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All you need to know about taxes in New Zealand for Work & Travel – Backpacking Tips

All information about income tax during your working holiday in New Zealand

Everyone who goes to work in New Zealand will sooner or later come into contact with the subject of tax in New Zealand. During your Working Holiday it may even be that this is your first contact with your tax return. That's why we have summarised all the important information here in this article. For concrete statements on tax issues, please consult your German or New Zealand tax advisor. Most Working Holiday travellers will not need either tax advisor, because fortunately New Zealand has a very simple tax system. Please read the article carefully, as you will need to do some preparation so that you can relax and wait.

 

How is the tax year in New Zealand defined

The normal tax year in New Zealand runs from 1.4 – 31.3, which is the case for all backpackers. On request, the tax year can be changed to a different rhythm, but this is especially interesting for businesses. As a Backpacker and Working Holiday Traveller the period from 1.4. – 31.3. is the period you should have in mind.

 

Photo by Sam Dan Truong on Unsplash

Photo by Sam Dan Truong on Unsplash

 

What are the income tax rates in New Zealand

The current annual income tax rates for New Zealand are as follows:

0 to 14000 NZD are taxed at 10.5%.

14001 to 48000 NZD are taxed at 17.5%.

48001 to 70000 NZD are taxed at 30%.

All income above 70000NZD is taxed at the top rate of 33%.

 

In addition to income tax, a tax for the ACC (Accident Compensation Corporation) is withheld from your salary. This tax for ACC is approximately 1.39% and is deducted directly by your employer together with the tax.

Any excess tax paid will be refunded when you file your tax return. Your weekly earnings are used as the basis for calculating your tax rate, so most Working Holiday travellers tend to pay too much tax and get a refund. Unfortunately, the often-repeated statement that you will get all your tax paid back at the end of your year abroad is not true.

 

Which preparations you should do for the tax in New Zealand

Easy tax preparation thanks to online tools

New Zealand has a good and flat tax infrastructure. In addition to the clearly defined tax rates, the IRD also makes your tax return easier because all processes can be carried out completely online.

Registration with MyIR

The IRD provides a free website where you can view all tax-related information and also submit any necessary changes to the IRD. This website is called MyIR (www.ird.govt.nz), to use it you have to register once.

Instructions on how to register with MyIR are available here in the blog. Once you have registered there and entered all necessary information including tax number and bank account, you are almost finished and the rest of the process can begin.

 

When do I have to take care of my tax return in New Zealand

The tax year ends on 31.3., so you should complete your registration with MyIR before the end of the tax year, once you have done this you have cleared the main hurdle. Your employer has until the 20th of the following month to report your income to the IRD. If you were still working in March, all income for the tax year should be complete by 21.4. The IRD will then start processing the data records, which, based on the experience of 2019, will start around the beginning of May and will normally be completed by the end of June. If there are any questions or uncertainties, you will receive an e-mail from the IRD via the MyIR portal or by post and can then comment.

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There is a possibility in the MyIR portal to view all income of the tax year, you should do this in your own interest after 20.4. The IRD can only process taxes of which it has knowledge, if an employer is missing you have to contact him and he has to manually retrigger the report. If your employer is not cooperative there, but you have accounts of the work done, you can also send these payslips to the IRD by message.

 

How does the automatic tax return work in New Zealand

Once you have completed your registration with MyIR, the tax is automatically carried out at the end of the tax year. In the past, this automatic tax calculation was performed between May and June. The important thing is that your bank account is in place so that any refund can be conveniently paid directly to your account. If you notice an inconsistency, then send your Payslips manually to the IRD of the employer that should be missing. Alternatively, contact your employer and ask them to resubmit the data to the IRD.

 

Doing a manual tax return before leaving New Zealand

In addition to the automatic tax return, there is also the possibility of a manual tax return. You can use this, for example, if you are about to leave New Zealand and are no longer going to work. Additionally, as far as we know, you can only use this option once all income has been transferred to the IRD. This is usually on the 21st of the month following your last salary payment.

