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Payroll in New Zealand – 2022 Updates
Due to covid-19, the following measures were taken by the New Zealand authorities:
- Minimum wage changes - The starting out and training minimum wage remain at 80% of the adult minimum wage. The student loan percentage will remain the same for the 2022/2023 tax year (12%). However, the annual repayment threshold will increase from $20,280 to $21,268.
- ACC Earners Levy and Threshold - From 1st of April 2022 the ACC Earners Levy rate is 1.46% and the threshold is $136,544.
- Student loan threshold - The student loan percentage will remain the same for the 2022/2023 tax year (12%). However, the annual repayment threshold will increase from $20,280 to $21,268.
- Short-term absence payment for employees waiting for Covid-19 test results - A One-off payment of $359 applies to employees who:
– Stay home and look after a dependent child who has been asked to get a COVID-19 test
– Live with someone who needs to wait and get a negative test result
- Leave support scheme payment
To be eligible for a one-week payment, the employee needs to be self-isolating for at least four consecutive calendar days. Will be paid at a flat rate of:
- $600 for people who were working 20 hours or more per week (full-time rate)
- $359 for people who were working less than 20 hours per week (part-time rate)
New Zealand Payroll – Basic Facts
The official currency is the New Zealand dollar (NZD), and New Zealand does not consider digital currencies to be legal tender.
New Zealand tax residents generally are taxed on their worldwide income while nonresidents generally are only taxed on their New Zealand-sourced income.
You are considered a tax resident of New Zealand, if you reside in New Zealand for 183 days in any 12-month period or have an “enduring relationship” with New Zealand. Former tax residents are still considered tax residents until they have been out of New Zealand for 325 days in any 12-month period and have stopped having an enduring relationship with New Zealand. The New Zealand tax year runs from April 1st to March 31st.
Tax and Social Security Considerations
Corporate Tax
The corporation tax rate is 28%.
Individual Income Tax
Income tax rates for 2022
Taxable income (NZD) | Tax rate (%) |
$0 – $14,000 | 10.50% |
$14,001 – $48,000 | 17.5% |
$48,001 – $70,000 | 30% |
$70,001 – $180,000 | 33% |
$180,001 + | 39% |
No notification | 45% |
Withholding Tax
- Dividends – 28%
- Payroll tax – No
- Real property tax – Local authorities charge rates on land based on the official valuation of the land. The rates vary considerably from one locality to another.
- Capital gains – there is no capital gains tax regime in New Zealand although New Zealand does tax certain gains on the sale of assets that might otherwise be considered capital in nature.
Other Taxes
- Branch tax rate – Dividends paid by resident companies from profits already taxed at the corporate level may carry imputation credits for the tax period. Dividends are referred as “fully imputed”, “partially imputed”, or “unimputed”, depending on the extend of which the company has chosen to use its imputation credits. Dividends paid to a nonresident are subject to a 30% nonresident withholding tax (NRWT) to the extend they are not fully imputed. Fully imputed dividends are subject to a 0% NRWT rate where the nonresident has a 10% or more voting interest in the company. In most other cases, the NRWT rate will be 15%.
- Interest – Interest paid to a nonresident is a subject to a 15% NRWT, which may be subject to further reduction under an applicable tax treaty.
- Royalties – 15%
Compensation and Benefits
Minimum Wage
The minimum wage has been revised in New Zealand from 1 April 2022. The adult minimum wage increases from NZ$20.00 to NZ$21.20 per hour. The starting-out and training minimum wage rate increases from NZ$16.00 to NZ$16.96 per hour.
Wage Payment
Employers are required to pay employees on the day and at the interval agreed between the two parties. Issuing payslips in New Zealand is not mandatory.
Hours of Work
The maximum workweek is 40 hours 5 days a week.
Overtime
New Zealand generally does not require employers to pay overtime pay unless specified in an agreement. However, work on public holidays must be paid at time and a half.
Holidays
There are 10 public holidays and 14 regional anniversary days in New Zealand.
Employee Leaves
- Paid leave: Full-time employees are entitled to 4 weeks of paid annual leave each year.
- Sick leave: 5 days of paid sick leave for employees after their first 6 months of continuous payment, and additional 5 days of paid sick leave after every subsequent 12-month period of employment.
- Bereavement leave: After 6 months of employment, employers must grant all employees with 3 days of paid bereavement leave in the case of the death of an employee’s spouse or partner, parent, child, sibling, grandparent, or grandchild.
- Paid parental leave: Employees are entitled to a parental leave period of 22 weeks for births or adoptions. From 1st of July 2020, employees are entitled to a parental leave period of 26 weeks for births or adoptions. The paid parental leave provision is paid for by the IRD to one parent at a time and may be transferred between parents.
Bonuses and Special Benefits
New Zealand does not mandate employers to provide bonus payments to employees.
Termination of Employment
There is no mandatory notice period. Employers must provide employees with a written statement of the reasons for dismissal if requested and must submit the statement within 14 days of receiving a request. Employers must pay employees for any unused leave provisions accrued after an employment relationship is terminated.
Foreign workers in New Zealand
Visas: Employers must ensure that their foreign workers have the proper visas to work in New Zealand—either a work to residence visa, work visa, a resident visa, or a variation of one of these visas. In the case that employees do not qualify for one of these visas, employers may obtain permission to recruit other foreign workers from Immigration New Zealand (INZ).
Taxes: Foreign workers should pay the same tax as the New Zealand citizens, unless they are on a qualifying short-term visit or qualify for the transitional residence exemption on foreign sourced income.
Foreign workers who are not liable for income taxes during their visit, if the following terms apply:
- the total number of days in New Zealand in a 12-month period is 92 days or less
- the foreign worker is employed by an employer that is not a resident of New Zealand
- the income earned while in New Zealand is taxed in the foreign worker’s country of residence
New Zealand residents in the US: Foreign workers from New Zealand must meet general visa requirements and be certified to be employed in the US.
New Zealand is eligible for the following:
- Visa waiver program for business visitors – allows New Zealand citizens to travel to the US for 90 days or less for business-specific purposes without having to obtain a B-1 business visa.
- H-2 B visas – cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by US law.
For more information about how our Global Payroll Control Platform integrates with local payroll providers in New Zealand, contact us today.