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New Zealand taxation is collected
at a countrywide level by the IRD or Inland Revenue
Department on behalf of the State of New Zealand.
Taxes for the nation are levied on business and
personal income, and on the supply of services and
goods.
There is no tax on capital gains, even though
certain earnings such as those that come from patent
rights are considered to be income. |
Property taxes on a local level are handled and
gathered by councils. Some services and goods bear a
particular tax, known as a duty or an excise tax.
These include gaming duty and alcohol excise. The NZ
Customs Service and several other state agencies
collect these specific taxes.During the 1980s, New Zealand had undergone an extreme tax
reformation program. The topmost borderline rate of income
tax was cut down from 66 percent to 33 percent and has since
gone up to 39 percent in 2000 of April 2000. Corporate
income tax rate went down from 48 percent to 33 percent and
was further reduced to 30 percent in 2008.
Services and goods tax was brought in, beginning at a rate
of 10 percent and is currently at 12.5 percent. A report of
OECD in 2001 reported the tax system of New Zealand as one
of the most efficient and neutral among its members.
The residents of New Zealand are legally responsible for
tariff on their global taxable income. In 2005 to 2006, 43
percent of the core revenue of the government of New Zealand
which translates to 22.9 billion New Zealand dollars came
from the income taxes of individuals. There are 5 kinds of
taxable income.
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These are wages and salary,
self-employed and business income, investment income
such as dividends and interest, income from rental,
and income from overseas such as overseas pension
income. The income tax in New Zealand is charged by
the sum that falls under a specific tax bracket. For
instance, if an individual earns NZ$70,000, they are
required to pay only 33 percent on the sum that
falls between NZ$48,001 and NZ$70,000 instead of
paying this on the entire NZ$70,000.Accordingly, the
equivalent income tax for that particular income
will build up to NZ$16,150 or approximately 23
percent of the whole amount. More often than not
employers subtract the pertinent sum of income tax
from wages and salary before it is given to the
employee. PAYE or Pay-as-you-earn is a system, which
was started in 1958, before which employees were
required to pay their taxes yearly. |
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Additionally, financial institutions such as banks subtract
the applicable rate of income tax on dividends and interest
as they are garnered. This is called the Residents
Withholding Tax.
At the closing of every tax year those who haven’t yet paid
the correct sum of income tax are obligated to present a
personal summary of tax, to let the IRD to determine any
overpayment or underpayment of tax completed for that year.
In cases wherein a person is a tax resident in two or more
countries, he may be required to give tax more than one time
on one income. There are double taxation agreements between
New Zealand and several other countries that make it its job
to find out which nation will charge taxes on particular
kinds of income.
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