Most New Zealand employees with only PAYE income don’t need to file a tax return — IRD auto-assesses them. But if you have rental income, business income or overseas income that IRD has not been told about (over $200 before tax), you will need to file an IR3. This step-by-step guide walks you through it.
You need to file an IR3 if you received more than $200 (before tax) in income IRD has not been told about, such as rental, business or overseas income. The deadline is 7 July (without a tax agent) or up to 31 March the following year (with a tax agent who has an extension of time). File online at myir.ird.govt.nz.
Do I Need to File a Tax Return?
You do NOT need to file an IR3 if:
- You only had salary or wages with tax already deducted
- IRD has auto-assessed you and you agree with the result
- You have only bank interest that was already taxed at source (RWT)
You MUST file an IR3 if you had:
- Rental property income (including Airbnb and Bookabach)
- Self-employment or business income (more than $200 before tax that IRD has not been told about)
- Overseas income (more than $200 before tax that IRD has not been told about)
- Other untaxed income over $200 before tax, such as cash jobs
- Income from a trust (as a beneficiary)
You may also want to file if:
- You have deductible expenses not captured through PAYE (if IRD has issued an assessment, you can tell it about missing deductions by amending the assessment in myIR)
- You received a redundancy payment (IRD may assess you automatically or ask you for an IR3)
NZ Tax Year and Deadlines
The NZ income tax year runs from 1 April to 31 March.
| Event | Date |
|---|---|
| Tax year ends | 31 March |
| IRD issues income tax assessments | May – July |
| IR3 due (self-filers) | 7 July |
| IR3 due (tax agent with an extension of time) | Up to 31 March (following year) |
| Tax bill due (standard) | 7 February (following year) |
| Tax bill due (tax agent with an extension of time) | 7 April (following year) |
| Refunds issued | IRD aims to process income tax refunds within 10 weeks |
Step-by-Step: Filing Your IR3 via myIR
Step 1: Set Up myIR
If you don’t already have a myIR account, set one up at myir.ird.govt.nz. To register you need your name, email address and phone number, then add your IRD number to the account.
Step 2: Gather Your Information
Before you start, collect:
- Income details:
- Employer earnings summaries (available in myIR — pre-populated from payroll data)
- Bank interest statements (your bank provides this or it may be pre-populated)
- Rental income records (total rent received)
- Business income records (total invoices/receipts)
- Overseas income (in NZD, converted with an IRD-accepted rate such as the mid-month rate)
- Deduction records:
- Rental property expenses (rates, insurance, maintenance, mortgage interest)
- Business expenses (check ird.govt.nz for what’s deductible)
- Charitable donations (for a donation tax credit)
- KiwiSaver contributions if you are self-employed
Step 3: Start the IR3 in myIR
Log in to myIR → Income tax → File a return. Select the relevant tax year.
Most data is pre-populated from IRD’s records (employer summaries, interest income, KiwiSaver). Review each section carefully — pre-populated data is not always complete or correct.
Step 4: Complete Each Section
Wages and salary: Confirm the pre-populated figures. If wrong, contact your employer for a corrected employer summary.
Interest income: Pre-populated from bank reporting. Check against your bank statements.
Rental income: Enter total rent received and all deductible expenses. Common rental deductions:
- Mortgage interest (fully deductible from 1 April 2025 for all residential rental properties)
- Rates (council rates)
- Insurance premiums
- Property management fees
- Maintenance and repairs (not capital improvements)
- Depreciation on capital items (not the rental’s land or buildings)
Business income: Report total receipts minus allowable expenses. If this is complex, consider using a tax agent or accounting software.
Overseas income: If you are a New Zealand tax resident, report your overseas income. Foreign tax paid may be available as a credit — see IRD’s foreign tax credit rules.
Step 5: Claim Deductions and Credits
Don’t miss these:
- Independent Earner Tax Credit (IETC): If you were eligible but didn’t use tax code ME, you can get it after year end, through your assessment or the IR3 (worth up to $520, full credit up to $66,000 then abating to zero at $70,000) The independent earner tax credit (IETC) pays up to $520 a year to New Zealand tax residents earning $24,000 to $70,000 (reducing by 13 cents a dollar above $66,000), as long as neither you nor your partner receives Working for Families and you don't receive an income-tested benefit, NZ Super or a Veteran's Pension (or an overseas equivalent).
