Schedular payments and tax rates

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Forums › Finance and wealth management › Schedular payments and tax rates

blackjack17

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#281061 27-Jan-2021 16:49

So I had to fill out an ir330c for some contract work I do and I noticed when having to select a tax rate that there is a massive range of tax rates based on what type of contract work you do.

From 10.5% for home help, 15% for being a guard, 20% for modeling to 33% for being an examiner.

https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir300---ir399/ir330c/ir330c-2019.pdf

I thought one of the advantages of the NZ tax system is that it is relatively simple.

Does anyone know why these different rates exist?

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antoniosk

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#2643138 27-Jan-2021 16:53

When you first complete the declaration, unless you’re really familiar with your personal situation it can be quite complicated to settle on a right that’s fair and reasonable. So the table is more of a guy to help you pick out a fault initial rate until you actually start earning and actually can settle what should be a more appropriate rate.

It’s also designed to guide people so they don’t trying to default to the lowest possible tax rate thinking that’s the right thing to do, instead settling on something that’s more appropriate that what’s likely to apply ongoing.

________

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surfisup1000

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#2643141 27-Jan-2021 16:58

My theory is that these rates are 'guess' at what your tax rate might be using IRD industry averages.

So , just choose your category. At the end of the tax year, you'll file an IR3 which makes an adjustment depending your actual income.

blackjack17

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#2643147 27-Jan-2021 17:08

surfisup1000:

My theory is that these rates are 'guess' at what your tax rate might be using IRD industry averages.

So , just choose your category. At the end of the tax year, you'll file an IR3 which makes an adjustment depending your actual income.

So at the end of the day people will still get taxed at the 10.5% / 17.5% / 30% / 33% tax rates on their income?

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cshwone

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#2643170 27-Jan-2021 17:54

blackjack17:
surfisup1000:

My theory is that these rates are 'guess' at what your tax rate might be using IRD industry averages.

So , just choose your category. At the end of the tax year, you'll file an IR3 which makes an adjustment depending your actual income.

So at the end of the day people will still get taxed at the 10.5% / 17.5% / 30% / 33% tax rates on their income?

At the end of the FY you're reconciled for tax against your total income.

My wife has two jobs. First is taxed at PAYE rates. The second is taxed at 30% .At the end of the year we get a big rebate as her total for the year doesn't take her into the 30% bracket.

So the tables above are only good for an initial assessment for your primary employment