|Taxable income||Tax rate|
|Up to $14,000||10.5%|
|Over $14,000 and up to $48,000||17.5%|
|Over $48,000 and up to $70,000||30%|
|Remaining income over $70,000||33%|
Tax is a compulsory contribution of money to your country’s/state’s overall revenue, taken from income and sales profits (added to majority transactions, goods and services). It may seem unfair, but the New Zealand Government has done an excellent job at making tax as fair as possible.
The amount of tax that is deducted from your income depends on your individual tax code. Your code primarily depends on how many jobs/sources of income you have, how much you earn, also whether or not you have a student loan, so listen up!
New Zealand’s tax rate is 33% for an income over NZ$70,000. At the other end of the scale, the tax rate is 10.5% on income up to $14,000. See the above table from the New Zealand Inland Revenue Department (IRD).
The Government announced in December 2018 that the minimum wage for those aged 16 or older will increase to $17.70 an hour on 1 April 2019 – an increase of $1.20 per hour. This means if you are being paid $17.70 an hour, effectively $1.73 is taken off as tax. However, your tax code can differ from someone else’s, depending on your circumstances, which may or may not change the amount of tax deducted from your pay.
If you have a student loan you’re required to use a main tax code that includes ‘SL’ unless you have a repayment deduction exemption.
You’ll need a separate code for any income you receive from a second job or another source.
Same again, if you hold a student loan, you are required to use a secondary tax code that includes ‘SL’
Employers are required to make student loan deductions from your pay at the standard deduction rate of 12%. You can ask them to deduct more if you want to pay off your loan faster.
For help working out your tax code, head to www.ird.govt.nz/how-to/taxrates-codes/workout.
A word about Kiwisaver
No one has to join KiwiSaver. But if you’re 18 or over and start a new job you’ll be automatically enrolled in KiwiSaver (with some exceptions). And that’s usually a good thing – you’ll be amazed how quickly the money accumulates
KiwiSaver contributions come out of your pay before you see it. This makes saving easy.
If you are employed, your employer has to contribute at least 3% of your gross wage or salary into your KiwiSaver account. That’s on top of your own contributions.
The government pays into your KiwiSaver account as well – an annual ‘member tax credit’ (if you are a contributing member aged 18 or over) of up to $521.
As well as saving for retirement, you can also use KiwiSaver for buying your first home through a KiwiSaver HomeStart grant and home purchase withdrawal.
If you change jobs or leave the workforce your KiwiSaver account moves with you. If you experience hardship it is possible to access the funds in your account.
Your funds are invested on your behalf by the KiwiSaver provider of your choice. If you don’t choose a provider, Inland Revenue will assign you to one of the nine default KiwiSaver schemes.
Visit https://sorted.org.nz/guides/kiwisaver/kiwisaver-how-it-works for more information.