New Zealand Payroll Information

Updated on: 2025/08/07 09:55 (UTC)

Overview

New Zealand is an island country located to the southeast of Australia in the Pacific Ocean, and is separated from Australia by the Tasman Sea, with about 1,600 kilometers of distance between the two countries at their closest points to each other. The two principal islands of New Zealand, which by far are the country’s largest, are North Island (Te Ika-a-Maui, in the Maori language) and South Island (Te Waipounamu, in Maori). Among New Zealand’s other populated islands are Stewart Island (Rakiura in Maori), which is separated from South Island by the Foveaux Strait, and the Chatham Islands (Rekohu in the Moriori language), which are located about 770 kilometers to the southeast of New Zealand’s capital of Wellington at their closest point to the mainland. The government of New Zealand is a constitutional monarchy with an elected parliament.

New Zealand consists of 15 regions, one of which sometimes is classified as two separate regions. The nine regions on North Island are Auckland, Bay of Plenty, Gisborne, Hawke’s Bay, Manawatu-Wanganui (Whanganui-Manawatu), Northland, Taranaki, Waikato, and Wellington. The six regions on South Island are Canterbury, Marlborough, Otago, Southland, Tasman/Nelson, and West Coast, and Tasman/Nelson sometimes is referred to as separate regions of Tasman and Nelson, for a total of seven regions on South Island. Stewart Island is part of the Region of Southland. The Chatham Islands, while part of New Zealand, are not part of one of the country’s regions.

The primary written and spoken language used in New Zealand is the English language, which along with Maori are the country’s official languages. The writing system for the Maori language, which is used by about 3.5% of the population, is an alphabetic writing system with Latin script that includes 13 letters of the English alphabet (a, e, h, i, k, m, n, o, p, r, t, u, and w), plus two letters that are digraphs formed from two other letters (ng and wh). The directionality that is used for written Maori text, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom. In Maori, the country of New Zealand is known as Aotearoa.

New Zealand’s currency is the New Zealand dollar.

Employers in New Zealand are responsible for withholding income taxes, social taxes, and fringe benefit taxes from employee pay and benefits. Employers must also make employer mandated social tax contributions and pay the Employer Superannuation Contribution Tax. In addition, employers must uphold New Zealand compensation and benefits laws.

Foreign workers in New Zealand generally are subject to the same tax and labor laws, although there are several exemptions. Employers in New Zealand must ensure that all foreign workers in their employ have the proper visas to work legally in New Zealand.

New Zealand residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

News articles regarding payroll in New Zealand are available in

CURRENCY DETAILS

The currency of New Zealand is the New Zealand Dollar (NZ$), known in Maori as the Aotearoa taara. The internationally recognized three-letter currency code for the New Zealand dollar is NZD. The plural form of New Zealand dollar is New Zealand dollars, and the plural form of Aotearoa taara is the same as its singular form, although the Maori word for “the” varies based on whether the singular or plural is used, with “the New Zealand dollar” rendered as “te Aotearoa taara” and “the New Zealand dollars” rendered as “nga Aotearoa taara.”

When an amount of New Zealand dollars is written using the currency symbol NZ$ or the variant $NZ to distinguish New Zealand dollars from other dollar currencies, and when New Zealand documents use the general dollar currency symbol $ to refer to New Zealand dollars, the symbol precedes the numerical value with no space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a New Zealand dollar is referred to as a cent in both English and Maori, with the English plural form of cents and with “nga cent” in Maori referring to “the cents.”

Digital Currencies: New Zealand does not consider digital currencies to be legal tender, in that they are not required be accepted as a means of payment but are not prohibited, according to guidance from the New Zealand government.

The Inland Revenue Department of New Zealand treats digital currencies like foreign currencies for tax purposes.

Effective starting Sept. 1, 2019, payments to employees in cryptocurrencies that are directly convertible into or pegged to a fiat currency and that after distribution to employees are not subject to a period in which they cannot convert or sell the cryptocurrency are considered income subject to income tax withholding. Payments in cryptocurrencies that are not subject to income tax withholding are subject to Fringe Benefit Tax. If an arrangement to pay employees in cryptocurrency does not value the payment in terms of New Zealand dollars, the value of the payment must be converted to New Zealand dollars as of the date it is made to the employee.

TAXES

The national government of New Zealand enacts laws relating to income taxes, fringe benefits taxes, and Superannuation Contribution Taxes (ESCT), all of which are administered by the Inland Revenue Department (IRD). Employers must withhold social tax contributions and make additional social tax contributions to the Accident Compensation Corporation.

The government also provides a payroll subsidy to assist employers with up to five employees in covering payroll administration costs. The subsidy is set at NZ$2 per employee, per payday.

New Zealand’s tax year spans from April 1 to March 31.

Coronavirus (Covid-19) Guidance: Individuals who cannot leave New Zealand because of travel restrictions are not considered to have met the 183-day threshold to become a resident, should they pass the threshold during their stay and leave within a reasonable amount of time after restrictions are lifted. Similarly, days during which individuals who intend to leave New Zealand cannot leave because of travel restrictions count towards the 325-day threshold for becoming a nonresident.

Employees who are receiving one of New Zealand’s wage-replacement subsidies through their employer may apply to the Inland Revenue Department to stop KiwiSaver contributions, generally for at least three months and up to one year, and generally if they have made contributions for at least one year. The department notifies the employer and employee of successful applications.

Income Taxes

Coverage: All employers who employ at least one employee generally must register as an employer, withhold income taxes from employees, and remit income taxes withheld under New Zealand’s Pay as You Earn (PAYE) system, administered by the Inland Revenue Department (IRD).

The term PAYE often is used in New Zealand to collectively refer to the sum of income tax withheld from employment income and the Accident Compensation Corporation earners’ levy withheld from employment income, and alternatively, the term PAYE sometimes is used in the country to refer to income tax withheld from employment income without also referring to the ACC earners’ levy.

New Zealand tax residents generally are taxed on their worldwide income while nonresidents generally are only taxed on their New Zealand-sourced income. Individuals generally are considered tax residents of New Zealand if they reside in New Zealand for 183 days in any 12-month period or have an “enduring relationship” with New Zealand. Former tax residents are still considered tax residents until they have been out of New Zealand for 325 days in any 12 month period and have stopped having an enduring relationship with New Zealand.

Different rates and withholding methods apply to workers in certain industries, such as casual agricultural, fishers, labor-only contracts in the building industry, shearers, shed-hands, shearing contractors, and musicians. Alternate rates also apply for commission agents and salespeople, directors, piece-workers, primary and secondary school children, recognized seasonal workers, shareholder-employees in close companies, subsidized workers and workers engaged in “activity in the community” project, as described on the IRD website.

