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\nWhat happens to tax on your pension if you’re 65 and working?
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Got questions? RNZ has a new podcast, No Stupid Questions, with Susan Edmunds.<\/p>\n
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<\/p>\n
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?<\/b><\/p>\n
You can claim NZ Super, you don’t need to wait.<\/p>\n
There is no income test or asset test on the pension, so anyone can claim it, no matter what they’re earning.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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. <\/b><\/p>\n
I asked Robyn Walker, a tax partner at Deloitte. She said you’ll need to determine whether you are a New Zealand tax resident.<\/p>\n
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.<\/p>\n
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.<\/p>\n
There might be taxes you’ll need to be prepared for in Australia, too.<\/p>\n
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.<\/b><\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
“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).”<\/p>\n
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.<\/p>\n