New Zealand: Personal Taxation
Rates of Income Tax
Personal income taxes rates rise on a progressive scale – 10.5% on taxable income up to NZD14,000; 17.5% from NZD14,001 to NZD48,000; 30% from NZD48,001 to NZD70,000; and 33% from NZD70,001 and over.
An individual’s taxable income includes income from employment, interest received, rental income (less rental expenses), and pensions and annuities (including qualifying overseas pensions).
Resident withholding tax (RWT) is generally required to be deducted from payments of interest to New Zealand residents. RWT rates on interest applicable from April 1, 2010 for individual investors are equivalent to the marginal personal income tax rates.
Dividends are taxed at a flat RWT rate of 33%, unless they have been franked under the New Zealand imputation system, under which companies that have paid company tax in New Zealand pass on to their shareholders an equivalent tax credit.
If an individual does not provide an IRD number to the payer, RWT is to be withheld at 33%.
An independent earners tax credit (IETC) is available for middle-income taxpayers. To be eligible for the IETC, a person must be a resident, earn at least NZD24,000 and must not receive a state benefit, Working for Families tax credits or New Zealand superannuation. The maximum annual amount of the credit is NZD520 from April 1, 2010, and is reduced by 13 cents for every dollar of income earned over NZD44,000.
Non-resident individual taxpayers are taxed at the then-current personal income tax rates.
A New Zealand resident must declare all assessable foreign income, gross of any tax taken out in the country from which the income came. If tax has been paid in another country, a resident may be entitled to relief from double taxation, subject to the availability of a relevant double taxation treaty.