►Basic information relating to New Zealand Taxation System:
Tax collection is done by the IRD [Inland Revenue Department].Taxes are levied on
1) Personal income
2) Business income
3) Supply of goods and services.
Interesting thing is that there is no capital gains tax! However certain gains such as profits on the sale of patent rights are deemed to be income.
Local property taxes collected by councils. Some goods and services carry excise duty which collected by the New Zealand Customs Services. Major Tax-reform had taken place in 1980s.Some of the major changes are described as follows:
1) Top marginal rate of income tax reduced from 66% to 33% (however it increased to 39% in year 2001)
2) Corporate income tax rate reduced from 48% to 33% (It was further reduced to 30% in year 2008)
3) Introduced Goods and Service Tax , at a rate of 10% (which is increased to 12.5% currently)
Tax reform continues in
· business taxes and the effect on productivity and competitiveness of NZ companies
· differences in the treatment of various types of investment income
· International tax rules
As per the OECD [The Organization for Economic Co-operation and Development] report in 2001 described the
►Individual income tax in
Each and every residents of
Types of taxable income are as follows:
(1) Salary and Wages
(2) Business income
(3) Professional income (self-employed income)
(4) Income from investments (interest, dividend, etc)
(5) Rental income
(6) Overseas income
Tax rates
Income tax varies as per income levels in any previous year (In New Zealand previous year is know as specific tax year) The financial year know as specific tax year (personal tax years) is from 1st April to 31st March. The tax slabs are divided in four levels:
|
Income |
Tax Rate |
|
$0 - $38,000 |
19.5% |
|
$38,001 - $60,000 |
33% |
|
Over $60,000 |
39% |
|
No declaration form (IR330) |
49% |
Rates are for the tax year
It is to be noted that the government of
The method of charging to tax is most similar to the Indian Tax system as i.e. if a person earns $60,000, he will only pay 33% on the amount that falls between $38,001 and $60,000 rather than paying this on the full $60,000.
TDS (Tax deducted at source)
The system of Pay-as-you-earn is implemented here. In most cases employers deduct the relevant amount of income tax from salary and wages prior to these being paid to the individual. Prior to the implementation of this system, employees paid tax annually by them self.
In addition to the employer, Banks and other financial institutions deduct the relevant amount of income tax on interest and dividends which is known as Residents Withholding Tax.
At the end of each tax year individuals who may not have paid the correct amount of income tax are required to submit a personal tax summary, to allow the IRD to calculate any under or overpayment of tax made during the year.
DTA (Double taxation agreements)
Individual who is tax resident in more than one country might be liable to pay tax more than once on the same income to different countries and hence to overcome this situation
|
These countries have double tax agreements with New Zealand |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The |
|
|
|
The |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACC earners levy
All employees pay an earners levy to cover the cost of non-work related injuries. It is collected by Inland Revenue on behalf of ACC (the Accident Compensation Corporation).
The earners levy is payable on salary and wages plus any other income that is subject to PAYE, i.e overtime, bonuses or holiday pay. The levy is 1.4% for the year from
Note:-These data are only merely for the study purpose of the taxation system and has been obtained from reliable sources such as Wikipedia, Taxman, yahoo, google, and other relavent materials. However vievers may refer to the original tax information provided by the New Zealand Government as it would serve better.
CAclubindia
