All Kiwis pay tax on the income they earn. This payment is mandatory and applies to all wages, commissions, return on investments, rent from property, or any other source of income. The residents of New Zealand are accountable for their worldwide taxable income. The Inland Revenue Department collects taxes on behalf of the government. The taxes are used for building and maintaining infrastructure, defence, health facilities, law and order and social welfare.
There is a pay as you earn (PAYE) system. It simply means that their tax payment is deducted by their employer on pay day. The payday could be weekly, fortnightly or monthly. This includes the appropriate income tax rate and bracket, plus the compulsory accident compensation scheme. This is income from salary, wages and taxable pension and is paid under New Zealand income tax. The government calculates tax on a progressive basis, meaning income tax rate climbs as the income grows.
A secondary tax has to be paid by an individual who works more than one job. This income tax is at a higher rate than the primary income. Withholding tax is levied on self-employed individuals, entertainers, and agricultural workers, members of councils, insurance agents, models and professional sports players. The withholding NZ tax can vary from 15 to 33 cents per dollar.
NZ income tax is levied on rental income from property. You can show insurance, repairs, legal fee, and maintenance as expenses which are all tax deductible. This sometimes means that there is not much left to pay as income tax on rental income from property.
New Zealand income tax applies to businesses and they pay tax on the net profit earned in a year. The income tax for companies is 28%.
If a New Zealander earns or invests outside the country, then the income earned will be taxed. Sometimes, both countries have international income tax rules, and then it can become a case of double taxation. New Zealand does have “double tax” agreements with almost 35 countries to determine which country can levy a tax on such type of income.
Income tax is a source that provides people of New Zealand with many amenities. A part of the income paid as income tax ensures a certain quality of life and benefits for a comfortable lifestyle.
