[suzer]

When does the tax year end?

And...I remember someone saying if you are working less than a year, you get much of your tax back?

[DMcG]

The tax year runs from 1st April to 31st March the following year.
Normally, your tax is calculated as if you would have been working for the entire year. The tax you would owe for a year is calculated and then deducted from your regular pay. If you only worked for part of a year, then you will have overpaid (because the tax isn't a flat rate).

You can do most things online providing you've got your ird number.
The tax site is at www.ird.govt.nz


Dougie

[suzer]

Perhaps this should be a sticky?

Thanks Dougie.

[sidabrine]

This puzzles me a bit. Lets say, you leave NZ for another country mid-year. You file a tax return, receive your cash back. You're also arriving mid-year to the new country, so you're not earning full salary that year and claim tax refunds for that.

Does it mean that as long as you move from country to country mid-year, you can get tax refunds over and over again? Not that I would intend to move countries every year, but surely this is a loophole?

[IanW99]

This puzzles me a bit. Lets say, you leave NZ for another country mid-year. You file a tax return, receive your cash back. You're also arriving mid-year to the new country, so you're not earning full salary that year and claim tax refunds for that.

Does it mean that as long as you move from country to country mid-year, you can get tax refunds over and over again? Not that I would intend to move countries every year, but surely this is a loophole?

If only it was that simple :)

The point is that IRD assume that you will be working for the full year and calculate how much tax to deduct based on this amount.

if you have only worked for part of a year (not part of a year in different countries), then you will not have earned as much as expected and therefore were (probably) taxed more than you should have been. So you get a tax refund.

If you work in NZ or elsewhere then you still get taxed.

Ian

[sidabrine]

If only it was that simple :)

If you work in NZ or elsewhere then you still get taxed.

Ian

Yep, I still get taxed, but at a lower rate?

If I earn 40 000 in NZ, I get taxed 19% and if I earn another 40 000 in another country, i get taxed 19% there. My tax would be significantly higher on 80 000 in one country alone, since they both have progressive tax system (tax brackets and such). Is it too good to be true?

[suzer]

This puzzles me a bit. Lets say, you leave NZ for another country mid-year. You file a tax return, receive your cash back. You're also arriving mid-year to the new country, so you're not earning full salary that year and claim tax refunds for that.

Does it mean that as long as you move from country to country mid-year, you can get tax refunds over and over again? Not that I would intend to move countries every year, but surely this is a loophole?

Some countries tax you as a non-resident, such as Australia. I worked there for 3+ months and got NONE of my tax back.

[IanW99]

Yep, I still get taxed, but at a lower rate?

If I earn 40 000 in NZ, I get taxed 19% and if I earn another 40 000 in another country, i get taxed 19% there. My tax would be significantly higher on 80 000 in one country alone, since they both have progressive tax system (tax brackets and such). Is it too good to be true?

If only it was that simple :)

One of the two countries is going to consider you as resident for tax purposes and will tax you on your world-wide income for the year.

Most countries have a double taxation treaty in place which means that they will take into account any tax that you paid in the other country but they will still expect you to pay the amount of tax to cover your full income.

Ian

[albion54]

OK - so it seems like there is the equivalent of UK PAYE ? i.e. tax deducted by employers at source. Is there also tax automatically deducted by banks on savings accts ?

In UK I don't have to do a tax return atm as nothing other than normal pay and normal bank acct.

Is it compulsory for everyone in NZ to file a tax return or if you don't have anything other than pay and bank acct. is it not necessary ?

[constablechuck]

If your only income is only from wages and bank interest then you don't need to file a return, if you want to find out for sure if you paid the correct tax you can call IRD to request whats called a personal tax summary, this will tell you if you have a refund or a bill, the alternative is to ask for what's called a summary of earnings, you can use this and the calculator on the IRD website to determine if you would get a refund or a bill, if it works out to a bill then don't request a personal tax summary and you pay nothing, if it works out to a refund then request a personal tax summary to claim it.

