If you are living in New Zealand for more than 183 days in any one year then you will need to register for tax purposes. This guide aims to give you a brief insight into all the taxes you are eligible to pay when you are living and working in New Zealand.
If you are resident in New Zealand and the UK
There is a double tax agreement in place between New Zealand and the UK to prevent you from being taxed twice. The country where you have a permanent home, or where you spend the most amount of time, will be the country to whom you pay your taxes. So if you are permanently based in the UK you will be exempt from paying income tax to New Zealand. For a more detailed explanation of how the system works, see the Inland Revenue Department in New Zealand.
New Zealand operates via the PAYE scheme as in the UK but the income tax rate is lower. The rates rise gradually the more you earn as follows:
- 10.6% on the first $14,000
- 17.5% from $14,000 to $48,000
- 30% from $48,000 to $70,000
- 33% capped on income higher than $70,000
Because of this tiered scale, employees do manage to take home more pay after tax than countries which have a flat rate, like the UK.
VAT in New Zealand
New Zealand charges a Goods and Services Tax (GST) on the price of goods and services. The GST is set at 15% and is automatically added onto the price, so when you pay for electric goods or particular services, the GST has already been included and there is no need for you to be charged extra.
New Zealand Property Rates
If you are an investor then you will be charged a Property Tax which will be calculated from the amount of rental income you acquire.
Property rates are payable by the homeowner and these are set by local councils. The rates are based on what the property is used for, i.e. residential or commercial and also on the market value of the property.
To give you a very approximate idea, a small 2 bedroom townhouse in Wellington City has annual property rates of $1,844.81. To find out the cost of your property, just log into your local council website, click on services and then rates where you should be able to do a search of your address.
Capital Gains Tax in New Zealand
There is currently no capital gains tax to pay in New Zealand or any Estate Duty, which is similar to the UK Inheritance Tax.
Immigration New Zealand have a very good guide to the tax system in New Zealand that is tailored for expats and worth noting. The tax system is very favourable when compared to the UK!