[afseac]

Hi,

I'm trying to get a handle on gross vs. net pay rates in NZ. I have looked at general tax rates provided by IRD, but I'm not sure how that results in the bottom line when all deductions are taken out on each pay day. In the US, there are so many "variations" in terms of deductions and credits, it is often difficult to determine what the net pay is until you have filed the tax returns. Is it the same way in NZ?

Can I pose a hypothetical situation? Assuming annual income is 100k (NZ), IRD information says this is in the 39% tax category. Is this a flat rate with no other adjustments? In the US, we start with individual exemptions (and other things) that reduce the gross income before tax rates are applied. Are there other "standard" deductions that are taken each pay period, like health insurance, retirement or pension funds, local taxes, etc. Which deductions would be optional and which are required? Does it make a difference if two people are working? Are taxes then computed on joint income? Of the 100k income, how much would a person actually receive?

Any help is appreciated?

[Bozeman]

I don't have the link at hand but if you go to the IRD website and do a bit of searching you can find tables/instructions that show/calculate exactly how much will be deducted (in terms of income tax and ACC levy) from your pay. There are essentially no deductions and NZ does not embrace the concept of "married filing jointly" - everyone is treated as an individual.

[owen-family]

My understanding was that they taxed 19.5% of the first $38k you earn, then 33% of the next $22k, then 39% of the rest.
So if you earn $100k then you get to keep $68430.
If you earn $60k you get to keep $44550
if you earn $38k then you get to keep $30590

Thats my understanding anyway!

Check out "Avalon's Money Thread" for some really useful money info, which I intend to use if we ever sell the house!

All the best

Ed Ellie Jeremy & Katie

[IanW99]

I don't have the link at hand but if you go to the IRD website and do a bit of searching you can find tables/instructions that show/calculate exactly how much will be deducted (in terms of income tax and ACC levy) from your pay. There are essentially no deductions and NZ does not embrace the concept of "married filing jointly" - everyone is treated as an individual.

The income tax calculator can be foun here (https://www.ird.govt.nz/cgi-bin/form.cgi?form=incrates)

And as already said, tax on income is calculated individually, so two people earning $50K each will take home more (be taxed less) than one person earning $100K. You can use the calculator to work out how much.

Ian

[James 1077]

This site (https://nztaxonline.deloitte.co.nz/public/tools/personaltaxrates/Default.aspx) will show you how much tax you have to pay for the next couple of years as some tax cuts were announced in the budget this year. The tax rates don't work as flat rates though - you pay the lower rate up to the earnings limit for that rate - then the next rate up to the earnings limit and 39% on everything over the top limit.

There are very few deductions available as the tax system is an evolution of the UK system and very few deductions are allowed there; also everyone is taxed individually so you can't share income between you and your spouse.

On top of tax you'll have ACC deducted (although it isn't a huge amount); ACC is government run accident insurance system which takes the place of suing people in cases of an accident (you can't sue or be sued in NZ - so not a place to be if you are a personal injury lawyer!).

The other deduction is Kiwisaver which is sort of like a pension fund / savings account. You don't have to join it straight away (and can join at any time if you decide not to join immediately) but if you do then you have 4% of your salary paid into the Kiwisaver account with another 2% paid by your employer and $1000 paid by the government. The government will also pay your annual investment fees each year (to a limit). The money is there until you retire / leave NZ but you can also use it to pay a deposit on your first house / mortgage payments - although I'm not sure if this is happening yet / will still be happening.

You may get working for families tax credits which pay back some of the tax that you've paid but at $100k income you are unlikely to get them unless you've been breeding like bunnies.

As a working example I earn a similar amount to this. My wife doesn't work and we have 9 month old twins. No savings income to speak of. With my salary we rent a largish (by London standards) place in Devonport, Auckland at $590 a week. At the end of the month we normally have some money to put away (not a huge amount but some).

[eternalkiwi]

The IRD's webpage detailing their tax rebates is available here .

[eternalkiwi]

The IRD's webpage detailing their rebates is http://www.ird.govt.nz/income-tax-individual/end-year/dch-rebates/

Shawn

[afseac]

Thanks for all the great information. It's a bit easier to take the graduated taxation levels rather that a flat 39% rate like I thought. Especially coming from a low tax environment like the US.

I also love the idea of the ACC contributions instead of lawsuits. The hidden costs of high insurance rates resulting from lawsuits in the US is criminal.

Are there any other retirement/pension requirements or options other than kiwisaver that are common? How does medical coverage work?

Thanks again!

[James 1077]

Medical coverage is basically free for major issues and subsidised for GP etc (paid for through taxation) but you may want to top up with private healthcare.

My work has a policy with Southern Cross healthcare with discounted health insurance and a $250pa subsidy. I therefore pay about $800pa and my health insurance covers surgery, diagnosis etc (basically anything you need to see a specialist for) for me, my wife and two kids. We also have pre-existing conditions covered as part of the deal with my work.

When you see the GP you need to pay about $40-$60 (I can't remember off the top of my head) but you can get high-user discounts as well. Kids are free or cheaper.

Prescriptions are subsidised with the subsidy depending on the medicine (basically go generic rather than named and you'll pay less).

Again as an example my wife and I were worried about one of our 9 month old twin's as she had a rash on Sunday. The other one had a really chesty cough. We drove up to the "after hours" doctor's surgery at about 12pm on Sunday; were immediately checked by a nurse and saw the doctor about 20 minutes later. The doctor presribed them some antibiotics and some liquid paracetamol which we collected from the after hours pharmacy next door.

The total cost came to $36 for the consultation and prescriptions and isn't covered by my health insurance (as it is primary care) - you can however get a more expensive insurance option that will cover it. If we went within normal working hours it would more likely have been somewhere between free and $15.

As to other retirement options some companies do offer superannuation schemes but these are rare and far between. Mainly because there are no tax incentives to pay into them and Kiwisaver is generally better.

There is also the state superannuation which you get at 65 if you qualify - http://www.workandincome.govt.nz/get-assistance/main-benefit/nz-superannuation.html

[melly]

The IRD's webpage detailing their rebates is http://www.ird.govt.nz/income-tax-individual/end-year/dch-rebates/

Shawn

Thanks for the link. It is helpful to know what rebates it is possible to claim (and what I need to make sure I keep the receipts from!)