pay for tax on their income that was earned in New Zealand only. You will become a New Zealand tax resident from the date you arrive into the country if here for more than 183 days. Non-residents are legally responsible for tax on their worldwide income only after the first four years of living in the country.
Usually income tax is paid on the PAYE system where money will be taken directly from the account monthly or yearly. Expats who are working will be required to give their employer an IRD number so that the incorrect amount is not taken. The income tax taken is different for individual workers who earn a certain amount each year. The more you earn the more tax you will be paying.
The tax year runs from the 1st of April to the 31st of March and self employed residents must complete a tax return annually which must be returned by the 7th of July.
There is a Double Taxation avoidance agreement with certain countries which prevents citizens from paying tax twice in two countries.
It is advisable to speak to a tax expert regarding how much tax you should be paying depending on certain factors.
IRD number
Expats who will be working in the country or are self employed will need to apply for an IRD number. This number is used to calculate tax and entitlements when in New Zealand.
Once you have received your IRD number, it should be given to your employer and bank so that they don’t deduct income tax at a higher rate.
It will also be compulsory for students who are applying for a student loan to have this unique number.
To apply for an IRD number, this can be done online or via the post office which will be sent to the Inland Revenue. Individuals will need to show forms of identifications and the process can take up to 10 working days to receive the number.