If you want to use the manual variant, you have the following three options:

  1. IRD Office: The fastest way is to visit one of the local IRD offices. Please visit the IRD website to find the location and opening hours of the nearest office. When you visit, you will need your IRD number and explain the reason why you want to file an early tax return. You will receive the appropriate forms either in paper form or online. After you have completed and submitted them, you will receive a tax refund a little later if you have paid too much tax. The money will then be transferred to your New Zealand bank account. After the tax refund you only have to transfer the money. You can easily use the Transferwise service for this. We have had the best experience with this service for international money transfers. Registration is free of charge*. More detailed information can be found in the following article here in the blog.
  2. By message: If you want to use the manual version, contact the IRD via the MyIR tool. You can easily send a secure message via the MyIR tool, the IRD will reply to you there. Explain in your message the reason for the manual tax return, then they will activate the necessary forms for you. This is also the easiest way to contact us if you have specific questions about your tax return. After the refund of your tax you only have to transfer the money. You can easily use the Transferwise service for this. We have had the best experience with this service for international money transfers. You can register free of charge via the following link*. More detailed information can be found in the following article here in the blog.
  3. By phone: If you want to use the manual version, contact the IRD by phone. The hotline can explain the concrete process and activate the necessary forms directly. All you need is your IRD number. Explain your reason for the previous tax return and wait until the appropriate documents are activated. If you have any questions, you can ask them directly on the hotline. After the refund of your tax you only have to transfer the money. You can easily use the Transferwise service for this. We have had the best experience with this service for international money transfers. You can register free of charge via the following link*. More detailed information can be found in the following article here in the blog.
  4. At the end of the tax year: You also have the option of waiting until the end of the tax year. In this case it is important that you still have access to your New Zealand account, ideally via online banking. After the refund of your tax you only have to transfer the money. You can use the Transferwise service for this purpose. We have had the best experience with this service for international money transfers, registration is free of charge*. More detailed information can be found in the following article here in the blog.
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Manual tax return after departure from New Zealand

In addition to the automatic tax return, there is also the possibility of a manual tax return. You can use this, for example, if you are about to leave New Zealand and are no longer going to work. Additionally, as far as we know, you can only use this option once all income has been transferred to the IRD. This is usually on the 21st of the month following your last salary payment.

If you want to use the manual variant, you have the following three options:

  1. By message: If you want to use the manual option, contact the IRD via the MyIR tool. You can easily send a secure message via the MyIR tool and the IRD will reply to you there. Explain in your message the reason for the manual tax return, then they will activate the necessary forms for you. This is also the easiest way to contact us if you have specific questions about your tax return. After the refund of your tax you only have to transfer the money. You can easily use the Transferwise service for this. We have had the best experience with this service for international money transfers. You can register free of charge via the following link*. More detailed information can be found in the following article here in the blog.
  2. By phone: If you want to use the manual version, contact the IRD by phone. The hotline can explain the concrete process and activate the necessary forms directly. All you need is your IRD number. Explain your reason for the previous tax return and wait until the appropriate documents are activated. If you have any questions, you can ask them directly on the hotline. After the refund of your tax you only have to transfer the money. You can easily use the Transferwise service for this. We have had the best experience with this service for international money transfers. You can register free of charge via the following link*. More detailed information can be found in the following article here in the blog.
  3. At the end of the tax year: You also have the option of waiting until the end of the tax year. In this case it is important that you still have access to your New Zealand account, ideally via online banking. After the refund of your tax you only have to transfer the money. You can use the Transferwise service for this purpose. We have had the best experience with this service for international money transfers, registration is free of charge*. More detailed information can be found in the following article here in the blog.

 

Question, suggestions or additions

You have a question, a suggestion for this article or an addition that you are missing? Then we look forward to your comment here under this article. Thank you very much!

 

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3 Comments

  1. Can I withdraw all of my tax money if I plan to move to the other country???

    • Hi Olo,

      no New Zealand just refunds the amount of tax, you paid to much.
      There is no option to receive a full refund of all tax you paid.

      Cheers Julian

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