Moving to New Zealand? Here’s how the tax system works

New Zealand’s tax system requires individuals and businesses to pay tax on income and most goods and services, with all collections managed by the Inland Revenue Department, according to official government information.

For migrants, workers and new residents, understanding how taxes work is essential, especially when starting employment or setting up finances in the country.

What taxes you need to pay

The main taxes in New Zealand include income tax and goods and services tax (GST). Income tax, also called Pay-As-You-Earn (PAYE), is deducted directly from salaries and wages. GST is added to the price of most goods and services at the point of purchase.


The system does not include inheritance tax, a general capital gains tax, payroll tax or social security tax. However, property owners are required to pay local council rates.

Why an IRD number is important

Anyone earning income in New Zealand must have an Inland Revenue Department (IRD) number, which acts as a tax identification number. Without it, individuals may be taxed at the highest rate.

New migrants can apply for an IRD number through a simplified ‘new arrival’ process. This number is also required to open a bank account in the country.

How income tax is collected

For most employees, income tax is automatically deducted by employers and paid to Inland Revenue. However, some individuals must file a tax return, known as an IR3, if they earn income from other sources such as overseas income, investments or rent.

The tax year runs from April 1 to March 31.

What tax relief is available for new migrants

New migrants may qualify for a temporary tax exemption on most overseas income for their first four years in New Zealand. During this period, they are generally taxed only on income earned within the country.

When you need to file a tax return

Most new arrivals are required to file a tax return in their first year. Non-residents, including those on work visas, may also need to file returns either at the end of the tax year or before leaving the country.

How GST works

GST is charged at a flat rate on most goods and services, including some purchases from overseas suppliers. It does not apply to certain items such as residential rents, international airfares, financial services and mortgage payments.

Businesses can claim back GST paid on goods and services used for business purposes.