Individuals generally are considered covered employees subject to income tax withholding from their employment income if they:

• are in a dependent employment relationship;
• are paid at a set rate;
• work set hours in a day, per week or per month;
• have someone else setting standards for the amount and quality of their work; or
• are under an employment contract.

Rates and Thresholds: Income tax rates are levied on a progressive scale, with rates ranging from 10.5% to 33%. In New Zealand’s progressive income tax system, portions of an individual’s income are allocated to New Zealand’s personal income tax brackets, and each portion of income allocated to a tax bracket is taxed at the tax rate applicable to that tax bracket.

Effective from April 1, 2021, to March 31, 2022, New Zealand’s personal income tax rates for residents and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Tax-Year Income (New Zealand Dollars)	Income Tax Rate
Up to NZ$14,000	10.5%
More than NZ$14,000 and up to NZ$48,000	17.5%
More than NZ$48,000 and up to NZ$70,000	30%
More than NZ$70,000 and up to NZ$180,000	33%
More than NZ$180,000	39%

Effective from April 1, 2020, to March 31, 2021, unchanged from April 1, 2019 to March 31, 2020, New Zealand’s personal income tax rates for residents and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Tax-Year Income (New Zealand Dollars)	Income Tax Rate
Up to NZ$14,000	10.5%
More than NZ$14,000 and up to NZ$48,000	17.5%
More than NZ$48,000 and up to NZ$70,000	30%
More than NZ$70,000	33%

The number of brackets for withholding from employment income and ranges of income for each tax bracket, as indicated in New Zealand’s PAYE deduction tables, differ from the aforementioned set of personal income tax brackets generally applicable to overall employment income. More information on New Zealand’s PAYE deductions tables is available in the Withholding Methods subsection below.

Registration: In order to register as an employer with IRD, employers must obtain an IRD number by filing Form IR334, Employer Registration, or by filing the electronic equivalent of Form IR334 using IRD’s Register As An Employer online feature. Additionally, companies can automatically register for an IRD number when they register their company with the New Zealand Companies Office, which they must do to reserve a company name.

Taxable Amounts: Taxable income includes normal wages, holiday pay, bonuses, allowances, and special benefits paid to employees such as loss of earnings compensation or life insurance premiums.

Withholding Methods: Employees earning salary or wages must provide their employers with a completed Form IR330, Tax Code Declaration, when they start working. Employees who fail to fully complete or submit the IR330 are assessed the no-notification income tax withholding rate of 45% instead of having their income withheld in accordance with progressive income taxation.

When determining the correct amount of income tax to withhold, employers should use the applicable PAYE deduction tables based on employees’ pay periods. Form IR340, Weekly and Fortnightly PAYE Deduction Tables, and Form IR341, Four-Weekly and Monthly PAYE Deduction Tables, include employment income withholding tables for the combination of income tax and KiwiSaver contributions, with compulsory employer contributions (CECs) and employer superannuation contribution tax (ESCT) based on employee income also indicated. Each Form IR340 and Form IR341 is for a tax year from April 1 to March 31.

The 2021-22 Form IR340 and 2021-22 Form IR341, and the 2020-21 Form IR340 and 2020-21 Form IR341, were issued by the IRD.

Employers are required to withhold additional amounts if employees have outstanding student loans or must make child support payments. Employers should withhold the additional amounts from an employee based on the employee’s Form IR330 or if given instructions to do so by the IRD.

Employers of employees who choose to donate to a government-approved charitable organization through a payroll-giving program must deduct the donation amounts from these employees’ wages and reduce the overall income tax withheld (gross PAYE) from their wages by a payroll-giving tax credit. An employee’s payroll-giving tax credit applicable to a pay period is equivalent to ¹ ⁄ ₃ of the amount for that pay period that the employee donated through a payroll-giving program.

Returns and Remittance: Effective since April 1, 2019, New Zealand requires employers, on or close to each day when they paid employees, to report to the Inland Revenue Department data regarding the payments to employees and taxes deducted from the payments. This payroll data reporting regime is known as payday filing.

Employers are required to complete payday filing electronically if their total annual PAYE and total annual employer superannuation contribution tax (ESCT) is at least NZ$50,000, with total annual PAYE defined as total annual income tax withheld from employment income plus total annual Accident Compensation Corporation earners’ levies withheld from employment income.

The deadline to complete payday filing in connection with a payment to an employee generally is two working days after the date the payment was made. However, the due date for employers that are not required to complete payday filing electronically and that choose to instead file by paper is 10 working days after the date the payment was made, or, if the employer receives permission from the IRD to report payroll data in accordance with a fixed semimonthly schedule, 10 working days after the 15th day of each month and 10 working days after the last day of each month. If the due date for payday filing were to be on a weekend or public holiday, the filing date would be the next working day.

Employers complete payday filing using the Employment Information (EI) report, whose use replaced the use of Form IR348, Employer Monthly Schedule. Employers must file EI reports through using the My Business section of the myIR online filing portal.

The last Form IR348, which reported data for March 2019, was due April 5, 2019.

Use of Form IR345, Employer Deductions, also was eliminated with the introduction of payday filing. The form was required to be filed by employers in conjunction with each of their payments to the government of amounts withheld from employees’ income and amounts of employer payroll-related contributions.

The schedule by which employers must pay to the government amounts withheld from employees’ income and amounts of employer payroll-related contributions that are due to the government is dependent on whether their total annual PAYE and total annual ESCT during the previous tax year from April 1 to March 31, or during the current tax year if this is their first year of operation, is at least NZ$500,000. The definition of PAYE used for this threshold is the same as the definition of PAYE for determining whether employers must complete payday filing electronically.

Employers that during the previous tax year had total annual PAYE plus total annual ESCT of at least NZ$500,000, and employers that during their first year of operation have total annual PAYE plus total annual ESCT of at least NZ$500,000, must make payroll-related payments to the government on a semimonthly basis. With regard to taxes based on salary paid between the 1st and the 15th days of a month, these employers must remit the taxes to the government by the 20th day of that month. With regard taxes based on salary paid between the 16th and last days of a month, these employers must remit the taxes to the government by the 5th day of the following month, except taxes based on salary paid between Dec. 16 and Dec. 31 of a year must be remitted to the government by Jan. 15 of the following year.

Employers that during the previous tax year had total annual PAYE plus total annual ESCT of less than NZ$500,000, and employers that during their first year of operation have total annual PAYE plus total annual ESCT of less than NZ$500,000, must make payroll-related payments to the government on a monthly basis, with taxes based on payments made to employees during a month due to the government by the 20th day of the following month.

