You need to develop your tax legislation for each source of income you receive. All new employees who take up employment must complete a tax form (IR330). The employee is responsible for choosing a tax code and there is an organizational chart that the IRD has created to determine the tax identification number on which an employee must appear. If a person`s annual income from all sources is likely to be less than $14,000, the secondary tax number (for their second job) is SB. If the income is likely to be between $14,000 and $48,000, the tax number is S. If the income is to be between $48,000 and $70,000, an HS tax code will be used and if the income from all sources is greater than $70,000, a ST income tax code will be used. Income from a self-service tax code is taxed at 10.5%, for an S code the tax rate is 17.5%, for an HS code the tax is 30% and for an ST code 33%. Tell your employer or payer what your code is, otherwise you will be taxed at the highest non-declaration rate of 45%. You have a tax number for your main income. The code you use depends on the type and amount of your main income. The special tax legislation only applies for 1 tax year (from 1 April to 31 March). If you apply in the middle of the year, it will apply from the date IR approves it until the end of that tax year.
You only know the exact amount of tax you will have to pay or that will be refunded to you after receiving your personal tax summary or completing an individual IR3 tax return. Secondary tax codes are used by people with more than one source of income, i.e. .B. for a second job or for part-time employment, if they also receive an income-related benefit. If the amount you receive from NZ Super is higher than what you earn on your wages or salaries, then this is your main source of income. Your NZ Super tax number is M unless you have a student loan. If you have a student loan, your tax identification number is M SL. NSWNSW is aimed at recognized seasonal workers. If you are an NSW or have a work visa as a foreign crew member of a vessel fishing in New Zealand waters, use the NSW code. Recognized seasonal workers must be employed by an employer registered under the Recognized Seasonal Employers program and be employed in the horticultural or wine industries. You must have a recognized seasonal employer visa/permit. For more information, see www.immigration.govt.nz (search term: seasonal).
The ME and M tax codes have fundamental differences and if you are not sure about the two different codes, it is important that you seek professional advice to avoid a future tax bill. You can use an ME tax number if: Change your tax number to NZ Super and Veteran`s Pension Use the NSW tax code if you are a recognised seasonal worker or if you hold a work visa as a foreign crew member of a vessel fishing in New Zealand waters. If the amount you receive from NZ Super is less than your wages or salaries, this is a secondary source of income and you must use one of the following tax codes. If you receive NZ Super, you can change your tax legislation through the Department of Social Development website. If you feel that you are paying too much or too little tax, you can apply for special tax legislation – for example, if you receive NZ Super and other income, or if you receive a foreign pension taxable in New Zealand. New Zealand taxpayers must complete a tax return (Ir Form 330) when they take up employment. It is important to store the right data here, as the amount of the tax is based on the information provided. The income tax code for most employees is Mr. If you are a New Zealand resident and have an income between $24,000 and $48,000, your tax number is ME. If you have a student loan, you must use a main tax number that includes „SL” unless you have a refund deduction exemption.
IRD has codes for your secondary income source such as SB, S, SH or ST, depending on the amount of income. There are also codes such as WT for sedular payments, CAE for the income of casual workers in agriculture, EDW for workers` income on election day, and STC for a special tax law, among others. M SLUse M SL if your tax number is M and you have a student loan. Example: Jerry has just finished school and works part-time in his mother`s office, who earns $4,000 a year, as well as an assistant at his brother`s coffee shop, who earns $5,000 a year. His total income for the year is $9,000. Then his second job ($4,000) would use the tax number sb. If Jerry has a student loan, he would use SB SL. Jay has a second job and uses the ST tax code. His second employer wants to pay him a one-time bonus of $40,000. Over the past four weeks, Jay has earned $2,695 from his second job.