- Donation tax credits: one third of eligible donations over $5, up to your taxable income (receipts required)
- Working for Families: Register separately in myIR (I want to… then Register for Working for Families)
Step 6: Review and Submit
MyIR calculates your tax automatically. Review the outcome:
- Refund: Paid to your nominated bank account, which IRD aims to process within 10 weeks
- Tax to pay: Due by 7 February (or 7 April if a tax agent has an extension of time for you). You can pay by internet banking, card or direct debit in myIR, or other options such as at a Westpac branch.
Step 7: Keep Records
Retain all income and expense records for 7 years.
Using a Tax Agent
A registered tax agent (accountant or tax advisor) can:
- File on your behalf, with an extension of time up to 31 March the following year where IRD has granted one
- Review your return for errors and missed deductions
- Represent you if IRD audits or queries your return
Accountant fees for preparing rental accounts and tax returns are deductible against rental income.
Frequently Asked Questions
Do I need to file a tax return as an employee in NZ?
Usually not — if you only had PAYE employment income and correct tax codes, IRD auto-assesses you. Check myIR to see if an assessment has been issued. If you agree with it, no action is needed. You need an IR3 if you received more than $200 (before tax) in income IRD has not been told about; IRD will also tell you if it asks you to file one.
What happens if I miss the IR3 deadline?
IRD charges late filing penalties starting at $50 for net income under $100,000 (rising to $250 for $100,000 to $1 million, and $500 above $1 million), plus use-of-money interest on late tax. File as soon as possible — late is better than never. If you cannot pay on time, contact IRD before the due date to arrange a payment plan.
How do I get a NZ tax refund?
IRD pays refunds when it processes income tax assessments. Check myIR in May after year end (31 March) — if you are owed a refund, it will be visible. IRD pays it into the bank account it has on file. IRD aims to process income tax refunds within 10 weeks. If you have a tax debt, some or all of your refund may be used to pay a debt you have with IRD.
Can I claim home office expenses on my tax return?
If you are self-employed and work from home, you can claim a proportion of home costs (rent, mortgage interest, rates, power, insurance) based on the proportion of your home used for business. If you are an employee working from home, you generally cannot claim home office expenses as a deduction because of the employment limitation, although an employer can reimburse some costs tax-free.
What is an income tax assessment and how does it differ from an IR3?
An income tax assessment is IRD’s calculation of your tax based on the information they already hold (PAYE data, bank interest, etc.). IRD sends one if your only income is salary, wages or investment income that is already taxed, in myIR or by post. An IR3 is a self-filed return where you provide the information — required when you have received more than $200 (before tax) in income IRD has not been told about.
Worked Example — Rental Property Owner
Scenario: Lisa is a teacher earning $72,000 PAYE. She also owns a rental property that earned $24,000 rent during the year. Her rental expenses were $18,000 (mortgage interest $12,000, rates $2,500, insurance $1,800, property management $1,700).
Net rental income: $24,000 − $18,000 = $6,000
Total taxable income: $72,000 + $6,000 = $78,000
Tax calculation:
- On $15,600 at 10.5% = $1,638
- On $37,900 (15,601–53,500) at 17.5% = $6,632.50
- On $24,500 (53,501–78,000) at 30% = $7,350
- Total income tax: $15,620.50
Her employer has been withholding PAYE on $72,000 only (tax on $72,000 alone = $13,820.50). At year end she owes the difference — approximately $1,800 in terminal tax. Note: rents are listed by IRD as income not liable for the ACC earners’ levy.
Lesson: Rental income is not taxed at source, so Lisa’s tax on it is settled in her IR3 after year end. Here the extra $6,000 falls in the 30% bracket, which is why the bill is about $1,800.
Worked Example — Sole Trader with Employment Income
Scenario: Mike is a graphic designer working part-time at a studio ($35,000 PAYE) and running freelance projects on the side ($22,000 revenue, $8,000 expenses = $14,000 net business income).