Payments of outstanding student loan payments that are withheld from employees’ wages are submitted along with income tax payments at the rates identified in the PAYE Deduction Tables.

If the due date for a payment falls on a weekend or public holiday, employers may make payments by the next working day without incurring a penalty.

Recordkeeping: Tax records, including wagebook information, PAYE payment receipts, completed IR330 forms, and letters from IRD generally must be kept for a minimum of seven years.

Employee Share Schemes: Shares offered to employees are taxable under New Zealand’s income tax and are subject to income tax withholding based on the difference between the market value of the shares and the amount the employee paid for them, if any. The taxable value of the employee share scheme benefit must be included for each employee on the Employment Information report.

The employee share scheme benefits must be listed separately from the employee’s other earnings on the report. The employer may choose whether or not to withhold tax from employee share scheme benefits provided to an employee, but if it does not, the employee is responsible for paying the tax as part of the individual filing process.

Penalties: Employers that fail to correctly or timely file reports and payments are subject to penalties as follows:

• late tax returns are subject to a penalty of NZ$250 per late monthly schedule;
• employers that must file Employment Information (EI) reports electronically and that instead file them by paper are subject to a penalty of NZ$1 multiplied by their number of employees, or NZ$250, whichever is greater;
• employers that fail to timely remit income tax withheld are charged a late payment penalty of 1% of taxes due for required payments of at least NZ$100. An additional penalty of 4% applies to payments that are more than seven days overdue. An additional penalty of 1% is added for every month of delinquency;
• tax payments that are less than the tax due are subject to a penalty of between 20% and 150% of taxes outstanding, a prison term of up to five years, or both; and
• failure to withhold taxes or remit income tax withheld is subject to a fine of between NZ$25,000 and NZ$50,000, a prison term of up to five years, or both.

Social Taxes

Coverage: All employees, including shareholder-employees, generally are covered by the Accident Compensation Corporation (abbreviated as ACC). Coverage includes an employer work account levy (abbreviated as EMP) and a working safer levy (abbreviated as WS), both of which are assessed on employers, and an earners’ levy, which is assessed on employees.

The employer work account levy, also simply know as the work levy, is remitted to the work account to fund replacement income for individuals who experienced work-related injuries and accidents. The working safer levy supports WorkSafe’s activities and injury prevention across the country. The earners’ levy is charged to cover the cost of rehabilitation and compensation following non-work related injuries.

Rates and Thresholds: The rates assessed for the three types of ACC levies are as follows:

• Employer work account levy: this levy is assessed on employers, and rates range from NZ$0.08 per NZ$100 paid to the employee to NZ$5.58 per NZ$100 paid to the employee, with rates varying among industry sectors based on the nature of business and risk of injury.
• Working safer levy: this levy is assessed on employers, with a rate of NZ$0.08 per NZ$100 paid to the employee.
• Earners’ levy: this levy is assessed on employees, with a rate of NZ$1.39 per NZ$100 paid to the employee, which includes a base rate of NZ$1.21 per NZ$100 paid to the employee and a goods and services tax (GST) of 15% of the base rate, which is NZ$0.18 per NZ$100 paid to the employee.

ACC levies are subject to a maximum computable salary, which is the maximum amount of wages paid to an employee or income earned by a self-employed individual during a period from April 1 to March 31 upon which the contributions may be assessed. The ACC maximum computable salary for employees usually is higher than the ACC maximum computable salary for self-employed individuals.

Effective from April 1, 2021, to March 31, 2022, unchanged from April 1, 2020, to March 31, 2021, the maximum computable salary for the ACC levies is NZ$130,911 for employees. Effective from April 1, 2019, to March 31, 2020, the maximum computable salary for the ACC levies was NZ$128,470 per year for employees.

The work levy rates for coverage by the Accident Compensation Corporation, effective for the period from April 1, 2021, to March 31, 2022, are available in the levy rates table within the 2021-2022 ACC levy guidebook. The work levy rates for coverage by the Accident Compensation Corporation, effective for the period from April 1, 2020, to March 31, 2021, are available in the levy rates table within the 2020-2021 ACC levy guidebook.

Registration: Employers must register to transact with the ACC by using the MyACC for Business online portal.

Taxable Amounts: Amounts subject to ACC levies include salary and wages; overtime, backpay, holiday pay, long service leave, bonuses or gratuities, and taxable allowances. Amounts that are not considered taxable income include retirement payments, redundancy payments, non-taxable allowances, rents, interest and dividends, estate and trust income, royalties, jury fees, witness fees, taxable and non-taxable pensions, and free or discounted shares received under an employee share scheme (also known as a share purchase agreement).

Returns and Remittance: The ACC generally sends employers an invoice in June, using employers’ tax returns to determine the applicable levies.

Payments are made for the entire year in advance, except for an employer’s first year of business, which is paid for at the end of that year. Employers generally must make payments within 30 days after the date of the invoice.

Payments of ACC levies can be made by credit card, Internet banking, direct debit, and the ACC’s MyACC for Business online portal.

Recordkeeping: Employers generally should keep records for at least four years.

Penalties: Late payments are assessed a 1% interest rate on taxes outstanding for each month of delinquency. Employers who have payments that are more than six months late may be assessed an additional 10% penalty on taxes outstanding for each six months of delinquency.

Other Taxes

KiwiSaver Contributions: All employers must withhold and contribute to the KiwiSaver retirement system for employees who are covered by KiwiSaver. The system is overseen by the Inland Revenue Department (IRD).

Coverage: Employees who are at least 18 years of age generally are automatically enrolled in KiwiSaver if they are eligible for the program based on their degree of presence in New Zealand, although they may choose to opt out of the program. Employees are eligible for KiwiSaver based on their presence in New Zealand if they live in the country, normally live in the country, are a citizen of New Zealand, or are not a citizen but are otherwise entitled to indefinitely reside in New Zealand. Some employees are eligible for KiwiSaver but are exempt from automatic enrollment and may voluntarily enroll in the program, including temporary and casual employees. Employees who are ineligible for KiwiSaver, or who if eligible must enroll themselves as self-employed individuals, include employees who are in the country through using work permits or visas, independent contractors, and some shareholder-employees.

Employers are required to provide new employees within seven days of starting work with Publication KS3, Your Introduction to KiwiSaver Employee Information.

Rates and Thresholds: Employers must withhold KiwiSaver contributions from employment income paid to employees covered by KiwiSaver. The KiwiSaver contribution withholding rate applicable to an employee’s gross salary generally is the rate the employee indicated on the employee’s Form KS2, KiwiSaver Deduction Form. Employees are required to choose a KiwiSaver contribution rate of 3%, 4%, 6%, 8%, or 10% of their gross salary. The options to select a KiwiSaver contribution rate of 6% or 10% have been available since April 1, 2019. When employees fail to choose a contribution rate, employers must make deductions at the default rate of 3%.

