NZ Tax Glossary
Plain-English definitions of New Zealand tax terms.
ACC
Accident Compensation Corporation — provides no-fault personal injury cover.
ACC Earner's Levy
A levy of 1.60% on earnings up to an annual cap, collected via PAYE.
Bright-Line Test
Tax rule on profit from selling residential property within a certain period.
Depreciation
A tax deduction for the gradual wear of business assets.
Effective Tax Rate
Your total income tax as a percentage of your gross income.
ESCT
Employer Superannuation Contribution Tax — tax on employer KiwiSaver contributions.
Fringe Benefit Tax (FBT)
Tax employers pay on non-cash benefits provided to employees.
Gross Income
Your income before any tax or deductions are taken out.
GST
Goods and Services Tax — a 15% consumption tax on most goods and services.
Income Tax
Tax on personal income, calculated using progressive brackets.
IRD
Inland Revenue Department — NZ's tax authority.
IRD Number
A unique identifier assigned by IRD to each taxpayer.
KiwiSaver
New Zealand's voluntary work-based retirement savings scheme.
LAQC / Look-Through Company
A company structure that passes losses to shareholders for tax purposes.
Marginal Tax Rate
The rate applied to your last dollar of income — the highest bracket you're in.
myIR
IRD's online portal for managing your tax affairs.
Net Income / Take-Home Pay
Your pay after all deductions have been taken out.
No-Notification Rate
The default withholding rate applied if no tax code is provided.
PAYE
Pay As You Earn — the system for deducting income tax from wages.
PIE
Portfolio Investment Entity — a type of managed fund with special tax rules.
PIR
Prescribed Investor Rate — the tax rate applied to your PIE/KiwiSaver earnings.
Provisional Tax
Tax paid during the year by self-employed people and businesses.
Residual Income Tax (RIT)
Your income tax bill after deducting PAYE and other credits.
RWT
Resident Withholding Tax — tax deducted from interest and dividends.
Schedular Payments
Payments to contractors where tax is withheld at source.
Secondary Tax
Tax applied to income from a second job at your correct marginal rate.
Student Loan
Interest-free loan for NZ-based borrowers, repaid via PAYE at 12% above threshold.
Tax Code
A code that tells your employer how much tax to deduct from your pay.
Tax Return / IR3
An annual declaration of income filed with IRD, if required.
Tax Year
NZ's tax year runs from 1 April to 31 March.
Working for Families
A tax credit scheme to help families with the cost of raising children.