„We promised to eliminate unnecessary secondary taxes for workers with more than one job. We are delivering on that promise,“ said Finance Minister Stuart Nash. „I am disappointed that National and Act voted against this measure. The tax system gives people with more than one source of income the opportunity to choose the rate at which secondary income is deducted by the employer. But if you don`t make the right choice, you risk deducting too much or too little tax. The IRD IR330 form, available on the IRD website, from accountants or your employer, will help you get it right. „This bill represents an important step in modernising and simplifying New Zealand`s tax system and supports much of the business transformation work of the Inland Revenue,“ said Nash. The misnomer of secondary tax comes from a tax system that attempts to ensure that income that is not a person`s primary source of income is taxed at the correct rate. The goal is to ensure that when all income and taxes paid in a year are added together, all tax revenues are correct. The tax rates are exactly the same as your main income, so you won`t pay more taxes if you have a second job. However, if your second job puts you in a higher tax bracket, you will pay the highest rate on the amount of income that falls within the next bracket. Let`s look at a few examples: Gig workers are part of a flexible, on-demand workforce that runs multiple short-term jobs (gigs), and can be anyone, from part-time workers who want to earn extra money from a second job or part-time to full-time freelancers. The gig economy covers most industries and roles.
I`m thinking about having 2 jobs, is it worth it? How much tax do I have to pay compared to just 1 job? Secondary taxes can be confusing for many salaried workers. Often, people think it`s not worth having a second job because the secondary tax on that income is so high. The truth is that secondary tax does not cost an employee more than normal income tax. The good news is that it is a common misconception that people pay a higher tax rate when they get a secondary tax law. New Zealand`s tax and PAY system is designed to tax employees at the right rate. We have a progressive tax system that ensures that individuals pay a higher tax rate if they earn more. Our current tax rates for individuals are as follows: „Until now, the tax on the second job often seemed too high. These changes ensure that employees pay only the taxes they should pay. Nearly 600,000 secondary tax codes are used each year. If you have more than one job, you need to determine what your main job is. It will usually be the job that will earn you the highest income.
You must use a tax number that is different from your primary tax number for all other tasks you perform. Below are the current secondary tax rates. Is it worth it if I still get as much money if I work two jobs as I would work 1? E.B. 2 jobs 20 hours per week compared to 1 40 hours per week. All new employees taking up employment must complete a tax return form (IR330). The employee is responsible for selecting a tax code and there is an organizational chart that the IRD has created to determine which tax code an employee should be on. If a person`s annual income from all sources is likely to be less than $14,000, the secondary tax number (for their second job) is SB. If the income is likely to be between $14,000 and $48,000, the tax number is S. If the income is to be between $48,000 and $70,000, an HS tax number will be used and if the income from all sources will be greater than $70,000, a ST income tax code will be used. Income from a self-service tax code is taxed at 10.5%, for an S code the rate is 17.5%, for an HS code 30% and for an ST code 33%. If employees have deducted too much tax, rest assured that the IRD will automatically calculate the refund and credit your bank account at the end of the year. For your second job, regardless of the actual salary level, tax will be deducted at the highest rate, and at the end of the year you will receive any overpayments – based on your total tax payable, which is based solely on total income.
If you earn $50,000 a year from your main income and earn $10,000 more than a second job, your additional income will remain in the same tax bracket so that the tax rate does not increase. You earn $45,000 a year before tax on your main income. You take a second job and earn $5,000 a year. You pay 10.5% tax on your income on $14,000, then 17.5% on your income from $14,001 to $48,000, then 30% on your income over $48,000 per year, which is equivalent to $2,000. You will pay an additional 12.50% tax on $2,000 as you move from over $48,000 to the next tax bracket. tl;dr: Yes, it`s usually worth it, depending on whether you work too much to have a life/family. Is it worth getting a second job? When I talk to clients about achieving their financial goals, one way that can really help with additional resources is to take a part-time job. Many people say that it is not worth it, since everything goes into the tax.
But is this really true? In reality, the system works and calculates the tax correctly in about 90% of cases. The 10% of the time the secondary tax system does not work is when a person`s income exceeds one of the income thresholds ($14,000, $48,000 or $70,000) because of income from their second job. An example of this is when a person`s first job earns them $40,000 a year, for which they would have a tax number M. Their second job earns them $10,000 a year, for which they would have an HS tax number. The HS tax code imposes them at 30% on their income of $10,000, when in reality their first income of $8,000 from their second job should only be taxed at 17.5%. Over the course of the year, this person will have the PAYE deducted from their total salary of $9,020, although the tax on $50,000 should actually be $8,020. So you`ll be overwhelmed by $1,000. Until the tax department updates its computer system, the only way around this problem is for people to file a tax return or request a personal tax summary from the IRD, or request a special tax rate from the Department of Domestic Income. It follows that if you have two sources of income and the main source of income (tax code M), for example, is $40,000 per year, and a secondary source is $5,000, for example, the rate you should choose for the PAYE deduction from the second source should be 17.5% (code S). However, if you choose the wrong code, say 10.5% (SB code), you will have to pay taxes at the end of the year. And if you choose 30% (HS code), you will receive a tax refund at the end of the year.
The amount of secondary tax you pay depends on the secondary tax number you give to your employer or payer. I think the secondary tax has been abolished and, under the new system, the ird will notify people and their employers when they are likely to switch to another tax bracket. Our office often receives calls from employees and their employers who are concerned about the impact of secondary taxes when they get a second job. People are usually unhappy with the idea of having a higher tax rate simply because they got a new source of income to pay the bills. The total amount of taxes you pay is the same as if you had a job with the total income. I understand that they are updating their system to avoid secondary taxes, but I cannot confirm that. Workers who pay too much tax due to incorrect secondary tax laws line up late in the evening with Parliament`s passage of legislation to be relieved. I do not understand how it will work and I do not see why the change was necessary. I used to have three jobs and get my secondary tax back, no problem. In practice, income from a person`s second job should be taxed at the correct rate. You must first request a personalized tax number.
When we approve your application, we will inform you of your tailored tax rate. ACC Tax Guide [PDF, MB 1.9](external link) — ACC „Inland Revenue will also make it easier for individuals to request tailored tax codes that match their income situation and provide an online process for requesting the codes. Many self-employed workers who accept casual or on-demand work are sole proprietors. You don`t have to do anything formal to set up as a sole proprietor – there is no legal process you have to follow. There are other business structures you can choose from – use our „Select Business Structure“ tool to help you decide. Inland Revenue will share your BIC code, responsible income or payroll and contact information with VAC so they can charge you taxes based on your business activities. Get a New Zealand Business Number (NZBN), a unique identifier available for every business in New Zealand. One of the benefits of an NCBN is that you can share and update your business information with other companies, including those you occasionally work for. Other income is not taxed until it is paid. This includes income from self-employment or the rental of real estate and some income from abroad.
You pay taxes on this income at the end of the tax year. The amount of tax you pay depends on your total income for the tax year. Rates are based on your total income for the tax year. Your income could include the following: When you file a tax return or register with the IRS for GST, choose an Industry Classification Code (BIC). This describes the business activity you carry out and forms the basis of your ACC levy. If you are self-employed and have more than one role, choose the BIC code for the activity you spend most of your time on. They are billed once a year by ACC – most people receive their bills between mid-July and mid-August. Whether it`s claiming expenses or paying VAC taxes and fees, here`s what you need to know if you`re a freelancer or an entrepreneur working in temporary jobs. .