Migrant workers – tax rate that applies

Clauses 383, 422 and 445

Submission

(32 – KPMG)

The submitter supports the proposed initiative to reduce the compliance costs for migrant workers, but also notes that some additional compliance costs will be imposed on employers and payroll software developers.

They also submit that migrant workers will not receive a high income for the period they are in New Zealand and therefore the proposed flat tax rate of 19% in the bill is too high and should be reduced.

Comment

The bill introduces a full and final flat tax rate of 19% which would apply to migrant workers. Since the introduction of the bill, the tax rates for individuals have been reduced twice and the 19% rate is now too high. A more appropriate flat tax rate for an average migrant worker in a normal picking season would be 15%. This rate should apply from date of assent of the legislation.

Recommendation

That the submission be accepted, and the flat tax rate that applies to migrant workers be reduced from 19% to 15%, and apply from date of assent of the legislation.