An employee may change his or her chosen KiwiSaver contribution rate after he or she has been assessed that rate for at least three months. Employees who have contributed to KiwiSaver for at least 12 months may choose to cease their KiwiSaver contributions for a period of three to 12 months through a savings suspension. To acquire a savings suspension, employees must apply via My KiwiSaver for the savings suspension and if the IRD approves the savings suspension, the employee receives a savings suspension notice. An employee must provide the savings suspension notice to the employer for the savings suspension to start.

For each employee, employers generally are required to pay a compulsory employer contribution (CEC) equivalent to 3% of the employee’s gross salary into the employee’s KiwiSaver account. Employers are not required to pay this contribution for employees who are younger than 18 years of age or more than 65 years of age. Employers also are not required to pay this contribution for an employee who receives retirement contributions from the employer that are paid into a retirement account other than a KiwiSaver account if those contributions are at least the amounts of the compulsory employer contributions that the employer would have been required to pay into a KiwiSaver account for the employee. Employers additionally are not required to pay a compulsory employer contribution for an employee who has a savings suspension in effect.

Separately, employers are assessed an employer superannuation contribution tax (ESCT) on each compulsory employer contribution amount they pay into an employee’s KiwiSaver or other retirement account, with more information about this tax available in the Employer Superannuation Contribution Tax subsection of this primer.

There is no maximum amount of employment income upon which the employee and employer KiwiSaver contribution rates are assessed.

Taxable Wages: Amounts subject to KiwiSaver contributions include bonuses, commission, extra salary gratuity, overtime, and any other remuneration of any kind before tax e.g., ACC or paid parental leave (PPL) payments. Amounts that are not subject to contributions include redundancy payments, the value of providing; board or lodging, use of a house or part of a house, or the payment of an allowance instead of the provision of the benefit; expenditure or allowances for accommodation and living costs overseas, free or discounted shares received under an employee share scheme (also known as a share purchase agreement), and payments under a Voluntary Bonding scheme funded by the Ministry for Primary Industries, the Ministry of Health, or the Ministry of Education.

Registration: Employers must register employees using the Form KS1, KiwiSaver Employee Details, which can be submitted online or manually. The Form KS1 for an employee must be submitted by the next due date for the Employer Information report.

Employers do not need to register employees or file Form KS1 for them if they already are enrolled in the KiwiSaver program.

Employees who were automatically enrolled in KiwiSaver may choose to opt out of the KiwiSaver program by submitting Form KS10, Opt-Out Request, to their employer or filing it online by their eighth week of employment but not before their second week of employment. Employees who have voluntarily chosen to join KiwiSaver cannot opt out of the program, although they may apply for a savings suspension to take effect. Employers are entitled to a refund of their compulsory employer contributions made to an employee’s account if the employee opts out of KiwiSaver during the applicable opt-out period. Upon receiving an employee’s Form KS10, the employer must stop withholding KiwiSaver contributions and making compulsory employer contributions. Employers must submit a copy of Form KS10 to IRD when filing the following Employer Information report if employees submitted a physical copy to them.

An employee’s KiwiSaver account is managed by a KiwiSaver scheme provider, and the employee’s provider by default is the employer’s chosen scheme provider. If the employer did not choose a scheme provider, the employee would be enrolled in a default scheme provider determined by IRD. Employees may choose from among the IRD’s list of KiwiSaver scheme providers a scheme provider other than the employer’s choice or the IRD-assigned default to be their scheme provider.

Returns and Remittance: Employers are required to make KiwiSaver payments and returns along with their income tax payments and returns.

Recordkeeping: Employers should keep completed KS2 forms along with a record of employees contribution rate, deducted amounts, compulsory and voluntary employer contributions, holiday and leave records, notifications of contributions holidays, opt-out requests, and the amount of employer superannuation contribution tax (ESCT) withheld from employer cash contributions for at least seven years.

Penalties: Employers who fail to correctly file returns and payments are subject to the following penalties:

• late tax returns are subject to a monthly penalty of NZ$50 for small employers, and NZ$250 for large employers;
• failure to remit income tax withheld on time are charged a 1% late payment penalty on taxes due, for payments of NZ$100 or more. An additional 4% penalty applies to payments that are more than seven days overdue. An additional 1% penalty is added for every month of delinquency;
• tax payments that are less than tax due are subject to a penalty of between 20 and 150% of taxes outstanding; and
• failure to withhold taxes or remit income tax withheld are subject to a fine of between NZ$25,000 and NZ$50,000 and/or a prison term of up to five years.

Employer Superannuation Contribution Tax (ESCT): Employers must withhold ESCT from the contributions that they pay into an employee’s retirement account. Employer superannuation contributions cover any cash contribution to a superannuation fund that was paid by the employer for the employee’s benefit, including KiwiSaver contributions and contributions to employee retirement funds outside the KiwiSaver program.

The ESCT rate applicable to an employer superannuation contribution paid into an employee’s retirement account is determined through either of two methods: calculating an ESCT rate threshold and using the ESCT rate associated with the income range among four progressive ranges that includes that threshold, or treating the employer superannuation contribution as part of the employee’s gross employment income and taxing the total amount under standard income tax withholding and ACC levy rules.

An employee’s ESCT rate threshold applicable to a tax year generally is calculated by adding the employee’s total employment income other than employer superannuation contributions paid to the employee during the previous tax year to the employer superannuation contributions paid by the employer during the previous tax year into that employee’s retirement account. If the employee did not work for the full previous tax year, the employer calculates the employee’s ESCT rate threshold for the current tax year by adding its estimate of the total employment income other than employer superannuation contributions that it will pay to the employee for the current tax year to its estimate of the total employer superannuation contributions it will pay into the employee’s retirement account during the current tax year. After the employer has determined an employee’s ESCT rate threshold for a tax year, the ESCT rate threshold must not be adjusted until a new tax year starts. The ESCT rate applicable to an employer’s superannuation contributions to an employee based on the employee’s ESCT rate threshold is as follows:

• employee’s ESCT rate threshold is up to NZ$16,800, ESCT rate applicable to employer’s superannuation contributions for that employee is 10.5%;
• employee’s ESCT rate threshold is more than NZ$16,800 and up to NZ$57,600, ESCT rate applicable to employer’s superannuation contributions for that employee is 17.5%;
• employee’s ESCT rate threshold is more than NZ$57,600 and up to NZ$84,000, ESCT rate applicable to employer’s superannuation contributions for that employee is 30%;
• effective starting April 1, 2021, employee’s ESCT rate threshold is more than NZ$84,000 and up to NZ$216,000, ESCT rate applicable to employer’s superannuation contributions for that employee is 33%; and
• effective starting April 1, 2021, employee’s ESCT rate threshold is more than NZ$216,000, ESCT rate applicable to employer’s superannuation contributions for that employee is 39%.

