Residual Income Tax (RIT)
Residual Income Tax (RIT) is your total income tax liability for the year minus any tax already paid through PAYE, RWT, and other tax credits. It represents the gap between what you owe and what has already been deducted at source.
If your RIT is positive, you owe additional tax to IRD. If it's negative, you're entitled to a refund. For most salary-and-wage earners, RIT is close to zero because PAYE covers their full tax liability. However, if you have untaxed income (self-employment, rental, overseas income), your RIT can be significant.
RIT is the key trigger for provisional tax obligations: if your RIT exceeds $5,000, you are generally required to pay provisional tax in the following year. This threshold makes it important for anyone with growing non-PAYE income to monitor their RIT and plan for provisional tax payments.
Related Terms
Provisional Tax
Provisional tax is how self-employed individuals, companies, and others with significant non-PAYE income pay their expected income tax during the year, rather than as a lump sum after year end.
Income Tax
New Zealand income tax is calculated using a progressive bracket system.
PAYE
PAYE (Pay As You Earn) is the system that New Zealand employers use to deduct income tax from employees' wages and salaries.
Try the calculator
Use our free tool to see how residual income tax (rit) affects your tax.