Individual Tax Rates
New Zealand has a progressive tax system, whereby the rate of tax rises as your income increases. Each person is taxed individually and there is no personal allowance or standard deduction. Income from jointly held assets is generally attributed 50% to each individual owner.
| For Each Dollar of Income | Tax Rate |
| Up to $15,600 | 10.5% |
| Over $15,600 and up to $53,500 | 17.5% |
| Over $53,500 and up to $78,100 | 30% |
| Over $78,100 and up to $180,000 | 33% |
| Remaining income over $180,000 | 39% |
Some of the key features of New Zealand’s tax system that may be different than those found overseas are:
- No inheritance tax
- No general capital gains tax, although it can apply to some specific investments, and there is a ‘Bright Line Test’ that applies to residential investment property
- No local or state taxes, apart from property rates levied by local councils and authorities
- No payroll tax
- No social security tax, or national insurance contributions
- No healthcare tax, apart from a very low levy for New Zealand Accident Compensation injury insurance scheme (ACC)
International Agreements
International tax is governed by agreements between individual countries that aim to set the rules about who gets to tax what, and to remove areas of double taxation.
The agreements generally fall into two categories, Double Taxation Agreements and Social Security Agreements.
Double Taxation Agreements
Double Taxation Agreements or DTAs are designed to prevent individuals and businesses from being taxed twice on the same income or profits.
DTAs generally provide for either a tax credit or tax exemption. A tax credit allows taxpayers to offset the tax paid in one country against the tax liability in the other country. A tax exemption means that certain types of income are exempt from taxation in one of the countries, avoiding double taxation.
New Zealand has DTAs when many countries including the UK. For details of the full list of countries please visit the New Zealand IRD website.
https://www.ird.govt.nz/international-tax/double-tax-agreements
Social Security Agreements
Countries may also have Social Security Agreements (sometimes referred to as a Totalisation Agreements). These agreements address issues related to state pensions and social security benefits for individuals who have worked in both countries.
This enables both countries to determine eligibility and calculate benefits based on the periods of work or contributions made in each country.
New Zealand has a Social Security Agreement with the UK.
New Zealand’s Saving and Investment Environment
Following a series of major reforms in the 1980’s New Zealand has an open economy based on free trade and enterprise. It ranks well by international comparisons for ease of doing business, has low levels of corruption and a healthy banking system.
New Zealand’s central bank (the reserve bank of New Zealand) has enjoyed political independence since 1989. As part of its remit it is responsible for setting the central bank interest rate, referred to as the Official Cash Rate or ‘OCR’ and implementing monetary policy decisions to keep the inflation rate at between 1% and 3%.
New Zealand has a deposit protection scheme what protects deposits up to $100k NZD per institution.
The provision of personal financial services is overseen by the Government’s Financial Markets Authority (FMA). All advisers giving advice to ‘retail clients’ are required to provide advice under a Financial Advice Provider or FAP. Each FAP is required to hold a license from the FMA to operate. The FAP also assumes primary compliance responsibility for their advisers. You can search for details of all FAPs and the financial advisers they are associated with on the Financial Services Providers Register (FSPR) https://fsp-register.companiesoffice.govt.nz/
There are few incentives for retirement and personal investment savings (aside from a government tax credit for KiwiSaver). Historically, property has been the favoured investment medium for many Kiwi’s but this is slowly changing as KiwiSaver balances have increased and tax breaks for property removed.
More information and Professional Advice
Seeking professional advice from a tax expert with knowledge of both New Zealand’s tax laws, your home country’s tax regulations and the impact of these agreements, is highly recommended to ensure compliance and ensure you organise your affairs efficiently.
You can find more information on New Zealand’s tax system, including a range of tax guides from New Zealand’s Inland Revenue Service (IRD) www.ird.govt.nz.
The above is general information only and should not be considered as individual advice. If you would like to discuss your situation or have any questions, please contact a member of the Pacific Wealth team.
