# NZ Tax Calculation



## aspire (Apr 6, 2013)

Hi All,
I have a query on the way tax is calculated in NZD
Here is the calculation 
Please suggest any anamoly in it

--Total Pay per annum - NZD 70,000
1 year = 365 days
1 month = 30.41 days [365/12]
Number of workable hours per month -- 173.33
Number of workable hours per day --5.70 [ 173.33/30.41]
rate per hour --33.645 p.h 
amount got per month === 33.645* 173.33
5831 NZD [ BEFORE TAX AND ACC]

Number of days worked in august --- 14
amount got -- 3836

Tax Deductions

Tax deducted per year -- 15035 [ including ACC+TAX] calculated from 
PAYE Calculator | PAYE.net.nz 
Tax deducted per month-15035/12 = 1252.91
Tax deducted per day ---1252.91/30.41 days = 41.20

I was on rolls for 18 calendar days in July and full August 

I month = 30.41 days
30 july calendar days = 30.41 days
18 july calendar days = (30.41/30)* 18 == 18.246
tax deducted for 18 days --41.20*18.246 = 751.735 NZD
tax deducted for full August = 41.20*30.41 =1252 

Plz suggest if the above tax calculation is fine as my company did not elaborate on tax details .They just memtioned total tax for complete august and 18 days july 
They are calculating based on hours like per hour rate and 173.33 hours per month 

[ I feel there is some discrepancy so I tried to calculate according to above logic . plz tell if it is corect


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## escapedtonz (Apr 6, 2012)

aspire said:


> Hi All, I have a query on the way tax is calculated in NZD Here is the calculation Please suggest any anamoly in it --Total Pay per annum - NZD 70,000 1 year = 365 days 1 month = 30.41 days [365/12] Number of workable hours per month -- 173.33 Number of workable hours per day --5.70 [ 173.33/30.41] rate per hour --33.645 p.h amount got per month === 33.645* 173.33 5831 NZD [ BEFORE TAX AND ACC] Number of days worked in august --- 14 amount got -- 3836 Tax Deductions Tax deducted per year -- 15035 [ including ACC+TAX] calculated from PAYE Calculator | PAYE.net.nz Tax deducted per month-15035/12 = 1252.91 Tax deducted per day ---1252.91/30.41 days = 41.20 I was on rolls for 18 calendar days in July and full August I month = 30.41 days 30 july calendar days = 30.41 days 18 july calendar days = (30.41/30)* 18 == 18.246 tax deducted for 18 days --41.20*18.246 = 751.735 NZD tax deducted for full August = 41.20*30.41 =1252 Plz suggest if the above tax calculation is fine as my company did not elaborate on tax details .They just memtioned total tax for complete august and 18 days july They are calculating based on hours like per hour rate and 173.33 hours per month [ I feel there is some discrepancy so I tried to calculate according to above logic . plz tell if it is corect


Personally think you're looking into this way more than you need to and making it way more complicated.

All you have to do is calculate a single figure of how much you have earned or will earn in a given financial year (gross earnings) and work it out that way.
There are a number of tax levels and no free earnings meaning you pay tax on every cent earned.
Once you know this figure you can calculate how much tax you will pay at each level then add them up for a total.
ACC is a % of gross earnings up to a max amount. Multiply gross earnings by the ACC % to get the figure paid over that year, however, if the figure is more than the max ACC payment then you'll only pay the max figure.

Gross earnings - income tax - ACC = Net earnings.

Divide each by 12 to give averages for a month.
Divide each by 26 for fortnightly.
Divide each by 52 for weekly.

It's difficult to work out tax for every pay cheque as you may have moved from one tax bracket to another on one particular month depending on total earnings so the % of tax for all or part of that salary may be at a higher level.

If you're worried about it sign up to one of the tax agencies that calculate if your tax is right - it's free to sign up (eg Woohoo). You give them all your details and each year they will make sure you are paying the right tax. They also claim refunds for you for a small commission and inform if you have paid too little, however they don't tell the tax man if you have paid too little.
You are only charged a commission if they successfully claim tax back for you.


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