Your tax number is M unless you have a student loan. If you have a student loan, your tax identification number is M SL. Use the CAE Tax Identification Number if you are doing occasional farm work. The good news is that it is a common misconception that people pay a higher tax rate when they get a secondary tax law. New Zealand`s tax and PAY system is designed to tax employees at the correct rate. We have a progressive tax system that ensures that individuals pay a higher tax rate if they earn more. Our current tax rates for individuals are as follows: Use the EDW tax number for income from optional day work. IR calculates the correct tax amount for you and provides you with a special tax certificate.
You must inform your employer or pension fund. Example: Bob has an after-school job at a newspaper store around the corner. He works two hours a day, four days a week for a total annual income of $13,000. This is Bob`s only job, so he uses the tax number M. In reality, the system works and calculates the tax correctly in about 90% of cases. The 10% of the time the secondary tax system does not work is when a person`s income exceeds one of the income thresholds ($14,000, $48,000 or $70,000) because of income from their second job. An example of this is when someone`s first job earns them $40,000 a year, for which they would have a tax number M. Their second job earns them $10,000 a year, for which they would have an HS tax number. The HS tax code imposes them at 30% on their income of $10,000, with their first income of $8,000 from their second job being taxed at only 17.5%. Over the course of the year, this person will deduct the PAYE from their salary totalling $9,020, although the tax on $50,000 should actually be $8,020. So you`ll be overwhelmed by $1,000.
Until the tax administration updates its computer system, the only way to get around this problem is for people to file a tax return or request a personal tax summary from the IRD or request a special tax rate from the tax administration. The whole issue of payroll, including tax codes, deductions, including student loans, KiwiSaver and child support, is a minefield and takes an enormous amount of time to manage for small businesses. Other tax laws such as CAE (Casual Agricultural Workers), WT (Schedular Payments) and the credit for self-employed individuals earning between $24,000 and $48,000 (ME tax code) all have their own rules. While payroll programs speed up the process, we`ve found that sometimes even the computer does it wrong, especially when a bonus or other large salary payment exceeds one of the income thresholds. The tax administration has a very good PAYE calculator on its website that can be useful for these situations. Example: Andy is a builder and earns $80,000. He also has a part-time job and earns $3,000 more. His total income for the year is $83,000. The secondary employment tax number of $3,000 is ST. If Andy has a student loan, he will use the tax code of ST SL.
It`s in your best interest to get your code correctly, otherwise you`d end up paying too much or too little tax. If it`s the latter, you`ll get an unpleasant tax bill and you definitely don`t want it. You must have tax legislation in place to meet your tax obligations. If you have a student loan, use a tax number that asks your employer to deduct your refunds. STCSTC for a special tax law. This is a tax rate that suits your personal situation. It generally applies when the use of other tax laws results in an excessive or insufficient deduction of tax. You must apply for and obtain approval from IRD before you can use it. If you receive a personalized tax law during the tax year, it starts on the date we approve it and ends on March 31.
Example: Lily has a job in an appointment calendar around the corner. She works 40 hours a week with a total annual income of about $40,000. Lily has no partner and receives no government support, so she uses ME tax legislation. Whether you have one source of income (employer) or two or more employers, your refund can help you determine the right tax legislation. Example: Brad`s main income comes from his father`s coffee shop work. He earns $38,000 a year. He also has a second job as a kitchen assistant and earns $8,000 a year. For the second job ($8,000), he should use S as the tax code. If he has a student loan, he would use S SL.
The New Zealand Tax Code consists of a letter (or letters) telling your employer how much tax you need to deduct from your salary or salary during the year. All of this happens automatically so you don`t have to worry about saving money on the terrible tax bill at the end of the year! All you need is to fill out an IR330 form and send it to your employer, and it`s their job to do the rest. If you have more than one job, you will need to complete IR330 for each employer you work for. When you start getting NZ Super, you may also have other sources of income. You need to make sure that you are using the correct tax identification number. If we determine that you are using the wrong tax identification number, we will ask your employer or payer to change it and notify you. We do this to prevent you from being taxed more than you should during the tax year or to avoid receiving an invoice at the end of the tax year. Talk to us if you disagree with our decision to change your tax legislation. You will need to dial a tax number when you complete your NZ Super application. .