Most people pay their taxes as they earn their income. Employers deduct tax on salary and wages. Banks and other financial institutions deduct tax on interest as it is derived. People who do not pay tax on all of their income as it is earned are required to file tax returns at the end of the tax year (31 March) to work out their tax liability. Inland Revenue (or IRD) is the government department that collects taxes. The New Zealand tax year is from 1 April to 31 March. In most cases, Inland Revenue will send you all the material you need to file tax returns and make payment.
If you are thinking of going into business, see Business: Business Tax.
Temporary tax exemption on foreign income for new migrants and returning New Zealanders
From 1 April 2006, people becoming tax residents in New Zealand may qualify for a temporary tax exemption on some of their foreign income. This temporary tax exemption is available to people who qualify as a tax resident in New Zealand on or after 1 April 2006 and are new migrants or returning New Zealanders (transitional residents) who have not been resident for tax purposes in New Zealand for at least 10 years prior to their arrival in New Zealand. The exemption can only be granted once in a lifetime.
The exemption
The temporary tax exemption for foreign income is for four calendar years (up to 49 months). The exemption starts on the first calendar day of the month you qualify as a tax resident in New Zealand and is valid until the last calendar day of that month four years later.
For example, if you qualify as a tax resident in New Zealand on 22 April 2006 and have one or more types of foreign income that are temporarily exempt for taxes in New Zealand, you are eligible for the exemption counting from 1 April 2006 until 30 April 2010, which effectively is 49 months.
For more info on this policy, visit the IRD website.