Effective until March 31, 2021, the 33% contribution rate applied to all rate thresholds of more than NZ$84,000.

An employer alternatively may treat its superannuation contributions for an employee as part of the employee’s total employment income and withhold income tax and ACC earners’ levies from the total if the employee agrees to this tax treatment. The employee at any time may inform the employer that he or she chooses to end this tax treatment and have the employer superannuation contributions taxed under the ESCT rate threshold method.

Employers report ESCT payment data as part of the Employment Information reports they submit for payday filing, as described in the Income Taxes section of this primer.

Fringe Benefit Tax (FBT): The Fringe Benefit Tax (FBT), which is payable by employers, is a tax on benefits that employees receive as a result of their employment, including those benefits provided through someone other than an employer. Benefits include the provision of a motor vehicle for use by employees, provision of a loan as a result of an employee’s employment, provision of goods and services, subsidized transport, contribution to funds, insurance, annuation funds, and other benefits. The IRD provides three FBT rates as follows:

• Single rate: effective starting April 1, 2021, the single rate is 63.93% of all fringe benefits provided. This rate covers employees with annual income of at least NZ$180,000. Effective until March 31, 2021, the single rate was 49.25% of all fringe benefits provided, and this rate covered employees with annual income of at least NZ$70,000.
• Short form alternate rate: effective starting April 1, 2021, the short form alternate rate is 63.93% for all attributed benefits and for non-attributed benefits provided to major shareholders, or 49.25% for other non-attributed benefits. This rate covers employees with annual income less than NZ$180,000. Effective until March 31, 2021, the short form alternate rate was 49.25%, or 42.86% for non-attributed benefits, and this rate covered employees with annual income less than NZ$70,000.
• Full alternate rate: the full alternate rate only applies to attributed benefits. Effective starting April 1, 2021, employees with annual fringe benefits of up to NZ$12,530 are subject to FBT at a rate of 11.73%, employees with annual fringe benefits of more than NZ$12,530 and up to NZ$40,580 are subject to FBT at a rate of 21.21%, employees with annual fringe benefit of more than NZ$40,580 and up to NZ$55,980 are subject to FBT at a rate of 42.86%, employees with annual fringe benefits of more than NZ$55,980 and up to NZ$129,680 are subject to FBT at a rate of 49.25%, and employees with annual fringe benefits of more than NZ$129,680 are subject to FBT at a rate of 63.93%. Effective until March 31, 2021, the 49.25% rate applied to all annual fringe benefits of more than NZ$55,980. These rates are independently applied to each layer of an employee’s fringe benefit, as each portion of the total annual fringe benefit that corresponds to one of the aforementioned ranges is taxed at the aforementioned rate applicable to that range.

Attributed benefits refer to fringe benefits assigned to an individual employee that can only be used or enjoyed by that employee, e.g., a monthly bus pass, while non-attributed benefits refer to pooled or shared fringe benefits that are not assigned to an individual employee, e.g., a work motor vehicle that all employees can use. Depending on employers’ annual revenues, employers should file returns quarterly with Form IR420, Fringe Benefit Tax Quarterly Return, or yearly with Form IR422, Fringe Benefit Ordinary Employee Annual Tax Return.

State/Jurisdiction Taxes

Taxes on employment income are not assessed by any of New Zealand’s regions or local jurisdictions.

COMPENSATION AND BENEFITS

Employers in New Zealand are responsible for upholding minimum wage, hours of work, holidays, leave, wage payment, worker’s compensation, and recordkeeping provisions.

New Zealand does not require overtime pay or termination pay unless otherwise stipulated through an agreement.

Employers must withhold employee pay and make additional contributions to the KiwiSaver retirement plan, which is administered by the Inland Revenue Department (IRD).

The applicable labor laws in New Zealand include the Holidays Act of 2003, KiwiSaver Act of 2006, and Wage Protection Act of 1983. Their application is overseen by the Ministry of Labor and the Inland Revenue Department.

Coronavirus (Covid-19) Guidance: New Zealand is operating two active wage-replacement subsidy programs. Employers may only receive one subsidy per employee. Since Aug. 24, 2021, the amount of all subsidies is in general NZ$600 per week for employees working at least 20 hours per week, or NZ$359 per week for employees working fewer than 20 hours per week. Until Aug. 23, 2021, the amount of all subsidies was NZ$585.50 per week for employees working at least 20 hours per week, or NZ$350 per week for employees working fewer than 20 hours per week. Employers receiving a subsidy must attempt to pay affected employees at least 80% of their normal wages, or if that is impossible, at least the amount of the subsidy.

Covid-19 Leave Support Scheme: This program provides four weeks of payments to employers that have employees who cannot work from home and are prevented from coming to their workplace because of official guidelines. Until Aug. 21, 2020, the employer also had to meet the financial requirements for the Covid-19 Wage Subsidy to apply. To be eligible for this program, employees must be recommended to self-isolate by official guidelines while public health restrictions are in place because they or a household member are in a high-risk group for Covid-19; must self-isolate because they came into contact with someone who has Covid-19; or must self-isolate because they tested positive for Covid-19. Starting Feb. 9, 2021, employers are also to be provided with one-off payments at the rate of a part-time employee subsidy for employees who cannot work from home but must stay at home while awaiting the result of a Covid-19 test.

Covid-19 Wage Subsidy: This program provided 12 weeks of payments to employers that suffered a decrease in income of 30% over a period of a month or 30 days, compared to the same month or 30 days of 2019. Applications for this program ended June 10, 2020, but from June 10 to Sept. 1, 2020, employers may apply for an eight-week extension once an employee’s initial 12-week period ends. To apply for an extension, the employer must have had at least a 40% decrease in income for a 30-day period in the 40 days before the employer applies and compared to an equivalent period in 2019. This program is to restart if Covid-19 restrictions are increased to Level 3 or Level 4 anywhere in New Zealand for at least seven days.

A variation of this program, known as Covid-19 Wage Subsidy August 2021, provides two weeks of payments to employers that suffer a decrease in income of 40% over defined 14-day periods starting in August 2021, compared to a 14-day period in the six weeks before New Zealand’s Covid-19 restrictions increased to Level 4 Aug. 17, 2021.

