Now, we know, taxes aren’t everyone’s cup of tea. Well really, they’re probably no one’s cup of tea besides tax planning professionals. But regardless of your feelings towards tax time, we all do need to pay some attention to them, and make sure we’re following the law when it comes to taxes.
Some big changes are coming to your tax return process for the 2019 year that you’ll actually need to look into. We’re making it easy for you and listing off all of the changes for this year that you’ll need to know, along with some basic tax information for if you’re a citizen of New Zealand, or a noncitizen wondering about your tax. Let’s dive in.
First thing is first, the tax year runs 1 April through 31 of March every year. Most of the information you need regarding tax returns will be found on the Inland Revenue New Zealand site, which can be found here. If you live and work in New Zealand, you may not necessarily need to file a tax return, which is drastically different than many other countries which require a tax return by law if you’ve earned income. You may need to file an Individual Income Return if you’ve earned a type of income that’s not your regular salary or interest or dividends.
The most you can be taxed in New Zealand for your personal tax is 10.5% for income up to $14,000 (NZD) and up to 33% for income over $70,000 (NZD).
How do I know if I need to file a return?
Tax returns aren’t required for everyone, as we’ve discussed. You likely are only required to file a tax return if you’ve earned “other income” besides your salary, and we’ve listed some of the main other incomes below for your ease. Click here for the entire list.
As a citizen you’ll need to file if you’ve earned:
- Income from rental properties
- Income from self-employed ventures
- Income from overseas
- Income from an estate or a trust
- Or, left or arrived in New Zealand part way through the tax year.
If you aren’t a citizen, such as someone on working holiday or visiting and working for someone else, you likely do not need to file a tax return. If you do, it will be because of the following:
- If you used the wrong tax code and overpaid taxes
- If you used the wrong tax code and underpaid taxes
Regardless of your situation, you’ll need to let the IRD office know that you are leaving the country so they can determine if either situation is applicable. Here is some additional information on filing a tax return when you leave the country.
For any of the above situations, here’s a list of what you’ll need to file your return.
Upcoming changes for 2019
This year, the New Zealand Inland Revenue has made some pretty big changes, and hopefully for the better. Let’s go through the main changes that will affect you.
Automatic tax returns:
This is a big change to the tax system in New Zealand. Essentially, an automatic tax returns means that the government will automatically have your information (as long as you keep it up to date) and process the tax return without you needing to do anything. The government currently already sends you your IR3 (individual tax return) if they know about the alternative income that we talked about above, or if you filed a paper IR3 last year. Either way, NZ is making it easier for you to file taxes, or to even do them for you!
Naturally there is a bit of a downside to this, which is if you will owe tax this year. Many residents have not filed a tax return because they don’t think they need to, or in rare cases, know they need to but are avoiding paying tax. Tax evasion is a serious crime, and can come with big fines and even prison time. The automatic process will mean that most people won’t be able to escape their tax return, regardless of how much you might want to.
Please note that it’s important you keep your details current with Inland Revenue. You can update any details like your employment status, address or bank account by contacting Inland Revenue or by signing in to myIR.
Compulsory reporting of PAYE information every payday:
Employers only voluntarily needed to report PAYE information to the Inland Revenue department before. Now, this becomes compulsory. PAYE, or Pay As You Earn, is the tax system in New Zealand that automatically deducts tax as you are paid. This goes hand in hand with the automatic tax refunds, as Inland Revenue is trying to ensure they have all the information before completing the tax return.
Tax Code notifications:
Again, this one is simply making tax easier for citizens. It applies to anyone who has the incorrect tax code, especially for people who work multiple jobs. The Inland Revenue department would send you a notification if your tax code is incorrect, hopefully saving you money when it all boils down.
Updated IR3 Form:
The online IR3 form is now a fully online process, rather than the paper form uploaded. This makes it much easier to navigate and complete if you are doing your own tax return.
Donation tax rebates:
You can usually save your charity donation receipts and claim some of the donation back at the end of the year in NZ. Now instead of holding on to your receipts every year and tracking them down at tax time, you can simply upload them throughout the year as you receive them.
Doing your taxes in New Zealand is only getting easier. Even if you are still confused (as a lot of people are about tax!), remember you can always contact the Inland Revenue team to help answer your questions. With plenty of time left in the tax year, we hope you get all of your questions answered and have a smooth tax time this upcoming year.