Most countries tax their residents in some way, whether through a goods and services tax, an income tax, or property taxes. These taxes typically fund government-run services ranging from healthcare and education to waste management. Each country has its own approach to its tax system, and here, we’ll explore the basics of how New Zealand taxes its residents and businesses.
1. Income Tax
Income tax in New Zealand is calculated based on overall income from all sources. If you have more than one job, earn interest or dividends on investments, or earn income in another way, the amount of tax you owe will be based on the total amount of all these sources.
Financial gains from lottery, horse racing, or casino wins, however, aren’t typically included in your taxable income as they’re seen as a recreational activity. This means that if you follow guides for different online casinos and win, you don’t need to worry about it impacting what you owe at the end of the calendar year. However, if you gamble professionally, any wins would be considered part of a business income and taxed as such.
In New Zealand, you are taxed based on different tax brackets, which progressively charge you more as your income increases. In the 2024-2025 year, this is what these rates look like:
- Income from $0 – $14,000 is taxed at 10.5%
- Income from $14,001 – $15,600 is taxed at 12.82%
- Income from $15,601 – $48,000 is taxed at 17.5%
- Income from $48,001 – $53,500 is taxed at 21.64%
- Income from $53,501 – $70,000 is taxed at 30%
- Income from $70,001 – $78,100 is taxed at 30.99%
- Income from $78,101 – $180,000 is taxed at 33%
- Income of $180,001 and over is taxed at 39%
These rates impact New Zealanders’ spending and saving habits and help fund essential government-funded resources that affect the wellness and daily lives of everyone in the country. Your taxes will likely be deducted from your regular pay if you’re employed based on your tax code or bracket. In some cases, you may be entitled to a refund after submitting your taxes.
If you run a business, even just a side hustle, you’ll have to carefully track your income and spending to accurately file your tax return. Business taxes are more complex, and you may need extra support during tax season.
2. Goods and Services Tax (GST)
Most goods and services bought in New Zealand are subject to the Goods and Services Tax (GST), which is currently 15%. Like income tax, this tax measure helps fund various government programmes and services. If you’re curious about the specifics, the Treasury makes this information available through its revenue and expenditure reports.
If you’re a business owner, you’re responsible for registering, charging, collecting, and paying GST rates to the government. However, if your business income is below $60,000, you’re not required to charge or pay GST.
3. Capital Gains Tax
Most countries have a capital gains tax, which taxes the profit earned from buying and selling an asset such as real estate. However, New Zealand does not have this type of tax, meaning that if you sell a piece of property at a profit, you will not be taxed or owed due to this income.
That being said, some types of gains are considered income in the eyes of New Zealand’s tax system, including some property sales. This is typically called the ‘bright-line rule’, and there are many different factors to consider when assessing whether this tax applies to you (such as the date you purchased the asset and the date you sold it). If you’re unsure of your tax obligations, it’s best to speak with a tax or finance professional.
4. Property Taxes
Property owners must pay property taxes that support community expenses and infrastructure ranging from parks and recreation services to emergency services. These taxes apply to property owners who own their homes or have rental property. The amounts owed are variable, depending on your region, land value, home value, and the services available for your property.
5. Excise Taxes and Duties
Excise taxes and duties generally apply to products that require a licence to produce or sell and are often applied to products that are harmful to individuals. In New Zealand, these excise taxes and duties are typically applied to goods such as alcohol, tobacco, and fuel. These taxes are used to reduce the consumption of these goods and generate revenue that combats the ill effects of overconsumption, such as funding healthcare services.
6. International Taxation
New Zealand has many agreements with other countries to prevent concerns like double taxation or tax evasion. These allow the country to charge non-residents earning an income in the country. These individuals are called ‘non-resident taxpayers’. Resident taxpayers are taxed on their worldwide incomes. New Zealand residents with a foreign income often qualify for a foreign tax credit, which helps reduce their tax burden.
7. Social Security and Payroll Taxes
New Zealand offers its residents benefits like universal healthcare and support for unemployment due to injury or disability. These are funded through two payroll taxes, the KiwiSaver and the ACC levy. The first is a voluntary program that can assist workers in saving for retirement at a rate of 3-10% of their income. The ACC levy is a mandatory tax that funds workplace injuries or social security costs. The rate for this is variable and impacts employers or businesses more than individuals.
Conclusion
New Zealand, like many other countries, taxes its residents and non-residents who earn an income in the country to help fund essential services, its universal healthcare system, and many different programmes and services. Like many countries, these taxes come in the form of income tax, property tax, and GST. Outlined above are the basics to be aware of when navigating New Zealand’s taxation system.