Resurgence Wage Subsidy: From Aug. 21 to Sept. 3, 2020, employers not receiving another subsidy for an employee could apply for a two-week Resurgence Wage Subsidy if their income decreased by at least 40% because of the pandemic over a 14-day period from Aug. 12 to Sept. 10, 2020, compared to an equivalent period of 2019. This program is to restart if Covid-19 restrictions are increased to Level 2 anywhere in New Zealand for at least seven days, and was reopened from March 4-21, 2021.

New Zealand reopened the Resurgence Wage Subsidy on Aug. 24, 2021, seven days after New Zealand’s Covid-19 alert level increased. Businesses that experience a 30% decline in revenue because of the increased alert level are eligible for a Resurgence Wage Subsidy. The program will close when the Covid-19 alert level returns to Level 1 or when the country’s Covid-19 protocol framework goes to Orange or Green.

Since Nov. 12, 2021, payments under this program are made every two weeks and the amounts are NZ$3,000 plus NZ$800 for each full-time employee for up to 50 employees. Until Nov. 11, 2021, payments were NZ$1,500 plus NZ$400 for each full-time employee for up to 50 employees.

Reimbursements related to work from home: Effective from March 17, 2020 to March 31, 2023, employers may make income tax-free reimbursements of up to NZ$15 per week to employees for expenses related to working from home and of up to NZ$5 per week to employees for expenses related to employees’ telecommunication-plan costs. Employers may also make income tax-free reimbursements of up to NZ$400 for expenses related to home office equipment with no additional requirements, or may make reimbursements of 25%, 75%, or 100% of the costs of home office equipment of up to NZ$1,000, for equipment purchased starting March 17, 2021, depending on to what degree the employee uses the equipment to perform work-related tasks. If the employer chooses the option to reimburse costs of home office equipment, it should keep evidence of the cost and the degree to which the equipment is used to perform work-related tasks. Effective for payments made starting Sept. 18, 2020, these measures apply to any employee working from home, even if work from home is not a direct result of the pandemic.

Minimum Wage

Standard minimum wage: New Zealand’s standard minimum wage applies to workers who are at least 20 years of age and who are not enrolled in an industry-recognized training program, as well as those between 16 and 19 who generally have completed at least six continuous months of employment.

Effective from April 1, 2021, to March 31, 2022, the standard minimum wage is NZ$20 per hour. Effective from April 1, 2020, to March 31, 2021, the standard minimum wage was NZ$18.90 per hour.

Effective from April 1, 2021, to March 31, 2022, employees subject to the standard minimum wage who are paid by the day were subject to a minimum wage of NZ$160 per day and NZ$20 per hour for each hour exceeding 8 hours worked by an employee during a day. Effective from April 1, 2020, to March 31, 2021, employees subject to the standard minimum wage in New Zealand who were paid by the day were subject to a minimum wage of NZ$151.20 per day and NZ$18.90 per hour for each hour exceeding 8 hours worked by an employee during a day.

Effective from April 1, 2021, to March 31, 2022, employees subject to the standard minimum wage who are paid by the week are subject to a weekly minimum wage of NZ$800 plus an additional NZ$20 per hour for each hour exceeding 40 hours worked by an employee during a week. Effective from April 1, 2020, to March 31, 2021, employees subject to the standard minimum wage in New Zealand who were paid by the week were subject to a weekly minimum wage of NZ$756 plus an additional NZ$18.90 per hour for each hour exceeding 40 hours worked by an employee during a week.

Effective from April 1, 2021, to March 31, 2022, employees subject to the standard minimum wage who are paid by the fortnight are subject to a minimum wage of NZ$1,600 per fortnight plus NZ$20 per hour for each hour exceeding 80 hours worked by a worker during a fortnight. Effective from April 1, 2020, to March 31, 2021, employees subject to the standard minimum wage who were paid by the fortnight were subject to a minimum wage of NZ$1,512 per fortnight plus NZ$18.90 per hour for each hour exceeding 80 hours worked by a worker during a fortnight.

Starting-out minimum wage and training minimum wage: The starting-out minimum wage and the training minimum wage generally apply to workers under 20 years old who have yet to work six continuous months of employment and to workers enrolled in an industry-recognized training program.

Effective from April 1, 2021, to March 31, 2022, the starting-out minimum wage and the training minimum wage both are NZ$16 per hour. Effective from April 1, 2020, to March 31, 2021, the starting-out minimum wage and the training minimum wage both were NZ$15.12 per hour.

Effective from April 1, 2021, to March 31, 2022, employees subject to the starting-out minimum wage and the training minimum wage who are paid by the day are subject to a minimum wage of NZ$128 per day and NZ$16 per hour for each hour exceeding 8 hours worked by an employee during a day. Effective from April 1, 2020, to March 31, 2021, employees subject to the starting-out minimum wage and the training minimum wage who were paid by the day were subject to a minimum wage of NZ$120.96 per day and NZ$15.12 per hour for each hour exceeding 8 hours worked by an employee during a day.

Effective from April 1, 2021, to March 31, 2022, employees subject to the starting-out minimum wage and the training minimum wage who are paid by the week are subject to a weekly minimum wage of NZ$640 plus an additional NZ$16 per hour for each hour exceeding 40 hours worked by an employee during a week. Effective from April 1, 2020, to March 31, 2021, employees subject to the starting-out minimum wage and the training minimum wage who were paid by the week were subject to a weekly minimum wage of NZ$604.80 plus an additional NZ$15.12 per hour for each hour exceeding 40 hours worked by an employee during a week.

Effective from April 1, 2021, to March 31, 2022, employees subject to the starting-out minimum wage and the training minimum wage who are paid by the fortnight are subject to a minimum wage of NZ$1,280 per fortnight plus NZ$16 per hour for each hour exceeding 80 hours worked by a worker during a fortnight. Effective from April 1, 2020, to March 31, 2021, employees subject to the starting-out minimum wage and the training minimum wage who were paid by the fortnight were subject to a minimum wage of NZ$1,209.60 per fortnight plus NZ$15.12 per hour for each hour exceeding 80 hours worked by a worker during a fortnight.

Overtime

New Zealand generally does not require employers to pay overtime pay unless specified in an agreement. However, work on public holidays must be paid at time and a half.

Hours of Work

The maximum workweek is 40 hours five days a week.

Employers must provide workers with breaks based on how long they work as follows:

• one 10 minute paid rest break for between two and four hours of work,
• one 10 minute paid rest break and one 30 minute unpaid meal break for between four and six hours of work, and
• two 10 minute paid rest breaks and one unpaid 30 minute unpaid meal break for between six and eight hours of work.

Employers generally must provide employees who have caring responsibilities with flexible working arrangements in regards to their hours of work, days of work, or place of work.

Holidays

The Holidays Act of 2003 specifies 11 mandatory paid public holidays.

