In New Zealand, your employer takes PAYE tax from your salary or wages before they pay you. They pay it to Inland Revenue (IRD) on your behalf, so the money that lands in your bank account is taxed income. Money invested in New Zealand is also generally taxed before you receive it (e.g. interest paid in a bank account, and money in your KiwiSaver account).
The IRD works out how much tax you have to pay automatically, based on your personal tax rate.
Sometimes you might receive income from other places, like a cash job or dividends from your overseas investments (like your Hatch shares). In these situations, no one has paid tax to the IRD before you get the money, so you may need to do it. This is called ‘untaxed income’.
Income that’s taxed before you receive it
Income that you may need to pay tax on after you receive it
The good news is that the IRD won’t make you file an IR3 form or pay tax if you receive less than $200 of this ‘untaxed’ income during the tax year (1 April to 31 March). But for larger amounts, they expect you to pay tax, just like you do on all the other income you earn. After all, it’s what funds our roads, hospitals and schools.
If you do earn more than $200 NZD in untaxed income, the process is very simple. You just need to file an individual tax return (IR3). The IRD and Hatch make this very easy. Just copy the numbers from your Hatch Tax Report (which will appear in your account after 31 March) into the IR3 form - we have a guide to help you fill it out.