Are You Paying More Tax Than You Need To?
Recently, I was working with a couple who initially came to see me about their KiwiSaver.
As we were reviewing their overall financial position, another question came up. They asked me to take a look at some personal savings accounts they had held for years.
What we discovered surprised them.
Although they couldn’t find any information online showing the tax rate being applied to their interest, I manually calculated it and quickly identified the problem.
They had been paying tax at 45%.
And they’d been doing so for around 16 years.
Why Does This Happen?
When a bank doesn’t have your IRD number on file, they’re required to deduct tax from your interest at the non-disclosure rate of 45%.
Many people have never heard of this, and because the tax is deducted automatically, it can go unnoticed for years.
Can You Claim It Back?
Naturally, their next question was:
“Can we get that money back?”
The answer is yes, however maybe not all of it.
My recommendation was that they work with their accountant or tax agent, who can help determine how much overpaid tax can be reclaimed. My understanding is that it may be possible to go back around five years, although your accountant will be able to advise you on your specific circumstances.
After all, if it’s your money, why leave it sitting with the IRD unnecessarily?
Three Things Worth Checking Today
1. Confirm your bank has your IRD number.
A simple phone call or online check could ensure you’re being taxed at the correct rate on your interest.
2. Review all sources of personal income.
Interest, dividends and other investment income should be included when preparing your annual tax information.
3. Give your accountant the full picture.
Don’t just provide business records at tax time. Make sure your accountant also receives details of your personal income, along with receipts for donations and any other deductible expenses you may be entitled to claim.
Small Details Matter
Financial wellbeing isn’t always about making dramatic changes.
Sometimes, it’s about uncovering the small things that have quietly been costing you money for years.
That’s why regular reviews matter.
A few minutes spent checking today could potentially save — or recover — thousands of dollars tomorrow.
Have you checked that your bank has your IRD number and that you’re being taxed at the correct rate? It might be worth taking a look.
Helping you create clarity, confidence and control with your money.
Kara Northcott
Financial Educator & Facilitator
Helping you create clarity, confidence and control with your money.
027 666 6784
📩 kara@financialconsultant.co.nz
🌐 kara-northcott-financial-consultant.kit.com
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