New Zealand

Individual - Significant developments

Last reviewed - 14 December 2020

New top personal tax rate

The New Zealand Government has legislated a new income tax rate of 39% on income over $180,000 that will come into force on 1 April 2021.

This change also affects rates on fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), retirement savings scheme contributions (RSCT), residential land withholding tax (RLWT) and resident withholding tax (RWT) (excluding dividends) and introduces new trustee annual return requirements.

This new rate could form part of New Zealand’s progressive tax system for years to come as the New Zealand Government navigates an economic recovery, commitments to public services and budgets to service the forecast growth in Government debt.

Simplifying tax administration

The government continues its work to modernise tax administration and reduce compliance costs. A number of recent Acts incorporate changes intended to simplify tax for businesses and individuals.

The Taxation (Annual Rates for 2018-2019, Modernising Tax Administration, and Remedial Matters) Act 2019 is the most recent. The purpose of the Act is to make it easier for individuals to understand their tax obligations and entitlements by simplifying and modernising the rules and processes. Such measures include the introduction of 'tailored tax codes' aimed at reducing the cash flow burden secondary tax codes can impose on people with multiple jobs or income sources, the automatic calculation of individuals’ taxable income and subsequent automatic refunds, and simplifying the process for claiming donation tax credits.

In addition to the tax administration improvements, the Act also introduces a number of other policy measures, including the introduction of two new contribution rates for KiwiSaver and opening up KiwiSaver to employees aged over 65.

The government continues to look at ways to simplify and improve New Zealand’s tax administration and will be releasing more detailed proposals on these areas over the next few years.

Double taxation agreements (DTAs)

New Zealand is currently negotiating new and updating DTAs with a number of countries, including Luxembourg, Norway, Portugal, and the United Kingdom. See the Significant developments section in the Corporate tax summary for a summary of the effect of the Multilateral Instrument (MLI) on New Zealand’s DTAs.