Responsible for Income

Who is Responsible for the Income?
Generally, it is the recipient of the income who will be taxed on it, with few exceptions (for example, agents, trusts and partnerships).

Income is received by 2 classes of people:

  1. Non Self Employed (employees, investors)
  2. Self Employed (businesses, companies, partnerships etc)

1. Non Self Employed

This group generally consists of those on a wage or salary working for a “boss”. Additional income may come from other sources of investments such as money on loan, company shares and rental property.

Your income from work as an employee is shown on your wages details given to you by your employer at the end of the tax year.

2. Self Employed

If you own a business (dairy, taxi driver) are engaged in a profession (doctor, lawyer, accountant) or carry out a trade (plumber, electrician) then you are self employed. If so, you will be required to furnish a tax return together with supporting statement of accounts and balance sheet to show how your taxable profit has been achieved.

  • If you have a partnership then the partnership is required to file a partnership return showing the split of the partnership profit, supported again by full accounts.

  • If you run your business under a company, it is the company that makes the profits but your source of income will be the way of a salary, director’s fees and dividends from your company.

  • All self employed people receive income which has not had tax deducted at the source (unlike on wages) and are therefore termed “provisional taxpayers”.

Receiving Income from Rent or Business?

When you receive rental or business income, you must:

  • keep records of rental and business transactions
  • send your Individual tax return (IR3) to IRD after each financial year.

See our "Business Tax" section for more details on what tax you must pay and what expenses/deductions you may claim when you are running a business.

Tax Responsibilities for People Receiving Taxable Income
You may receive taxable income through employment, a business, rent, a benefit or superannuation, or other income that is taxed at source (before you receive it).

Here IRD outline what to do:

  • to ensure you pay the correct amount of tax on your taxable income
  • when you receive income from rent or a business in particular
  • when you have a student loan.