You will need to dial a tax number when you complete your NZ Super application. The tax legislation you use depends on whether you have a different income and, if so, where it comes from. If you do not renew or change your custom tax code before the end of the fiscal year, your tax rate on April 1 will be 45%. There are a few other tax legislation options for certain professions in New Zealand that may well apply to people on working holidays, especially if they work for a salary in agriculture. These are as follows: When you start getting NZ Super, you may also have other sources of income. You need to make sure that you are using the correct tax identification number. Inland Revenue will tell us what your tax identification number is. If you have personalized tax legislation, you will have to renew it at the end of each financial year at the Tax Office. If you do not renew your custom tax code, you will need to change it to a standard tax code and let us know.
If you`re not sure what tax legislation you should be on, head over to the Inland Revenue website. The good news is that it is a common misconception that people pay a higher tax rate when they get a secondary tax law. New Zealand`s tax and PAY system is designed to tax employees at the correct rate. We have a progressive tax system that ensures that individuals pay a higher tax rate if they earn more. Our current tax rates for individuals are as follows: If form IR 330 is for employment that is not your highest source of income, you will need to provide a secondary income tax code. Your secondary tax code is determined by your combined annual income and whether you repay a student loan. Since a working holidaymaker probably doesn`t have a New Zealand student loan, these are the likely secondary income tax codes. If you receive a personalized tax law during the tax year, it starts on the date we approve it and ends on March 31. IR calculates the correct tax amount for you and provides you with a special tax certificate. You must inform your employer or pension fund.
To change your custom tax number to a standard tax number, you must complete the “Change Tax Number” form. If you do not fill out this form with the right IRD number and the right tax identification number, you may be taxed much more than necessary. No one needs to cut their travel money! The most common tax legislation among working holidays is M. This means that the job for which form IR 330 is intended is your main/highest source of income, and: If you receive NZ Super, you can change your tax number through the Department of Social Development website. Your tax number is M unless you have a student loan. If you have a student loan, your tax identification number is M SL. Tell your employer or payer what your code is, otherwise you will be taxed at the highest non-declaration rate of 45%. In reality, the system works and calculates the tax correctly in about 90% of cases. The 10% of the time the secondary tax system does not work is when a person`s income exceeds one of the income thresholds ($14,000, $48,000 or $70,000) because of income from their second job.
An example of this is when someone`s first job earns them $40,000 a year, for which they would have a tax number M. Their second job earns them $10,000 a year, for which they would have an HS tax number. The HS tax code imposes them at 30% on their income of $10,000, with their first income of $8,000 from their second job being taxed at only 17.5%. Over the course of the year, this person will deduct the PAYE from their salary totalling $9,020, although the tax on $50,000 should actually be $8,020. So you`ll be overwhelmed by $1,000. Until the tax administration updates its computer system, the only way to get around this problem is for people to file a tax return or request a personal tax summary from the IRD or request a special tax rate from the tax administration. When it`s time to renew your personalized tax legislation, Inland Revenue will send you a letter via myIR, and you can fill out the online form. You need to develop your tax legislation for each source of income you receive. All new employees who take up employment must complete a tax form (IR330). The employee is responsible for choosing a tax code and there is an organizational chart that the IRD has created to determine the tax identification number on which an employee must appear. If a person`s annual income from all sources is likely to be less than $14,000, the secondary tax number (for their second job) is SB.
If the income is likely to be between $14,000 and $48,000, the tax number is S. If the income is to be between $48,000 and $70,000, an HS tax code will be used and if the income from all sources is greater than $70,000, a ST income tax code will be used. Income from a self-service tax code is taxed at 10.5%, for an S code the tax rate is 17.5%, for an HS code the tax is 30% and for an ST code 33%. You have a tax number for your main income. The code you use depends on the type and amount of your main income. Here are some terms used by the tax administration when talking about tax laws. We will review the main tax laws that generally apply to people who take a working holiday or backpack in New Zealand. The IRD number is your individual tax number, which you can find out more about here. Your tax identification number could be, for example, M, CAE, NSW, SB. We will go through all this in this article.
The special tax legislation only applies for 1 tax year (from 1 April to 31 March). If you apply in the middle of the year, it will apply from the date IR approves it until the end of that tax year. You only know the exact amount of tax you will have to pay or that will be refunded to you after receiving your personal tax summary or completing an individual IR3 tax return. Change your tax identification number to NZ Super and Veteran`s Pension Use NSW tax legislation if you are a recognised seasonal worker or if you hold a work visa as a foreign crew member of a vessel fishing in New Zealand waters. If we determine that you are using the wrong tax identification number, we will ask your employer or payer to change it and notify you. We do this to prevent you from being taxed more than you should during the tax year or to avoid receiving an invoice at the end of the tax year. Talk to us if you disagree with our decision to change your tax legislation. Tax identification numbers are labeled codes that you must put on the Inland Revenue Department (IRD) tax return form (IR 330), which your employer should give you when you start a new job. .