Relocation Guide

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Economy

New Zealand has a mixed economy which operates on free market principles with sizeable manufacturing and service sectors complementing a highly efficient export oriented agricultural sector. The agricultural, horticultural, forestry, mining, energy and fishing industries play a fundamentally important role in New Zealand’s economy, particularly in the export sector and in employment. Overall, the primary sector contributes over 50% of New Zealand’s total export earnings. The service sector accounts for over two-thrids of the GDP and employs nearly 65% of the workforce. Within the service sector, retail and wholesale trade, restaurants and hotels comprise a major subcomponent, accounting for about 25% of service sector activity. Transport is a major component of economic activity in New Zealand with the efficiency of the country’s internal transport system playing a critical role in New Zealand’s economic growth. Tourism is one of the largest single sources of foreign-exchange revenue and a major growth industry in New Zealand.

The economy is strongly trade-oriented, with exports of goods and services accounting for around 33% of total output. The largest export markets are Australia, USA, Japan and China, Korea and the UK.

For the year ended June 2007, annual growth in gross domestic product was 2.2 percent.  Slow growth is forecasted to continue throughout 2007. Domestic demand and export revenues are forecast to be flat through most of 2008.

The CPI for the year to June 2007 is 2.0%. The June 2007 quarter represents a 1% rise in the CPI.

Nine of the 11 groups in the CPI recorded increases in the June 2007 quarter. The most significant upward contributions came from the transport group (up 2.4 percent) and housing and household utilities group (up 1.3 percent). Less significant upward contributions came from the following groups: health (up 1.9 percent), food (up 0.5 percent), household contents and services (up 1.2 percent), miscellaneous goods and services (up 0.8 percent), clothing and footwear (up 0.9 percent), alcoholic beverages and tobacco (up 0.3 percent) and communication (up 0.3 percent).

(Source: Statistics NZ and The Treasury NZ)

For an extensive summary of the NZ economy see the website of The Treasury at www.treasury.govt.nz/nzeconomy/

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Taxation

The tax year begins on 1 April. Employees have tax deducted from their income on a “pay as you earn” (PAYE) basis. Since the introduction in 1985 of consumption or Goods and Services Tax (GST), currently set at 12.5%, income tax rates have been considerably reduced. Income up to NZD$38,000 is taxed at 19.5%. Income of NZD$38,001 to NZD$60,000 is taxed at 33%. Income over NZD$60,001 is taxed at 39%. Non-cash forms of remuneration received by employees (e.g. company cars) are not subject to income tax, but are instead subject to a Fringe Benefits Tax, which is payable by the employer. For the most recent tax details visit.
For the most recent tax details visit the IRD website at - www.ird.govt.nz.

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