When your new to NZ the IRD will automatically put in their system that you need to file what's called an IR3 return, this is because they want to know if you have overseas or other untaxed income, if you don't then just call and tell them and they will ask you a bunch of questions, if your not required to file they will update their records so their system is not looking for your return.

You need to be careful about how you instruct your bank to deduct tax from your interest, if you earn less than 38k including the interest you get, then the interest should be taxed at 19.5%, if your between 38,001 and 60K then it's 33%, if your income is over 60K then it's 39%, the bank does not know how much income you have so it's up to you to get it right, if your mistakenly taxed at the non resident withholding rate or the wrong resident withholding rate then you could end up with a large bill from IRD.

Also, your taxed based on your income alone, not like the U.S. where they combine the income of a husband and wife who file a joint return and then tax it based on the total, however if you have a joint bank account then you must each claim 50% of the interest earned as income, this is to prevent the partner with the lowest income from claiming all the income from interest thus paying tax at a lower rate.

[suzer]

If your only income is only from wages and bank interest then you don't need to file a return, if you want to find out for sure if you paid the correct tax you can call IRD to request whats called a personal tax summary, this will tell you if you have a refund or a bill, the alternative is to ask for what's called a summary of earnings, you can use this and the calculator on the IRD website to determine if you would get a refund or a bill, if it works out to a bill then don't request a personal tax summary and you pay nothing, if it works out to a refund then request a personal tax summary to claim it.

When your new to NZ the IRD will automatically put in their system that you need to file what's called an IR3 return, this is because they want to know if you have overseas or other untaxed income, if you don't then just call and tell them and they will ask you a bunch of questions, if your not required to file they will update their records so their system is not looking for your return.

You need to be careful about how you instruct your bank to deduct tax from your interest, if you earn less than 38k including the interest you get, then the interest should be taxed at 19.5%, if your between 38,001 and 60K then it's 33%, if your income is over 60K then it's 39%, the bank does not know how much income you have so it's up to you to get it right, if your mistakenly taxed at the non resident withholding rate or the wrong resident withholding rate then you could end up with a large bill from IRD.

Also, your taxed based on your income alone, not like the U.S. where they combine the income of a husband and wife who file a joint return and then tax it based on the total, however if you have a joint bank account then you must each claim 50% of the interest earned as income, this is to prevent the partner with the lowest income from claiming all the income from interest thus paying tax at a lower rate.

This is provided you work an entire year. If not, see above...you DO need to file a return to get your tax back.

[andy141]

Also, your taxed based on your income alone, not like the U.S. where they combine the income of a husband and wife who file a joint return and then tax it based on the total, however if you have a joint bank account then you must each claim 50% of the interest earned as income, this is to prevent the partner with the lowest income from claiming all the income from interest thus paying tax at a lower rate.

My OH and I are retiring and, hopefully, moving to NZ next year(sponsored by our Daughter).

Based on the above quote I assume that, as we will have income from our own personal pension plans, it would be best for tax purposes for us to have independant bank accounts rather than a joint account.

Andy

[suzer]

So even if I earned less than $38K (the 1st tax bracket), if I worked only 9 months out of the years, I should still be getting some tax refund?

[barryp]

If my experience is representative, then YES, you would.

This soon-to-conclude tax year, all of my wage income was from NZ, and I was resident in NZ the entire time. So I won't bother with a tax return this year; PAYE does simplify matters.

But last tax year, I only worked about 11 weeks in NZ, and submitted a NZ tax return. I was hoping that I'd get a few dollars back, having not been gainfully employed for a few months prior to coming over. The refund was actually pretty substantial, because the IRD put me into a lower bracket for the tax year.

The same rules apply if you leave the country mid-year, though your total income over that gap period is considered (not just your NZ income).

It costs nothing to submit a tax return and takes very little time. You don't have to do the math - the IRD will do it for you.