Calculation of income tax through tax codes

налог на прибыль и налоговые коды

Main Income Tax

New Zealand law requires all individuals and legal entities to pay income tax. The government uses these taxes to pay government spending, including a large number of social programs, as well as education, health care, roads and improvements.

New Zealand has a progressive taxation system. The main income tax for individuals is calculated in accordance with the following thresholds:

  Income  Tax Rates   
  Below $14,000   10.5%
  $14,000 – $48,000   17.5%
  $48,000 – $70,000   30%
  Above $70,000   33%

Thus, on annual earnings of $ 60,000, the tax is $ 11,020.00. Example of calculating the tax amount:

 Tax Rate   Income   Tax
  Below $14,000 – rate is 10.5%   $14,000.00   $1,470.00
  $14,000 – $48,000 – rate is 17.5%   $34,000.00   $5,950.00
  $48,000 – $70,000 –rate is 30%   $12,000.00   $3,600.00
 Above $70,000 – rate is 33%   $0.00   $0.00
 Total   $60,000.00   $11,020.00

Tax Codes

In addition to the rate of the main income tax, the amount of your final tax is determined by other factors, such as the number of sources of income, the form of employment, the availability of a student loan, etc. Thus, to determine the tax rate in each specific case, special codes are implemented. The code is a guideline for the employer on how much tax to transfer for each employee. Each employee must correctly indicate their tax code by filling out a specific form for this.

Types of tax codes:

M – the main or only job. It is applied if you have only one job, as well as if you are employed in several places, but this place of work is the first in terms of employment or the main one, that is, you work there most of the time.

MS – any other job;

ME – a tax concession code for annual earnings from $ 24,000 to $ 48,000. The amount of the concession is $ 10 per week. A prerequisite is the absence of other social benefits.

SL – a code to pay off the student loan.

WT – a code for self-employed.

The Inland Revenue website will help determine your tax code.

Wrong Tax Code

If for any reason, your tax code is determined incorrectly, the tax office will send you a notification after the tax year has passed. When requesting a PTS, it will also be possible to adjust the tax amount.

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