New 39% Personal Tax Rate For Highest Income Earners

New 39% Personal Tax Rate For Highest Income Earners

Circle Cloud Accounting

In December 2020, the NZ Government passed legislation to implement a new personal tax rate of 39% for those with personal incomes above $180,000. This new rate comes into effect from 1 April 2021 (the 2021-2022 income year).

What You Should Know

As with any changes in tax, there are knock-on effects that you should know about. These include:

  • New Fringe Benefit Tax rate of 63.93% for all-inclusive pay of more than $129,681
  • Employer Superannuation Contribution Tax rate of 39% on superannuation contributions for employees whose income from employment and from employer Kiwisaver contributions exceed $216,000 per annum.
  • 39% Resident Withholding Tax rate for individuals on interest income
  • 39% Residential Land Withholding Tax Rate on residential land sales by offshore persons within the bright-line period
  • 39% non-declaration rate of taxable Māori authority distribution, where a member has not provided an IRD number

Meanwhile, there are no changes to PIE tax rates for individual investors or to Resident Withholding Tax on dividends.

Actions You Should Take

You should consider the following actions before 31 March 2021:

  • Employment income is taxed at the date the cash is paid or credited to an account. Bonuses accrued at 31 March that are not usually paid until shortly after could be paid before 1 April and be taxed at 33% instead of 39%.
  • Dividends could be paid before 1 April so the additional tax payable would just be 5% instead of 11% that will be in effect starting 1 April 2021.
  • Review how motor vehicles are provided to high-earning staff and see if there’s scope to take vehicles off the balance sheet and minimise the Fringe Benefit Tax bill by paying a vehicle allowance instead.

Need guidance on these changes or help with your tax? Get in touch with us today and let our advisors help you navigate these upcoming changes.

Recent Posts


Is the 4-Day Work Week for You? Pros, Cons and Tips

When was the last time you felt that you had a week’s worth of energy to pour into just four days

Read More

The key to growing your business: unlock new customers and markets

For a business to thrive and grow, it essentially needs two things: a strategic plan and an ability

Read More

Stop putting off the little things

As a business owner, you often find yourself pulled in different directions by competing responsibil

Read More

Subscribe to our newsletter

Sign up with your email address to receive news and updates