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New Zealand tax code is made up of a letter (or letters) that tells your employer how much tax to deduct from your salary or wages over the year. This is all done automatically so that you don’t have to worry about saving money for the terrifying tax bill at the end of the year! All you need is to fill out an IR330 form and pass it to your employer and it's their job to do the rest. If you have more than one job, you will need to fill out IR330 for each employer you work for.
Tax code also depend on certain factors such as:
● if this is your main or secondary job.
● if you have student loan.
● if you are on a seasonal work or schedule payment work (non-regular payment).
Regardless of whether you have one source of income (employer), or two or more employers, Your Refund can help you to determine the right tax code.
It's in your best interest to get your code right, otherwise, you would end up paying too much tax, or too less. If it’s the latter, you’ll be receiving an unpleasant tax bill and you definitely don't want that.
You use 'M' tax code if you meet a combination of the following criteria:
● You receive an income-tested benefit.
● This is your main or highest source of income.
● You are not a New Zealand tax resident.
● Your annual income is not likely to be between $24,000 and $48,000.
● You or your partner receive Working for Families Tax Credits or an overseas equivalent, or you receive Superannuation payments - veteran's pension or an overseas equivalent.
Example: Bob has an after-school job at a diary shop 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 M tax code.
Use M SL if your tax code is M and you DO HAVE a student loan.
Example: Bob has an after-school job at a diary shop 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, AND he has a student loan, so he uses the M SL tax code.
The ME and M tax codes have some fundamental differences and if you're unsure about the two different codes, then it is important you seek professional advice to avoid a future tax bill. You can use an ME tax code if:
● You do NOT receive an income-tested benefit.
● This job is your main or highest source of income.
● You are a New Zealand tax resident.
● Your annual income is likely to be between $24,000 and $48,000.
● You and your partner DO NOT receive Working for Families Tax Credits or an overseas equivalent.
● You DO NOT receive New Zealand Superannuation - veteran's pension or an overseas equivalent.
Example: Lily has a job at a diary shop around the corner. She works 40 hours a week with a total annual income of approximately $40,000. Lily doesn't have a partner and doesn't receive any government support, so she uses the ME tax code.
Use ME SL if your tax code is ME and you HAVE a student loan.
Example: Lily has a job at a diary shop around the corner. She works 40 hours a week with a total annual income of approximately $40,000. Lily doesn't have a partner and doesn't receive any government support, AND she has a student loan, so she uses the ME SL tax code.
If you do have secondary income, you should not be taxed at a higher rate. This is like a pay rise from your first (main) income, it needs to be taxed at the correct level so you could avoid huge tax bill at the end of the year.
If your yearly income from ALL jobs (first job + second job + any other jobs) is less than $14,000. Then use:
● SB - No Student Loan
● SB SL - Has Student Loan
Example: Jerry has just finished school and is working a part-time job at his mum's office earning $4,000 annually, as well as as an assistant at his brother's cafe earning $5,000 annually. His total income for the year is $9,000. Then his second job ($4,000) would use tax code SB. If Jerry has a student loan he would use SB SL.
If your yearly income from ALL jobs (first job + second job + any other jobs) is between $14,001 and $48,000. Then use:
● S - No Student Loan
● S SL - Has Student Loan
Example: Brad's main income is from working in his father's cafe. He earns $38,000 per year. He also has a second job as a chef assistant making $8,000 per 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.
If your annual income from ALL jobs is between $48,001 and $70,000, use:
● SH - No Student Loan
● SH SL - Has Student Loan
Example: Nick's main income is $49,000 per year. He also has a second job where he earns $18,000 per year. For the second job ($18,000), he should use SH as the tax code. If he has a student loan, he would use SH SL.
If your annual income from ALL jobs is over $70,000, then use:
● ST - No Student Loan
● ST SL - Has Student Loan
Example: Andy is a builder and makes $80,000. He also has a secondary job earning an additional $3,000. His total income for the year is $83,000. The $3,000 secondary job tax code is ST. If Andy has a student loan, he would use ST SL tax code.
This is for Casual Agricultural Workers - people who are engaged in casual seasonal work on a day-to-day basis, for up to 3 months. This includes shearers and shearing.
This is for Election Day Workers.
NSW is for recognized seasonal workers. If you are a NSW or hold a work visa as a foreign crew of a vessel fishing in New Zealand waters, you will use the NSW code. Recognized seasonal workers must be employed by a registered employer under the Recognized Seasonal Employers' Scheme and are employed in the horticulture or viticulture industries. You must have a Recognized Seasonal Employer Limited Visa/Permit. See www.immigration.govt.nz (search keyword: seasonal) for more details.
Scheduler payments (formerly known as Withholding Tax) are specifically for contract work (non-regular), not for salary or wage workers. This includes independent contractors, labour-only contractors and self-employed contractors. You will receive scheduler payments if you’re not an employee.
STC for a special tax code. This is a tax rate to suit your individual circumstances. It usually applies when using the other tax codes will result in too much or not enough tax being deducted. You need to apply and obtain approval from IRD before you can use this.
Travellers' Tax Returns
Planning on going abroad? Maybe you're already there? As long as you are a Kiwi resident or non-resident for tax purposes, you can work out if you are due any tax refunds from the IRD. Let's find out if you can claim tax returns.
Immigrants' Tax Returns
If you're new to New Zealand, chances are, you may have a foreign passport, or hold a resident, work or student visa or an Australian passport - but not an IRD number. Yet, you are still legible to apply for your tax refunds from IRD.
Seasonal workers are individuals willing to work on short notice - these can be overseas visitors, students, part-timers, etc. - and can range from agriculture to industries, to recreational jobs and more. But do they have tax returns?