NZ Income Tax

[StuckInLA]

Hey everyone,
I have a question regarding NZ's income taxes on wages/salary. Currently the rates are:
20.8% on income up to $38,000
34.3% on income between $38,001 and $60,000
40.3% on income over $60,001

My question is this: for married couples who both work, is the tax computed on each individual separately, or is the tax set by the combined income? For example, if the two earn $62,000 and $45,000 individually for a total combined income of $107,000, the tax comes out to $34,390 if you apply the rates to the total $107,000 income, but only $26,560 if you tax each job individually and then sum them.

Which is it?

[wiki]

Individually - otherwise no one would get married!

[barryp]

Individuals pay tax on their own incomes. There is no concept of married filing status(es) as in the USA.

(The rates you quote include ACC levies, which have a cap, so the top rate is typically a wee bit smaller than those percentages imply.)

[Trigirl]

although ACC doesn't get capped out till $96k so those %s are right for the majority of people

[richard]

Does anyone know what the situation is with tax on interest from a joint bank account?

Do you have to just split the interest in half and pay at your tax rate or can you be more creative than that if the partners are in different tax bands?

[Moorf]

Does anyone know what the situation is with tax on interest from a joint bank account?

Do you have to just split the interest in half and pay at your tax rate or can you be more creative than that if the partners are in different tax bands?

Ohhh, good question, we were talking about this tonight - we have received a statement of our "withholding tax" which we've already paid as was taken automaticallly out of our accounts, we don't quite know how to split it

Also, we got one for our general account which earns interest but only when we have money left over at end of month - does everyone get this withholding tax debited?

[wiki]

You're supposed to split the interest from joint accounts equally on your tax form.

But joint accounts can only be registered under one IRD number so if you register it under the lowest earner's tax rate then the higher earner will have to pay more tax on it when it comes to tax declaration time.

http://www.ird.govt.nz/yoursituation...-overview.html
(ignore the bit about retirement/redundancy, because it's the same principle regardless)

If you have a joint account, it can only be under one IRD number, so you'll need to decide the appropriate rate of RWT to be deducted. If one account holder earns more than the other account holder, we recommend that you use the RWT rate for the higher earner. This avoids the higher earner ending up with a tax bill at the end of the year, when the interest is split between both of your accounts.

The best way around this if you had a lump sum (like unspent house sale cash) is to put it in an account only in the lowest earner's name and IRD number... if you trust them!

[richard]

You're supposed to split the interest from joint accounts equally on your tax form.

Thanks, I thought that was the case but someone on another forum claimed that you could split it anyway you want. They didn't come up with any proof though.