Most people assume that if you earn money in New Zealand, it’ll be taxed. And for the most part, that’s true. But there are a few exceptions – and knowing what income is not taxed in New Zealand can make a real difference when you’re planning ahead or reviewing your finances.

The rules can be a bit grey in places, so it’s always worth checking the latest information from the IRD website here.

Examples of Income That’s Generally Not Taxed

• Lottery and prize winnings: If you win Lotto or a raffle, the money is yours, tax-free. However, if you enter competitions as part of your business or work, things might be different.
• Gifts: One-off cash gifts from family or friends aren’t usually taxed. But if they’re regular or connected to services you provide, they might be treated as income.
• Inheritances: Money or assets inherited from a deceased estate are not taxed when received. However, any income generated later (e.g. rent or interest) may be.
• Capital gains: New Zealand generally doesn’t have a capital gains tax, but some gains (like from property flipping or dealing) can be taxed depending on your intent.
• Personal loans: Borrowed money isn’t income. But if your loan is written off or forgiven, the IRD might consider that income in some cases.

And Now the Flip Side – What Is Taxed?

It’s a long list. Wages, business income, interest, dividends, rent, and contract payments are all taxable. So are many overseas earnings, even if they never hit your New Zealand bank account. If you’re earning money in any form, the default position is that it’s taxable unless specifically excluded.

Why It Pays to Get It Right

Getting your tax right isn’t just about avoiding penalties – it’s about clarity. If you know what’s taxable and what’s not, you can plan better, price more accurately, and make smarter decisions.

Confused about how it applies to your situation? Book a time to chat here – we’ll make sure you’re not missing anything or over-declaring income unnecessarily.  Of course, your accountant is a great person to ask, but if you need more general help, a business coach or consultant can also guide you.

NZ Business Coach – helping small business owners across New Zealand get clearer about their numbers and their next steps.