Some of New Zealand’s paid public holidays have celebration dates that are subject to annual change, and Employment New Zealand issues yearly holiday calendars to account for the variations in celebration dates. New Zealand’s paid public holidays are as follows:

• Jan. 1: New Year’s Day
• Jan. 2: Day After New Year’s Day
• Feb. 6: Waitangi Day
• Good Friday
• Easter Monday
• April 25: Australian and New Zealand Army Corps (ANZAC) Day
• First Monday in June: Queen’s Birthday
• Fourth Monday in October: Labour Day
• Provincial Anniversary Day (varies among historical provincial locations)
• Dec. 25: Christmas Day
• Dec. 26: Boxing Day

A new public holiday, Matariki, is planned to be celebrated for the first time on June 24, 2022. The Matariki holiday is to be celebrated with paid leave on the closest Friday to the Tangaroa lunar calendar period of the correct lunar calendar month and falls in June or July.

If New Year’s Day occurs on a Saturday and Day After New Year’s Day occurs on a Sunday, the holidays generally are celebrated with paid leave on the following Monday and Tuesday. If New Year’s Day occurs on a Sunday, it instead would be celebrated with paid leave on Tuesday, Jan. 3, causing it to be celebrated following the celebration of Day After New Year’s Day on Jan. 2. If Day After New Year’s Day occurs on a Saturday, it instead would be celebrated with paid leave on Monday, Jan. 4. However, if employees usually are required to work on weekends and New Year’s Day or Day After New Year’s Day occurs during a weekend, the holiday is celebrated on the actual day of the holiday.

If Christmas Day occurs on a Saturday and Boxing Day occurs on a Sunday, the holidays generally are celebrated with paid leave on the following Monday and Tuesday. If Christmas Day occurs on a Sunday, it instead would be celebrated with paid leave on Tuesday, Dec. 27, causing it to be celebrated following the celebration of Boxing Day on Dec. 26. If Boxing Day occurs on a Saturday, it instead would be celebrated with paid leave on Monday, Dec. 28. However, if employees usually are required to work on weekends and Christmas Day or Boxing Day occurs during a weekend, the holiday is celebrated on the actual day of the holiday.

If during a year the date Feb. 6, Waitangi Day, is a Saturday or Sunday, the celebration of Waitangi Day with paid leave occurs the following Monday. If during a year the date April 25, ANZAC Day, is a Saturday or Sunday, the celebration of ANZAC Day with paid leave occurs the following Monday.

New Zealand’s provincial anniversary days recognize arrivals of settlers in 12 separate parts of the country that generally correspond to the borders of the country’s 10 former provinces, plus the areas of South Canterbury (the southern part of the former Canterbury Province) and the Chatham Islands. The approximate borders of the 12 separate parts, including the 10 historical provinces, South Canterbury, and the Chatham Islands, are indicated in a Map of New Zealand’s Approximate Historical Province Borders. The provincial anniversary day applicable to a New Zealand location is the provincial anniversary day for the historical province whose approximate borders would have included that location, with South Canterbury and the Chatham Islands considered historical provinces for this purpose. The paid-leave celebration days for the provincial anniversary days for each of the historical provinces are as follows:

• Auckland: Last Monday in January
• Canterbury: Fifth Friday Before Dec. 16
• Chatham Islands: Monday Closest to Nov. 30
• Hawke’s Bay: Friday Closest Before Labour Day
• Marlborough: Monday Closest After Labour Day
• Nelson: Monday Closest to Feb. 1
• Otago: Monday Closest to March 23
• South Canterbury: Fourth Monday in September
• Southland: Tuesday Closest After Easter Sunday
• Taranaki: Second Monday in March
• Wellington: Second-to-last Monday in January
• Westland: Monday Closest to Dec. 1

Exceptions to these celebration days are indicated in the anniversary day notes of Employment New Zealand’s holiday calendars.

Employers and employees may arrange for a paid day of leave on another day in lieu of the paid public holiday.

Leave

Full-time employees are entitled to four weeks of paid annual leave each year. The leave is granted on their first and subsequent anniversaries after starting work.

Sick leave: Effective July 24, 2021, employers must grant all employees 10 days of paid sick leave after their first six months of continuous employment, and must grant an additional 10 days of paid sick leave after every subsequent 12-month period of employment. Effective until July 23, 2021, the paid sick leave entitlement is five days.

Bereavement leave: After six months of employment, employers must grant all employees three days of paid bereavement leave in the case of the death of an employee’s spouse or partner, parent, child, sibling, grandparent, or grandchild. Effective starting March 31, 2021, leave must also be granted if an employee or their spouse suffers a miscarriage, including when the employee is a former spouse but was a biological parent of the child, and when the employee or spouse was planning to adopt a child or have a child through a surrogate but for a miscarriage.

For other deaths, up to one day of paid leave may be taken if the employer accepts that the employee is bereaved. Factors for deciding bereavement for other deaths include how close the association was between the employee and the other person, whether the employee is responsible for any aspects of the ceremonies regarding the death, and whether the employee has any cultural responsibilities to fulfil in respect of the death.

Paid parental leave: Effective since July 1, 2020, employers must grant female employees who gave birth to a child and employees of either gender who are adopting a child with 26 weeks of paid parental leave. The paid parental leave provision is paid for by the Inland Revenue Department to one parent at a time and may be transferred between parents.

Workplace injury leave: Employers must grant all employees injured while performing work-related duties with one week of paid leave, paying employees at least 80% of their normal wages during this period. After this one week period, the Accident Compensation Company will provide the employees with paid leave.

Domestic violence leave: Effective starting April 1, 2019, employees who are victims of domestic violence are able to claim up to 10 days of paid domestic violence leave in a 12-month period, and employees also are able to request that for up to two months, they may vary their hours, days, or place of work to help cope with the effects of being subject to domestic violence. To be eligible, employees must have worked for their employer for least six continuous months, or over a six-month period, worked at least an average of 10 hours during that period and no less than 1 hour in every week or no less than 40 hours in every month during that period.

Volunteer defense force leave: Employers must allow employees who volunteered in the armed forces to take unpaid leave for training. If an employee volunteers for the armed forces or is called to action in the armed forces because of a situation of national interest, the employer may be required to hold the employee’s job open for up to 12 months.

Wage Payment

Employers are required to pay employees on the day and at the interval agreed upon between the two parties as there is no mandatory timing of wage payments. However, employers may not change the day and interval of wage payments without agreeing with employees first.

Employers must make wage payments in cash unless otherwise agreed upon in writing.

Bonuses and Special Benefits

New Zealand does not require employers to provide bonus payments to employees.

Termination Pay

While there is no mandatory notice period, employers and employees generally provide required notice periods in their employment agreement.

