The IRD Number: A Complete Guide
When hearing anything about working holidays in New Zealand or working in New Zealand, you will hear about the “IRD Number”. But what is an IRD Number and why is getting one for working in New Zealand so important? In this guide, we’ll go over everything you need to know about the IRD Number and how to get one.
So if you are planning to work in New Zealand, whether it’s on a working holiday visa, on a student visa, on a skilled-based visa or any other visa that legally permits you to work in New Zealand, you need to get an IRD Number. Read on to see why you need an IRD Number and what it means.
What is an IRD Number?
IRD stands for “Inland Revenue Department”. An IRD Number is a unique tax number given to you by the Inland Revenue Department of New Zealand so that you can pay the correct work taxes as you work in New Zealand. Without an IRD Number, 46.7% of your wage will automatically be taxed, which is a “no-declaration rate”. So to keep the tax percentage of your wage as low as possible, this is why it is so important to get an IRD Number if you are working in New Zealand.
What is the Income Tax System in New Zealand?
The income tax system in New Zealand runs on a Pay as You Earn (PAYE) system. A percentage of your wage is taxed straight away. It’s an automatic process so there is nothing you need to do, other than making sure you are getting the correct percentage of your wage taxed, which you do by having an IRD Number. (You’ll also need to select the correct tax code when filling out the paperwork for a new job in New Zealand). As mentioned above, you will want to get an IRD Number to keep the percentage of your wage which is taxed as low as possible.
How Much Will You Be Taxed?
The income tax rates in New Zealand are as follows. Note that to give you a more accurate estimate, the tax rates displayed below are including the mandatory ACC Levy (currently around 1.39%).
- Yearly taxable Income: Up to NZ$14,000 / Taxable Income 10.05%.
- Yearly taxable Income: from NZ$14,001 to NZ$48,000 / Taxable Income 17.05%.
- Yearly taxable Income: from NZ$48,001 to NZ$70,000 / Taxable Income 30%.
- Yearly taxable Income: NZ$70,001 and over / Taxable Income 33%.
- No-notification (no IRD number): Taxable Income 45%
For more information on how the income tax system works, check out New Zealand Work Tax System: Work and Pay Your Taxes!
What You Need to Get an IRD Number
So you will now have seen why it’s important to get yourself an IRD Number for New Zealand. However, before you can apply for an IRD Number, you need to open a New Zealand bank account. Not only do you need a New Zealand bank account so that you can get paid for working in New Zealand, IRD actually required that you have proof of a New Zealand bank account for the IRD Number application. For this reason, it’s often easier to apply for an IRD Number once you are in New Zealand because it is easier to open a bank account in New Zealand rather than from overseas.
IRD Application Checklist
Here are the things you will need to apply for an IRD Number
- Access to the Internet
- Your Passport
- Your Immigration New Zealand application number
- Your tax number from your home country (this has different names in different countries, such as taxpayer identification number (TIN), national identity, social security, personal or tax number.
- Proof of a New Zealand “fully-functional bank account” (This could be a letter from the bank or a bank statement showing both deposits and withdrawals).
Each of these requirements is explained in greater detail later in this guide.
Where to Apply for an IRD Number?
There are two ways to apply for an IRD Number: online at the IRD website or by sending a paper form to IRD.
Apply Online for an IRD Number
The easiest and quickest way to apply for an IRD Number is to apply online. Head to this page of the IRD website and follow the onscreen instructions and fill out the mandatory fields. You will need the supporting evidence mentioned in the section above.
Apply by Paper Form
If you don’t have access to good Internet, then an alternative way to apply is by filling out the IR742 application form and sending it to IRD along with the documents that the form calls for. You can pick up an IR742 form in any New Zealand Post Shop. Once filled out, go to the counter in the NZ Post Shop and they will tell you what to do next.
How to Confirm Your Bank Account is Fully Functional for IRD
In order for your IRD application to be successful, you will need proof of a fully functional New Zealand bank account. This could be a letter from the bank or a bank statement showing both deposits and withdrawals.
IRD are pretty picky in the evidence you provide to show you have a fully functional New Zealand bank account. IRD will only accept the following evidence from your bank:
- An attached copy of a New Zealand bank statement with your name, bank account number, and showing at least one deposit and one withdrawal of different amounts.
- Alternatively, get a letter from your bank stating your name, bank account number, and clearly stating that your “bank account is fully functional”, or “it is an active bank account”, or “the bank account has had due diligence completed in accordance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009”.
If you need to communicate what you need from your bank, print out the IR984 form and give it to your bank. It has clear instructions on there of what you need for your IRD application.
What is the Taxpayer Identification Number for IRD?
If you have the equivalent of an IRD number in another country (i.e. your tax number at home), then you will need to provide this for the IRD number application. If you do not have a tax number from home, you will need to state why.
The taxpayer identification number (TIN) may have a different name in different countries, for example, national identity, social security, personal or tax number.
Print out a copy of the tax number official document from your home country (and any other country/jurisdiction).
Evidence to Prove Why You are Applying for an IRD Number
It’s most likely that you are applying for an IRD number because you want to work in New Zealand. Your Immigration NZ Application number is all IRD needs if you are applying online. If applying through a paper form, tick the option in Question 8 stating “For employment in New Zealand” and attach a copy of either your work visa in New Zealand or a letter of employment on the employer’s letterhead.
Don’t worry, you don’t need an employment offer to apply for an IRD number as long as you have a New Zealand bank account. You can search for jobs after you have got your IRD number by following our advice in How to Quickly Find a Job in New Zealand.
Customer Due Diligence
If you cannot provide evidence that you have a fully functional bank account in New Zealand then you have the option to provide evidence that you are a customer due diligence. This basically shows that you are a customer of, or will become a customer of, a New Zealand reporting entity such as a New Zealand bank.
Some people may want to choose this evidence option when applying for an IRD Number prior to arriving in New Zealand. However, in most cases, banks do not allow people with a working holiday visa to open a bank account prior to arriving in New Zealand, therefore, will not allow working holidaymakers to become a customer until they are in New Zealand. If you consider yourself as having a special case, perhaps with a job offer already received before arriving in New Zealand, then contact your chosen bank directly to see if they will allow you to become a customer prior to arrival. If accepted, you can send them the IR997 Form which they must fill, sign and stamp, to be sent off as evidence of customer due diligence with your IRD application form.
How Long Does it Take to Receive an IRD Number?
If You Applied Online…
If you applied for your IRD Number online and selected the options to receive your number by text message or email, then it will take two working days to receive your IRD Number. If you selected the option to receive your IRD Number by mail, then it can take up to 10 working days to reach you.
If You Applied by Mail…
If you applied with a paper form sent in the mail, you need to take the postage times into consideration. Factor in about two working days for your form to reach IRD. Then, if you selected to receive your number by text or email, it will take a further two working days. If you prefer to get your number by mail, it will take up to 10 working days.