Legal Aspects and Taxation in NZ

Taxes are a crucial component of a country’s international competitiveness.

New Zealand on the second place of OECD's most competitive tax systems

In today’s globalised economy, the structure of a country’s tax system is an important factor for businesses when they decide where to invest, how much to invest, and which types of operations to locate in which countries.

Structure and rate of corporate taxes, cost recovery of business investment, property taxes, income taxes, and tax rules for foreign earnings are some of the factors that determine the competitiveness of a tax system in comparison to other countries.

In response to global trends, New Zealand cut its top individual income tax rate from 38 per cent to 33 per cent, shifted to a greater reliance on the goods and services tax, and cut its corporate tax rate to 28  from 30 per cent. New Zealand added these changes to a tax system that already had multiple competitive features, including no inheritance tax, no general capital gains tax, and no payroll taxes.

A big attraction, if you’re considering living in NZ, is the tax concession on overseas investment income & pensions that applies for your first four years of living here.

The Inland Revenue Department, IRD

You do not have to be a New Zealand citizen or resident to have an IRD number. You need to apply for one if you:

  • are in New Zealand on a visa with work rights
  • intend to work, and
  • you do not already have an IRD number.

PAYE

A pay-as-you-earn tax (PAYE) is a withholding tax on income payments to employees.

Amounts withheld are treated as advance payments of income tax due. Employers and employees can work out how much PAYE should be withheld from wages paid weekly, fortnightly, four-weekly or monthly. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns.

ACC

The Accident Compensation Corporation, ACC, is the sole and compulsory provider of accident insurance in New Zealand for all work and non-work injuries. The corporation administers the ACC Scheme on a no-fault basis so that anyone - regardless of the way in which they incurred an injury - has coverage under the Scheme. The scheme provides financial compensation and support to citizens, residents, and temporary visitors who have suffered personal injuries.

Every employer needs to pay ACC levies for their employees.

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