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By Haruna Kobayashi, for ExpatBriefing.com
17 February, 2017
New Zealand, an increasingly popular destination for backpackers, is to increase its minimum wage from April 1, in a move that may improve the country's appeal further following Australia's decision to levy a backpacker tax.
New Zealand will increase its minimum wage by 50 cents to NZD15.75 (USD11.39) an hour on April 1, 2017, Workplace Relations and Safety Minister Michael Woodhouse announced on January 24. This is equal to AUD14.75 an hour, making it lower than Australia's minimum wage, which last increased in July 2016 to AUD17.70 an hour from AUD17.29. The cost of living in Australia however is considerably higher.
Following changes to the tax regime affecting backpackers in Australia, expats on a 417 (working holiday) or 462 (work and holiday) visa face higher taxes. As of January 1, 2017, employers are required to withhold 15 percent from every dollar earned by working holiday makers, up to AUD37,000. Foreign resident tax rates will apply from AUD37,001. Where a business fails to register, it will need to withhold tax at the foreign resident tax rate of 32.5 percent, and penalties may apply.
New Zealand's tax regime subjects income up to NZD14,000 to a 10.5 percent rate, with a 17.5 percent rate applicable thereafter, on income up to NZD48,000.
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