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jbiggley
I'll Hang Around A Little
Joined: 23 Jan 2004
Posts: 14
Location: Ontario, Canada
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Posted: Wed Jan 28, 2004 8:25 pm Post subject: Taxation |
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In contemplating our decision to immigrate, we are trying to understand the taxation system in NZ. It would appear that NZ residents are taxed at a greater rate than even Canadians! (And we are taxed to death!) If taxes are taken at the time they are earned (ie directly off of your pay) at a rate of 32%, is there any vehicle to reduce that rate at the end of the tax year?
In Canada my marginal tax rate is 37%. However, at the end of year with deductions, both personal and family, charitable contributions, etc my effective tax rate last year was closer to 10%.
Does anyone have any information on this sticky subject?
Josh |
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andy
I Like It Here
Joined: 17 Nov 2003
Posts: 60
Location: Auckland
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Posted: Wed Jan 28, 2004 8:34 pm Post subject: |
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| Not sure how it works in Canada but I was shocked to discover that you pay your own holiday pay here too at 6% directly from your wages. |
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John Miller
Valued Member
Joined: 17 Nov 2003
Posts: 102
Location: New Zealand
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Posted: Wed Jan 28, 2004 8:36 pm Post subject: |
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Hi Andy, what do you mean? - sorry, don't understand  |
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andy
I Like It Here
Joined: 17 Nov 2003
Posts: 60
Location: Auckland
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Posted: Wed Jan 28, 2004 8:41 pm Post subject: |
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| You have 6% of your wages deducted to cover your 3 weeks paid holiday per year. |
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jbiggley
I'll Hang Around A Little
Joined: 23 Jan 2004
Posts: 14
Location: Ontario, Canada
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Posted: Wed Jan 28, 2004 9:20 pm Post subject: |
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Ok, so presuming that I earn more than $60,000 per year my tax rate would be 32% + 6% vacation = 38%? Holy crap! How the heck do you afford to live?  |
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andy
I Like It Here
Joined: 17 Nov 2003
Posts: 60
Location: Auckland
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Posted: Wed Jan 28, 2004 9:26 pm Post subject: |
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| I only pay 19% tax, isnt it anything over about 40k that is taxed at a higher rate? |
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John Miller
Valued Member
Joined: 17 Nov 2003
Posts: 102
Location: New Zealand
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Posted: Wed Jan 28, 2004 9:30 pm Post subject: |
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Andy, this holiday deduction doesn't happen to me or my wife!!!
Josh, tax is 19.5% on your first $38,000. Then 33% on income between $38,000 and $60,000. This means the effective tax rate for a $60,000 income is 24.5%. |
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karltsmith
Moderator
Joined: 26 Nov 2003
Posts: 570
Location: North Shore, Auckland since March 2004
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Posted: Thu Jan 29, 2004 12:33 am Post subject: |
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Hi Andy,
Are you sure about the 6% deduction for holiday pay?
I found these references to the 6% you mention but no mention of a deduction from the employee.
| Quote: | This section specifies the calculation of termination payments for all employees.
If an employee has been employed for less than a year, they are entitled to holiday pay calculated as 6% of their gross earnings.
If they have been employed for more than a year, they are entitled to payments for any unused holiday days accumulated in their full years of service, plus 6% of the gross earnings for that last period of their employment that is not a full year.
Some interpretations believe that section 21.3 requires an employer to also include holiday pay on any payments received by the employee from ACC.
An employer can deduct from the final payment any holiday pay that may have been paid in advance. |
Source http://www.acepay.co.nz/hol21.htm
Employment law in NZ is under reform and new regulations come into force from April 1st 2004 also all employers must grant 4 weeks holiday per year from 2007.
for further info on employment law visit http://www.acepay.co.nz/index.htm
I'd be interested to learn more about this as it is not mentioned in my wifes contract of employment! |
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andy
I Like It Here
Joined: 17 Nov 2003
Posts: 60
Location: Auckland
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Posted: Thu Jan 29, 2004 6:32 am Post subject: |
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| All I know is it comes out of my wages!! |
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jbiggley
I'll Hang Around A Little
Joined: 23 Jan 2004
Posts: 14
Location: Ontario, Canada
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Posted: Thu Jan 29, 2004 9:05 am Post subject: |
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Oh, that is a lot better. I kept running numbers through the trusty calculator and just couldn't make the money work at 32%+ At 24.5%, it hurts a little less.
Does the gov't refund any of the taxes at year end, or is it a flat rate tax?
Josh
| John Miller wrote: | Andy, this holiday deduction doesn't happen to me or my wife!!!
Josh, tax is 19.5% on your first $38,000. Then 33% on income between $38,000 and $60,000. This means the effective tax rate for a $60,000 income is 24.5%. |
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