New Zealand’s tax system extends well beyond PAYE income tax. Employers, investors, business owners, and people with overseas income all face additional tax obligations that many New Zealanders are unaware of until they receive a bill from IRD.
Fringe Benefit Tax (FBT)
FBT is paid by employers on non-cash benefits provided to employees. The most common fringe benefit in New Zealand is a company car — if an employer provides a vehicle for private use, FBT applies. Other benefits subject to FBT include subsidised loans, car parking in CBDs, employer contributions to friendly societies, and certain gifts.
FBT is calculated at a flat rate of 63.93% on the taxable value of the benefit (for employees on the top marginal rate), making it one of NZ’s more complex tax obligations for employers. Many employers pass the FBT cost on by grossing up salaries, while others pay it themselves. Understanding FBT matters whether you’re an employer offering perks, or an employee negotiating a salary package that includes non-cash benefits.
Resident Withholding Tax (RWT)
When you earn interest from a bank deposit or dividends from a company, the payer deducts Resident Withholding Tax before paying you. RWT rates for interest range from 10.5% to 39% depending on your income. Getting your RWT rate right prevents underpayment (and a tax bill at the end of the year) or overpayment.
Overseas Income
New Zealand tax residents are taxed on worldwide income. This catches many people off guard — a NZ resident receiving dividends from overseas shares, rental income from a property abroad, or salary earned while working in another country must declare that income to IRD. Foreign tax credits may apply to reduce double taxation, but the rules are specific and require careful handling.
Inheritance and Donations
New Zealand abolished estate duty (inheritance tax) in 1992. There is no inheritance tax in New Zealand. However, certain tax issues can arise when someone dies — including income earned before death, depreciation recovery on business assets, and trust distributions. On the giving side, donations to approved charities generate a 33.33% tax credit, meaning IRD effectively subsidises a third of your charitable giving.
Guides in This Section
- Fringe Benefit Tax (FBT) Guide NZ — when FBT applies, rates, and how employers calculate it
- Resident Withholding Tax (RWT) — how RWT works on interest and dividends
- Overseas Income and NZ Tax — what NZ residents must declare and how foreign tax credits work
- Inheritance Tax NZ — Does NZ Have One? — no estate duty since 1992, and what tax does arise when someone dies
- Charitable Donation Tax Credits NZ — the 33.33% credit, approved donees, payroll giving, how to claim