There are many sources of income that affect your tax rate and the types of tax returns we are required to submit on your behalf, so it is imperative that you provide us with the correct information so we can ensure we have you covered.
As an Independent Earner, your IRD tax rate is based on your total earnings across ALL income sources in a financial year.
- If you earned $50,000 from a permanent job prior to joining Hnry, $30,000 in self-employed earnings through Hnry, and receive a further $20,000 in income from a rental property, then your tax rate needs to be based on a total income of $100,000.
- If we don't know about your prior income or other income, such as the rental property, then our system will assume that your only income is the $30,000 through us and your tax rate won't be set high enough (which means there's a chance you could end up with a tax bill).
Types of Income we need to know about when you sign up:
Permanent/Salaried job (PAYE):
These are payments made when you are a direct employee. If you are unsure if this applies to you, direct employees are entitled to sick and holiday leave, as well as employer KiwiSaver contributions.
- If you have finished your PAYE job prior to joining Hnry, then we need to know your total income (before tax) in the current financial year (from 1st April to current date - you should be able to get this from myIR on the IRD website), or
- If you have an ongoing PAYE job, we need to know your Annual salary for this job so we can take this into account when setting your tax rate
- N.B: PAYE income does not need to be paid into your Hnry account
These are payments made to contractors generally via a recruiter or other third party. Tax is deducted from these payments (known as Withholding Tax) but these payments are different to salary or wage payments.
- For this type of income, your Recruiter or Client should have asked you to complete an IRD form known as an "IR330C" where you are required to specify how much tax you would like them to withhold and declare on your behalf.
- You must let us know of any income earned via Schedular Payments (you should be able to see these in myIR on the IRD website) and how much tax was paid against those earnings from prior to joining Hnry.
N.B: All Schedular Payments need to be paid into your Hnry account as this is self-employed income.
You will need to set your Recruiter/Third Party up as a Client on your dashboard and log how much tax they will be deducting prior to payment so you don't get double-taxed on that portion (see Withholding Tax and IR330C Forms).
Self-employed Income - not through Hnry:
Payments received for self-employed work that did not have tax deducted prior to payment (see Schedular Payments above)
- NB: If you receive payment directly into your personal account for self-employed work then you will need to transfer the full payment into your Hnry account to make sure you are declaring the correct income and paying the right taxes against that income
Rental Property Income:
- As you are earning additional income through property ownership, you must declare this source of income as you would a second job.
Dividends from Investments:
- It's important you declare money coming from dividends on investments so we know how to handle your return.
- These subsidies are counted as additional income so we'll need to incorporate any money you receive from the government in your tax return.
- If you are a tax resident of another country as well as New Zealand, you'll need to let the Hnry team know as soon as possible so that we can make sure you're on the right tax rate.
- You will need to provide us with the details of any overseas income earned and any tax paid against that income
N.B If you have earned or are earning any of these in addition to your self-employed income through Hnry, please indicate this in the 'My Account/Income Sources' section of your Dashboard
If there are any changes to the information you provide us at sign-up then you must ensure you update this information in the 'My Account/Income Sources' section of your Dashboard. It is essential that you regularly maintain your information regarding other sources of income earned outside of Hnry. If we don't know this information, your tax rate will be incorrect and you may end up with a tax bill owing at the end of Financial Year.
For further help in how to add your income sources into Hnry, please see the Updating your Income Sources article