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Working While Receiving NZ Super? You still might be eligible for Tax Refunds

GrownUps accepts no responsibility for decisions made by Members or any other persons as a result of using or relying on any information on the GrownUps website. GrownUps does not give any financial or health advice or make any recommendation of any product or service. Please ensure that you are familiar with our Terms, prior to clicking any links.

While New Zealand doesn’t actually have an official retirement age, for many people 65 years old is the target.

It’s the age when most superannuation plans begin to pay out your savings, including Government funded NZ Superannuation (Super).

New Zealand Superannuation is a fortnightly payment for people aged 65 and over. To qualify, you must have lived in New Zealand for at least 10 years since you turned 20. Five of those years must be since you turned 50. Time spent overseas in certain countries, including Australia and for certain reasons may be counted.

Details about who can get superannuation are on the Government’s Work and Income website.

If you’re working while receiving NZ Superannuation, you may be entitled to  a tax refund.

You can still get your New Zealand Superannuation while you’re working or getting other income. This may affect the amount of income tax you have to pay on your combined income and can sometimes entitle you to a tax refund.

Here are some real life cases where retirees in NZ have been entitled to a Tax Refund in this situation (names have been changed):

  • Mary Fraser is 70 and she receives the super as well as full time income from a pre-school. Her combined annual income is $55k and because she’s paying secondary tax, at the end of the financial year she receives a refund of $4,758.29. She has received large refunds in prior years also.
  • Lorraine Grey is 79 and has been receiving the super as her only income for the last 3 years. 4 years ago when Lorraine was also working and receiving her super she was paying secondary tax on it. Since ceasing her employment she has not updated her tax code so is paying tax at a higher rate. For the last 3 years she has received tax refunds of over $900.
  • Ian Johnson is 69 and last year he finished up at his job part way through the year while also receiving the super. As his tax paid while in employment was based on what he had earned in previous years it was higher than what he should have paid so he ended up with a $1,900 refund at the end of the financial year. Ian’s tax codes were correct and he did everything he should have but due to the timing of his employment ceasing the overpaying of tax was inevitable.

There are many other cases where earning Superannuation and working in the same financial year can mean you’re entitled to a refund. We suggest getting in touch with IRD  or your tax agent for more information.

Using the right tax code while on NZ Superannuation

Your main source of income

If you receive NZ Super and income from another source (excluding interest or investment income), you need to ensure that you are using the right tax code.

Using the right tax code while on NZ Superannuation

If your NZ Super is not your main source of income or you have a secondary source of income, you need to use a secondary tax code.

As a general guideline for tax codes:

  • if New Zealand Superannuation is the client’s highest or only source of income, the ‘M’ tax code should be used
  • if New Zealand Superannuation is not the client’s main source of income, a secondary or ‘S’ tax code should be used or
  • clients with a Student Loan must use a tax code with the Student Loan (SL) repayment code or
  • a special tax code can also be used when the client has other income

Note clients need to apply to Inland Revenue for a special tax code. The client will need to provide proof of their special tax code for example, a letter from Inland Revenue, in order for this to be added to their New Zealand Superannuation record.

Tax and Tax Refunds can get a bit tricky sometimes – chatting to your tax agent or IRD directly can help clear up what you’re paying and what you’re entitled to as a refund.