An NZ tax year begins April 1st and ends 31st March each year.
Although it is not compulsory for all tax payers to file a tax return every year, it is recommended to do so. IRD collect tax from salary and wage earners throughout the year as PAYE (pay as you earn). Tax payers other than those that have PAYE deducted are required to file a tax return every year. The tax year ends 31st March but finalisation of tax returns won’t occur till at least the middle of June. Tax refunds older than 5 years may not be available.
Your assessment will be automatically calculated if IRD have all your income information for the tax year (1 April to 31 March).
If you income is from: employment investments (bank deposits or savings interest) a benefit under an employment share scheme.
This includes income from: salary or wages NZ Superannuation schedular payments income-tested benefits interest or dividends taxable Maori authority distributions benefits under an employee share scheme.
Your assessment shows if you are due a refund or if you have tax to pay. In some situations, IRD will automatically write-off tax owing.
What you need to do – As your tax agent we will send you a copy of the earnings information held by IRD. Once we have received your confirmation we can review if your assessment is true and accurate. You can update your details anytime in myIR (including removal of a tax agent)
A temporary increase to the write-off threshold for qualifying individuals aims to ease financial stress resulting from COVID-19.
This change to the threshold from $50 to $200 for the 2020 income tax year only applies to qualifying individuals – customers who only receive reportable income and an automatically calculated assessment, not customers who are required to file an IR3 tax return.
Income tax is money taken out of your earnings. Unless you’re self-employed, your employer takes out the income tax before you get paid. The main types of income tax are:
Your employer lodges the tax deductions directly with Inland Revenue throughout the tax year. If at the end of the income tax year you haven’t paid enough income tax, you’ll have to pay it directly to Inland Revenue by 7 February of the following year. If you have overpaid your income tax, you get a refund (release mid-June)
Income tax rates are applied to your combined income at the end of the tax year to work out your tax obligation.
Income Tax Rates from 01 April 2021
If your taxable income is:
Your tax code is what decides how much tax is deducted from your income. The tax code that you will need to use depends on how many sources of income you have, and whether you have a student loan.
If you:
then your main tax code is M and if you have a student loan your tax code is M SL.
then your main tax code is M E and if you have a student loan your tax code is ME SL.
then you main tax code is M.
The tax code for a second job depends on your annual estimated gross income from all sources. If you estimate your annual gross income to be:
You pay tax on the income you receive during the tax year. At the end of a tax year an annual calculation is made to determine if what you paid during the year is accurate or not!
You could get a refund if you:
You’re most likely to get a refund if you:
You could get a tax bill if you:
All employees must pay an ACC earners’ levy to cover the cost of non-work related injuries.
It is collected by IR on behalf of the Accident Compensation Corporation.
2023 tax year ACC earners levy rate was 1.46% with a maximum cap of $136,544.
2024 tax year ACC earners levy rate was 1.53% with a maximum cap of $139,384.
2025 tax year ACC earners levy rate was 1.60% with a maximum cap of $142,283.
At the end of each tax year some taxpayers need to confirm the amount of personal income tax to be paid as they receive income in addition to salary and wages. This is done by filing an Individual income tax return (IR3). If a client hasn’t filed, the most recent IR3 by January of the current tax year we need to issue an L letter to the client to encourage them to contact us.
An IR3 determines:
There are many reasons why a client maybe required to file and IR3, some of the reasons are:
Working for Families Tax Credits are for families with dependent children 18 or younger, to help with day-to-day living costs. All tax credits are paid to the principal child carer – the person who mainly looks after the child. While this tax credit does not influence income tax required to pay, the WFFTC is required to be squared up in conjunction with the Income tax return/PTS
What types of tax credits are there? Clients might qualify for one or more type of tax credit, depending on their circumstances: family tax credit – the most common payment, paid regardless of your source of income in-work tax credit – paid to families who normally work a minimum number of hours each week minimum family tax credit – paid to families who earn up to a certain amount per year before tax parental tax credit – paid for the first 56 days (eight weeks) after your baby is born or adopted (first 70 days (10 weeks) for babies born on or after 1 April 2015).
How much can you get?
The amount depends on:
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