Received your first pay from your working stint during your New Zealand working holiday? Curious why the amount you’ve received does not match the minimum pay in the country? This could be due to withholding taxes on your income in New Zealand! Read on to understand how to file for taxes in New Zealand as a foreigner.
For a start, here are some of the things you should know about tax in New Zealand:
1. Tax authorities in New Zealand
The Inland Revenue Department (IRD) is the tax authority in New Zealand. Working in New Zealand even for the short term, also means having to pay taxes in the country.
2. Tax Financial Year in New Zealand
The tax year in New Zealand is from 1 April to 31 March of the next year. The IRD will work out at the end of each tax year, the right amount of tax you need to pay using the information they hold about your income. These information would usually be directly supplied by your employer to the IRD. Hence, you do not need to worry about this part at all!
3. IRD Number
Your IRD number keeps track of the tax you pay. As an individual working in New Zealand, you need to pay taxes on a withholding basis. That is your employer will pay the net amount to you after withholding taxes. At the end of the financial year, you file your taxes with the IRD online and they’ll make a final assessment to
You can apply for your IRD number very easily at any post office or even online. This is necessary so make sure you have this before you can offically be hired for a job.
4. Tax codes for your job
There are various tax codes in New Zealand that may be applicable to you as you get hired for a job. This is usually completed by the employer. However, I think this is a good to know for taxpayers like us, especially when you file for taxes to know what rate you are taxed at in New Zealand. The most applicable codes for people who are on a working holiday are as follow, for which are taxed at a flat rate of 15%:
- CAE – Applicable to casual seasonal work on a day-to-day basis, for up to three months
- NSW – Applicable to recognised seasonal workers who work seasonally in the horticulture or viticulture industries and are employed by a registered New Zealand employer under the Recognised Seasonal Employers’ Scheme.
5. File for your taxes in New Zealand
You need to file for your taxes in April before your tax assessment is finalised by the IRD. You can do this online easily via the IRD website with your myIR account.
The myIR is an account that would enable you to have access to Inland Revenue’s secure online services facility. All you need to register for myIR is your IRD number and email address. The process is very simple and easy to administer!
6. Income Tax Assessments
After the end of each tax year, the IRD will send you one of these:
- an income tax assessment
- a request for more information for your income tax assessment
- a message to complete your individual income tax return – IR3 in myIR, or a paper copy by post
By mid-May to end of July, you should receive the finalised Income Tax Assessments. It is usually viewable online even before the physical statements reaches your registered address. Hence, don’t worry if you are travelling then and may not be back at your registered address to collect your letter.
7. Paying taxes in New Zealand
Income gets taxed before it is paid in New Zealand. In other words, the cash that you receive is the post-tax amount. What this means is your employer would take taxes out of your income and pass the tax on to IRD on your behalf. Thereafter, you will receive your post-tax salary. Hence, you do not have to worry about paying taxes at the end of the financial year when you’re probably out in the midst of a hike!
Based on my personal experience, instead of having to pay more taxes after filing, I received refunds. The final assessment done by IRD concluded that I’ve paid excess taxes. HOORAY! Although the amount is not significant, it was at least some money that lasted me for an additional two to three days for my holidays. It felt like a blessing in disguise!
Need to know anything more?
The IRD website has this really comprehensive page explaining how taxes work for individuals in New Zealand. If you have any other questions, do check this page out first to see if their FAQs solve any of the questions you have.
Hope this has been useful and easy for you to understand! Check out my other articles too for other useful tips for your New Zealand working holiday!