Paying tax

It all starts with an IRD number

Everyone needs an IRD number, which you get from IR (Inland Revenue). This is the number the government uses to keep track of all your tax, entitlements and personal details. It's essential to have one if you are earning money in Aotearoa New Zealand, and, it's really easy to apply for one too.

If you don’t have an IRD number when you start earning money or interest (like through your bank account) you’ll pay more tax than you need to. It’s a good idea to get an IRD number even if you don’t need it now, just to be ready for the future. You may already have one so ask your parent or guardian. If you need one, click on the link below and get yourself set up.

Useful links:

• Inland Revenue - 'IRD numbers for individuals'

Which tax code applies to me?

Every job has a different tax code. Tax codes help your employer work out how much tax to take out to pay IR before they pay you. You’ll need to work out the tax code for each source of income you receive.

Useful links:

• Inland Revenue - 'Tax codes for individuals'

Using myIR

You can check that your employer is deducting your tax and see a summary of all your earnings information using myIR. Most of the things you need to manage your tax can be done in myIR. These are just some of the things you can do:

• update contact information
• make payments
• track refunds.

You can create your own myIR using the link below.

• IR - 'Register for a personal myIR account'

How much tax will I pay?

How much tax you pay depends on how much you earn. Everyone pays within the range of 10.5%-33% of their earnings, but what the percentage is depends on what you've got coming in.

If you paid too much tax during the year and are due a refund, IR will automatically pay the refund directly into your bank account. Don't worry, you won't pay any more tax than you're meant to!

One myth people often get confused by is that if you work a second job you pay more tax. While it’s true that the method of calculating your tax changes, the amount you pay in total over a whole year is the same as if you were only working one job.

Useful links:

• Inland Revenue - 'Tax rates for individuals'

Does my tax pay for my Student Loan bill too?

Your Student Loan is a separate bill that must also be paid. The tax code you give your employer will tell them that you have a Student Loan, and then, as well as taking out your taxes, they will take out an extra 12% which helps pay your Student Loan. This is a different deduction, but it is taken out of your pay at the same time as tax.

If you’re looking for more information on Student Loans, check out the post on financial support for students below.

Useful links:

• Inland Revenue - 'Student loan repayment calculator'
• School Leavers' Toolkit - 'Financial support for tertiary education'

I'm self-employed, how do I pay my taxes?

If you don't have an employer and are, for example, a plumber or an artist who sells prints online, you are in business and are considered self-employed.

If you're self-employed you need to let IR know, and at the end of the tax year they will contact you and get you to fill out an IR3, which can be completed online or done on paper. It will ask you things like:

• how much money you made
• any money you spent buying supplies or running your business.

Once you've done that, you'll be sent a tax bill letting you know what you need to pay. A crucial part of being self-employed is setting money aside for this tax bill so you are able to pay your yearly income tax. As being self-employed can be complicated tax-wise, we’d recommend using a savvy accountant or a tax agency specialising in self-employed people, especially if you haven’t been self-employed in Aotearoa New Zealand before. Do your research on what fees, taxes and levies you’ll need to account for.

Keep in mind that it’s important to keep receipts for any money you spend running your business. These are used to work out your profit and your tax bill at the end of the year. If you want, you can get an IR adviser to visit you for free.

Useful links:

• Business.govt.nz: ‘Introduction to taxes and levies’
• Citizens Advice Bureau: ‘I am self-employed. What are my tax obligations?’
• Inland Revenue: ‘Self-employed’
• Inland Revenue: 'Requesting a business advisory or social policy visit'

What is considered income?

Income is money you earn from your job, running your own business, investments like bank savings and company shares, and regularly selling things for a profit. It doesn’t include most gifts or winning Lotto.

If you buy stuff to use and enjoy and later sell it that’s not income and you won't have to pay tax on that amount.

If you buy stuff regularly (used or second hand) with the intention of selling it to make money that’s income and you should pay tax on it.

Cash jobs

If you have a job that pays you in cash, you need to be upfront about what you earn and know that you aren’t exempt from paying tax. The benefits of paying tax include contributing to a safe and equal society. Paying tax is part of being a New Zealander and it’s something everyone should do happily, knowing that it keeps the system ticking along.

Key websites

• Inland Revenue collects taxes for the government and its funded programmes. They are the government agency that you pay taxes to. They have all the details about tax in Aotearoa New Zealand on their site, which you can visit if you need any tax-related questions answered.