Total taxable income: $35,000 + $14,000 = $49,000
Tax calculation:
- On $15,600 at 10.5% = $1,638
- On $33,400 (15,601–49,000) at 17.5% = $5,845
- Total income tax: $7,483
His employer withheld PAYE on $35,000 (tax on $35,000 alone = $5,033). Terminal tax owed: approximately $2,450.
Mike also pays ACC on his self-employment income at 1.75% (2026–27 rate) on the net business income: $14,000 × 1.75% = $245 additional ACC.
Lesson: Self-employment income is usually income IRD has not been told about, so an IR3 is normally needed.
What Deductions Can I Claim?
For Rental Property Owners
Since 1 April 2025, mortgage interest is fully deductible on all residential rental properties (the interest limitation rules introduced in 2021 were progressively phased out, with full restoration by April 2025).
| Expense | Deductible? | Notes |
|---|---|---|
| Mortgage interest | ✅ Yes | Fully deductible from 1 April 2025 |
| Council rates | ✅ Yes | |
| Insurance (landlord/building) | ✅ Yes | |
| Property management fees | ✅ Yes | |
| Repairs and maintenance | ✅ Yes | Must be repairs, not improvements |
| Chattel depreciation | ✅ Yes | Carpet, appliances, curtains, etc. |
| Fees for finding tenants | ✅ Yes | Payments to agents who find tenants for you |
| Accounting fees | ✅ Yes | For preparing rental accounts |
| Body corporate levies | ⚠️ Partly | General levies, such as for maintenance or insurance, are deductible; levies for capital improvements are not |
| Capital improvements | ❌ No | Adding a room, deck — these are capital |
| Building depreciation | ❌ No | Residential buildings not depreciable since 2011 |
| Private use proportion | ❌ No | If property was partially personal use |
For Self-Employed / Sole Traders
| Expense | Deductible? | Notes |
|---|---|---|
| Business equipment | ✅ Yes | Full write-off for low-value items costing up to $1,000 |
| Vehicle (logbook method) | ✅ Yes | % of actual costs based on business use |
| Vehicle (kilometre method) | ✅ Yes | $1.20/km petrol, $1.30/km diesel for the first 14,000km (Tier 1, 2025–26 rate); 37c/38c per km beyond that (Tier 2) |
| Home office | ✅ Yes | Floor area % × eligible home costs |
| Professional subscriptions | ✅ Yes | Industry body memberships |
| Tools and materials | ✅ Yes | Materials used up in the business are deducted; tools are usually capital items claimed through depreciation (or in full if low value, see above) |
| Marketing and advertising | ✅ Yes | |
| Subcontractors | ✅ Yes | Amounts paid for outsourced work |
| Meals (client entertaining) | ⚠️ 50% | IRD treats entertainment that is not completely business related as 50% deductible |
| Meals (own meals working late) | ❌ No | Personal expense |
| Fines and penalties | ❌ No | Traffic fines, IRD penalties |
| Private expenses | ❌ No | Personal purchases, holidays |
Common IR3 Mistakes
1. Not Filing When You Have To
If you have rental or business income and you don’t file, IRD may still find out: it collects information from third parties such as banks, and uses the Land Transfer Register to check tax obligations when property is bought and sold. A late filing penalty may apply if you file late (the first late return usually gets a warning letter), and interest on unpaid tax starts the day after the due date.
2. Forgetting to Include All Income Sources
All income sources must be declared: NZ employment, overseas income, rental income, business income, interest and dividends, trust distributions, and schedular payments. IRD receives information about your income from employers, banks and other organisations, so it can compare it with what you file.
3. Claiming Private Expenses as Business
Vehicle use, meals, home costs and personal purchases are areas where business and private use can mix. Where a cost has both business and private use, allocate it and claim only the business share.
4. Not Keeping Records
You must keep records for 7 years. Without receipts, you cannot prove deductions. IRD can ask to see the records behind an expense you claim.
5. Missing the Provisional Tax Obligation
If you owed more than $5,000 in terminal tax in the prior year, you’re required to pay provisional tax the following year (usually three instalments).