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Pay As You Earn

It is a perfect model of deduction of tax at source, and the responsibility of collection lies with employer, so the tax department would have minimum cost of administering the process. In New Zealand employee’s income is taxed at a tier tax rate, where low income earner pay less tax rate and the highest tax rate is 33% (as of year 2013).

Employment limitation of section DA2 prohibits any deductions of expenses incurred in deriving the employment income except few minor items.

It only applies to individual who is a natural person; it does not apply to any other type of entities such as company, a trustee, a non-complying trust, and Maori Authorities. Generally the onus of filing tax return is not on the taxpayer if the only source of income is employment. One of the main reasons for doing that is minimising the compliance cost of maintaining the tax system, think if everyone start filing the tax return the IRD would not be able to deal with the workload. 

If an individual has received income from other sources, such as business or rental income, dividend or interest then the tax return must be filed.

For tax rates click here:Tax rates

For tax credits click here:Tax credits