There generally is no required redundancy compensation unless provided by an agreement.

Employers must provide employees with a written statement of the reasons for dismissal if requested, and must submit the statement within 14 days of receiving a request.

Employers must pay employees for any unused leave provisions accrued after an employment relationship is terminated.

Workers’ Compensation

Employers must contribute to the Accident Compensation Company, which provides employers and employees coverage for workplace accidents and is covered under social taxes.

Recordkeeping

Employers generally must keep employee records, including wage and time records, holiday and leave records, and other records for six years. They must be kept either in paper or electronic files and must be made available to employees, their unions, and Department of Labor inspectors if requested.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as New Zealand citizens and are generally covered by the same tax and workplace laws.

Visas: Employers must ensure that their foreign workers have the proper visas to work in New Zealand—either a work to residence visa, work visa, a resident visa, or a variation of one of these visas. In the case that employees do not qualify for one of these visas, employers may obtain permission to recruit other foreign workers from Immigration New Zealand (INZ).

Work-to-residence visas are available for foreign workers at a job for at least two years. The work-to-residence visa is granted for professions listed on the Longer Term Skill Shortage List, which is compiled by the Ministry of Business, Innovation, and Employment or accredited employers. The work-to-residence visa is valid for two and half years and provides a path to residence.

Work visas are available in two different categories, for professionals listed under one of the shortage lists compiled by the Ministry of Business, Innovation, and Employment, and for positions where employers have failed to recruit New Zealand nationals and are not listed under one of the shortage lists.

To receive a work visa for a foreign worker who doesn’t meet the criteria for one of the lists, employers must prove that they were unable to fill the position with a New Zealand national. All work visas are valid for up to five years dependent on the skill level of the employees and the terms of the job offer.

Residence visas are granted to foreign workers who qualify under the Skilled Migrant Category and may stay in New Zealand indefinitely.

Other visas which allow foreign workers to work legally in New Zealand for a limited amount of time include Silver Fern Visas, limited visas, Working Holiday Visas, and Essential Skills Work Visas, as well as special visas for residents of many pacific nations and China.

Additionally, New Zealand employers may apply to become Recognized Seasonal Employers (RSE), which allows them to recruit seasonal workers for low skilled positions for periods of seven to nine months. Employers may also apply for Approval in Principle, which allows employers to recruit employees not listed on any of the shortage lists.

Taxes: Employers generally must withhold all taxes from foreign workers as they would for New Zealand nationals, unless the foreign workers are on a qualifying short term visit or qualify for the transitional residence exemption on foreign sourced income.

Foreign workers who expect to be in New Zealand are not liable for income taxes on employment income during their visit if the following terms apply:

• the total number of days in New Zealand in a 12-month period is 92 days or less;
• the foreign worker is employed by an employer that is not a resident of New Zealand; and
• the income earned while in New Zealand is taxed in the foreign worker’s country of residence.

This tax exemption does not apply to public entertainers.

Foreign workers who expect to be in New Zealand for less than 183 days but do not meet these term still may be exempt from income tax on employment if the workers’ countries of residence have a double taxation agreement with New Zealand which covers employment income.

New migrants or returning New Zealanders who qualify as a tax resident for New Zealand but have not qualified tax residents in New Zealand for 10 years prior to their arrival in New Zealand qualify for a once-in-a-lifetime four year tax exemption on foreign income. This includes some forms of attributed foreign company and investment fund income, income from foreign mortgages, income from foreign trust, income from foreign dividends and other forms of foreign income. This does not include employment income from overseas employment while living in New Zealand nor business income relating to services performed offshore. The exemption is automatically applied by the Inland Revenue Department if individuals qualify.

Wages/Payments: Employers must pay foreign workers in a legal currency, following the regulations applicable to New Zealand nationals.

WORKING IN THE UNITED STATES

Foreign workers from New Zealand must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate

New Zealand is eligible for the visa waiver program for business visitors, which allows New Zealand citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for reasonable length of time is at the discretion of the Department of Homeland Security.

New Zealand workers also are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, New Zealand citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. New Zealand has a tax treaty with the U.S.

State and local taxation of New Zealand workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from New Zealand and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from New Zealand and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c. Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: New Zealand and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the ith the employer.

Students and trainees in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of studying or training and has accepted an invitation by the U.S. government (or by a political subdivision or local authority) and a university or other recognized educational institution in the U.S. for any period of time. It also must affirm that the individual will receive compensation for services performed in the U.S. There is no limit placed on student compensation for New Zealand students.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: New Zealand and the U.S. have not entered into a social tax totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

New Zealand has entered into more than 40 income tax treaties, including an income tax treaty with the United States. New Zealand also has 10 totalization agreements for social tax coverage purposes, but does not have an agreement with the United States.

New Zealand’s tax treaties are available in

RESOURCES

All resources in English unless otherwise noted.

General

U.S. State Department: U.S. Relations With New Zealand

U.S. Central Intelligence Agency:

• The World Factbook: New Zealand
• The World Factbook: Languages

U.S. Department of Commerce: Export.gov: New Zealand - Business Travel

Inland Revenue Department:

• Publication IR320, Smart Business: A Guide for Businesses and Non-Profit Organisations
• Publication IR335, Employer’s Guide

Ministry of Business Innovation and Employment

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: New Zealand

Inland Revenue Department, Public Ruling BR Pub 19/01: Income Tax - Salary and Wages Paid in Crypto-Assets

Taxes

Accident Compensation Act of 2001

Income Tax Act of 2007

Taxation (Income Tax Rate and Other Amendments) Act 2020

Accident Compensation Corporation

Inland Revenue Department:

• Employer Responsibilities
• Fringe Benefit Tax
• PAYE Forms and Guides
• Determination EE003 (Aug. 25, 2021)

Compensation and Benefits

Holidays Act of 2003

KiwiSaver Act of 2006

Wage Protection Act of 1983

Holidays (Increasing Sick Leave) Amendment Act 2021

Ministry of Social Development: Covid-19 Support Programs

Employment New Zealand:

• Tools and Resources
• Hours and Wages

Foreign Workers

Immigration New Zealand:

• Work in New Zealand
• Apply for a Visa

Working in the United States

U.S. Department of Labor:

• Foreign Labor Certification
• Hiring Foreign Workers

U.S. Internal Revenue Service:

• IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
• IRS Publication 15, Circular E, Employer’s Tax Guide
• IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Publication 519, U.S. Tax Guide for Aliens
• IRS Publication 901, U.S. Tax Treaties

U.S. Department of State: Visa Waiver Program

Treaty Arrangements

Inland Revenue Department: Double Taxation Agreements