Source: Radio New Zealand
What happens to tax on your pension if you’re 65 and working? 123RF
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We’d love to hear more of your questions about money and the economy. You can send through written questions, like these ones, but – even better – you can drop us a voice memo to our email questions@rnz.co.nz
I’ll be 65 this February. I have had a notification from IRD that I need to apply for New Zealand Superannuation. As I am continuing to work (at least for the next five years) as I have a mortgage to pay I’m wondering what this means for my tax rate? Should I claim it or wait until I’ve retired?
You can claim NZ Super, you don’t need to wait.
There is no income test or asset test on the pension, so anyone can claim it, no matter what they’re earning.
If you have a job, you might find that NZ Super needs to be taxed with a secondary tax rate – this doesn’t mean you pay more tax overall, it just reflects that the pension is coming in on top of your existing income and may be pushed into a higher tax bracket because of that. If you end up paying too much tax, you’ll get it back at the end of the tax year.
You won’t be worse off for having claimed NZ Super because New Zealand’s tax system means you only pay the higher rates of tax on the higher amounts earned – if your pension means your total annual income is now over $53,501 a year, for example, it’s only the bit over that threshold that is charged at 30 percent. The rest remains taxed as it was previously.
I am looking at retiring back in NZ at the end of the year so as to access the NZ superannuation as I turn 65 later this year. My question: If I sell my home in Australia will I be taxed in New Zealand on the sale? I have lived here for five years.
I asked Robyn Walker, a tax partner at Deloitte. She said you’ll need to determine whether you are a New Zealand tax resident.
People are counted as a tax resident when they have been in New Zealand more than 183 days in any 12-month period or have a permanent place to live here.
If you are, then you could be subject to the bright-line test to tax the capital gains you make on the sale of overseas property, but only if you’ve bought and sold your home within two years.
There might be taxes you’ll need to be prepared for in Australia, too.
I would like to know the rules for gifting money and the tax implications associated with it. Could you please answer this question for me or let me know where I could find the answer.
New Zealand hasn’t had a gift duty since 2011 so you won’t pay tax on gifts you make to family members or other people.
The main way that it can be a problem is if you’re gifting assets in the years before you apply for a rest home subsidy. If you gift more than the limit in the years before you apply, you can find that amount is included in the Government’s calculation of assets.
The Ministry of Social Development says: “We won’t count up to $8000 of assets you’ve gifted each year in the last five years (from when you apply for the subsidy). This is a total of $40,000 of any assets you and your partner (even if they’ve died) have gifted in the last five years.
“If your partner applies at the same time, this amount will double to $80,000 (but we won’t count $40,000 each if you apply at different times).”
Ther could also be situations where the gift of a house to a family member could trigger the bright-line test if you’ve only owned it for a short time. When you gift a house you are considered to have sold it for its market value even if there is no money moving.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
