If you’re getting taxable income from more than 1 source, you may need to use a secondary tax code. This is because your extra earnings may have pushed you into a higher tax bracket.
Income sources could include pay, a benefit, pension or other taxable payment such as Student Allowance, an ACC compensation payment or paid parental leave.
Using the right tax codes ensures your payer deducts tax at the right rate for your total annual income. Each 'layer' of your income is taxed at a different rate. The higher layers are taxed at a higher rate than the lower layers.
Tax rates for individuals
Each payer has no way of knowing the total amount of income you’ll earn in a year. Using secondary tax codes lets your payer know the right amount of tax to deduct from your secondary source of income.
This helps you pay the right amount of tax, so you don’t overpay during the year or end up with a tax bill at the end of the tax year (31 March).
What happens at the end of the tax year
Follow the flowchart on pages 2 and 3 of the IR330 tax code declaration form to work out the right tax code to use.
Complete my tax code declaration
You can also use our tax rate calculator to see how your total annual income will be taxed.
Tax rates for individuals
Once you know the right tax code for an income source, give your payer a completed IR330 form so they can deduct the right amount of tax from your income. Payers do not need us to confirm your tax code information.
Every time you get a new source of income you must let your payer, such as an employer, know the right tax code to use for you.
If you’re getting an income-tested benefit, NZ Super or Veteran’s pension, you’ll need to give MSD a tax code to use. If you're getting ACC payments, let ACC know.
Tax codes cover a range of income, including pensions and other benefits.
Types of individual income
We see the words 'Earning an additional income?'
Ivy and Rikki from Te Tari Taake Inland Revenue are speaking.
The words change to 'Secondary Income. Know what to do'.
Ivy
Kia ora, I’m Ivy.
Rikki
And I’m Rikki, from Inland Revenue Te Tari Taake.
Ivy
Tax can be complicated, so we’re here to tell you what to do if you earn an additional source of income.
Alex appears in-front of her work desk, with a roll of blueprints in her hand.
Ivy
Meet Alex, she earns $70,000 a year as an interior designer.
Alex now appears in an art gallery gesturing towards the art on the walls.
Rikki
She also works at a local art gallery, earning her another $5,000 a year.
Ivy and Rikki appear side by side with an A-frame board between them.
The board shows Alex's total income of $75,000, the tax code 'SH'. and the secondary tax rate of 30%.
Ivy
That brings her total annual income to $75,000.
Rikki
For her additional income, Alex uses the secondary tax code ‘SH’.
Ivy
With this code, Alex’s additional income gets taxed at 30%, which is just right for her total income.
Rikki
If either of Alex’s incomes change, she may need to switch to a different secondary tax code.
The camera zooms into the A-frame board, displaying the different tax brackets, codes, and rates.
| Annual total income | Secondary tax code | Secondary tax rate |
|---|---|---|
| $15,600 or less | SB | 10.5% |
| Between $15,601 and $53,500 | S | 17.5% |
| Between $53,501 and $78,100 | SH | 30% |
| Between $78,101 and $180,000 | ST | 33% |
| Over $180,001 | SA | 39% |
Ivy
It's key to remember, secondary tax rates are based on your total income to ensure you’re taxed correctly on every dollar.
Rikki
And don’t worry, using the right secondary tax code means you're not overpaying tax; it's about paying the right amount.
Ivy and Rikki are speaking side by side
Video closes with the Inland Revenue logo.
Ivy
So, stay on top of your situation, just like Alex. Use the right tax code and be sure you’re paying the right amount of tax during the year.
Rikki
And help avoid a potential bill.
