Peter recently graduated from high school and works part-time with his aunt. He earns NZ$4,000 a year. He also works at his sister`s café and earns NZ$6,000 a year. Of course, his total annual income is NZ$10,000. He has no student loans. In this case, the highest source of income uses a primary tax code and the lower source uses the tax code sb. Use a self-service tax code if the annual income from ALL jobs is less than NZ$14,000, but WITHOUT student loans. Many people now have more than one part-time job, but one comment we often hear is, “Secondary tax means I`m going to end up paying a lot more taxes.” In mid-March, a T6 form will be issued listing the codes to be used for each employee. An employee`s tax identification number consists of one, two, three or four digits followed by a suffix letter: F, M, N or S. There are also three non-numeric codes: you will need to choose a tax number when filling out your NZ Super application. The tax legislation you use depends on whether you have a different income and, if so, where it comes from. 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.
This tax legislation applies to independent contractors, not employees. Refer to the list of contractor work types on page four of the IR 330 form to complete your payment activity for planners on the first page of the IR 330 form. The tax legislation is WT. The IRD number is your individual tax number, which you can find out more about here. Your tax identification number could be, for example, M, CAE, NSW, SB. We will go through all this in this article. There are a few other tax legislation options for certain professions in New Zealand that may well apply to people on working holidays, especially if they work for a salary in agriculture. These are as follows: Individuals pay progressive tax rates. This means that you pay a progressive amount based on the income you receive. 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. If circumstances have changed, continue to use the code you are using until a revised code is issued to you by the Income Tax Service. 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: Tax identification numbers are labeled codes that you must put on the Department of Taxation (IRD) tax return form (IR 330) that your employer should give you when you start a new job. You will need a special tax certificate and will need to attach a copy to form IR 330. The tax identification number is STC. Secondary tax can be confusing for many employees. Often, people think it`s not worth having a second job because the secondary tax on that income is so high.
The truth is that secondary tax does not cost an employee more than ordinary income tax. 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%. With your IR 330 form, you get an organizational chart that you can use to determine your personal tax code. Be sure to refer to this flowchart or use the “Tax Code Finder” on the IRD website if you think you have an unusual case for taxation in New Zealand. Right now, we`re going to review the tax laws that apply most to people on working holidays in New Zealand. The most common tax legislation among working holidays is M. This means that the job for which form IR 330 is intended is your main/highest source of income, and: 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. Talking about taxes is never a compelling topic, but one piece of information that is definitely worth knowing is how to use the right tax code for paid work in New Zealand. IR calculates the correct tax amount for you and provides you with a special tax certificate. You must inform your employer or pension fund. If you do not fill out this form with the right IRD number and the right tax identification number, you may be taxed much more than necessary. No one needs to cut their travel money! If an employee arrives after April 6 and does not bring you a T21 form, please use the emergency code. If form IR 330 is for employment that is not your highest source of income, you will need to provide a secondary income tax code. Your secondary tax code is determined by your combined annual income and whether you repay a student loan.
Since a working holidaymaker probably doesn`t have a New Zealand student loan, these are the likely secondary income tax codes. 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 have not received notice of the Code by April 5, please complete Form T20 for each employee who marks it as a “replacement” and forward it to the Income Tax Service. Until a new code is received, continue to use the previous year`s code or use the emergency codes if you don`t have one. Your tax number is M unless you have a student loan. If you have a student loan, your tax identification number is M SL. The purpose of suffix letters is to allow code numbers to be changed without the need to issue individual revised codes for each employee when changes in the amount of personal allowances are announced based on budget. Under no circumstances should you use the employee`s T1 coding notice. The authority to use a code for an employee is Form T6, which was sent to you by the income tax department, or Form T21, from a previous employer. The code is calculated from the details of your employee`s annual tax return.
The employee receives a breakdown of how the code is created on the T1 form, while the employer is only informed of the code itself. Any objection to the adopted code must be filed by the employee and not by the employer. The codes are easy to remember: SB for Bottom, S for Standard, SH for High and ST for Top. If one of your employees has more than one job, their tax code can also get a bit complex with secondary tax legislation. These are casual seasonal workers who work daily for up to three months, including scissors and scissors. .