Community-Wise - 2011
Community-Wise Issue June 2011
- It's time to tidy up your taxes
- Christchurch office temporary closure
- Overseas student loan borrowers
- Doing your tax online - families and individuals
- Child support 2011 square-up
- Redundancy tax credit extended
- Need to update your subscription details?
- Salary and wage income finalised for 2012 child support
- Adjusting your income for Working for Families Tax Credits
- Early withdrawal of KiwiSaver funds for customers affected by Christchurch earthquake
- Are you an IR56 taxpayer?
- Budget 2011 update
- Contacting our Community Relationships staff
- Key dates and events
Notify us: Changes in your family circumstances or income may affect your child support and/or Working for Families Tax Credits (WfFTC). Remember to tell us about any changes:
- for child support, use your secure online services account or call us on 0800 221 221
- for WfFTC, use your secure online services account or call us on 0800 227 773.
7 July: Income tax returns are due for those who don't have an agent or an extension of time.
Most salary and wage earners don't need to do anything at the end of the tax year, but there are a few people who may need to take action.
The fast way to do your tax is to register online you can manage almost everything for your tax and tax credits once you've set up an online services account. Just go to:
register now, or
Self-employed or earned extra cash?
If you've received income over $200 you haven't paid tax on, you'll need to file an individual tax return (IR3) by 7 July unless you have a tax agent with a valid extension of time. For example, you may have earned rental income or sold products regularly through online auctions.
If you've filed an IR3 income tax return in the last two years, we would have sent you a tax pack or letter at the end of May. If your tax pack hasn't arrived by the end of May, or this is the first time you've had to file a return, call 0800 377 774 to have one sent to you (at the prompt say "money back business"). Have your IRD number with you when you call.
Made donations, or childcare and housekeeper payments?
If you've made donations or childcare and housekeeper payments, you may be entitled to a tax credit.
If you claimed a tax credit last year, we'll automatically send you a Tax credit claim form (IR526) this year.
Once you've completed the form, post it to Inland Revenue (the address is given on the form).
This year you can transfer your donation tax credit to the Christchurch Earthquake Appeal. To transfer all or part of your credit, insert the details shown below in the "Transferring your tax credit" section of the IR526 and fill in the amount you want to transfer.
|IRD number:||106 497 389|
|Transfer to year ending:||31 March 2011|
|Amount to transfer:||the amount you'd like to go to the Appeal|
|Name of person receiving the tax credit:||Christchurch Earthquake Appeal|
If you file an IR3 income tax return and claim a tax credit for donations or childcare and housekeeper payments, you'll need to file your IR3 return before we can process your claim.
Are you due a tax refund?
If your income has changed, or you've only worked part of the year or you've earned less than $14,000, you may be eligible for a refund.
You'll need your end-of-year payslip and details of any other income you received during the year. All the information you enter is anonymous.
If the calculator shows you're due a refund you'll then need to request a personal tax summary (PTS) to claim it. You can do this online if you're registered for our secure online services or call 0800 227 774 (at the prompt say "money back individuals"). You'll need your IRD number when you call. If you request a PTS and it shows you have tax to pay, you'll need to pay that tax.
If you received Working for Families Tax Credits during the year, and you don't need to file an IR3 tax return, you'll receive a PTS by the end of July. We'll tell you if you need to do anything. If you don't receive your PTS by the end of July call us on 0800 227 773 (at the prompt say "money back individuals").
Have you been directly affected by the Christchurch earthquake?
If you have, we understand tax will be the last thing on your mind. Please don't worry if you can't make a tax filing or payment date. We'll work with you to help sort things out. Call us on 0800 473 566.
The temporary closure of our Christchurch office has meant we've had to manage our child support and Working for Families Tax Credits work differently. This may mean longer than usual wait times for responses to your forms and letters. Using our secure online services can make it easier and faster for you to exchange information with us, see "Doing your tax online" below for more about our online services.
We're currently sending out student loan statements so this is a good time to think about what you need to do and what you need to know as an overseas borrower.
What you need to do
Keep us up to date with your contact details so we can send information to you.
Contact us if you fall behind in your repayments so we can help you get back on track.
What you need to know
You have to make repayments twice a year unless you're on a repayment holiday. If you don't pay you'll be charged penalties and interest.
Compound interest is being charged on your loan so making extra payments can make a big difference.
It's easy to keep in touch and on track using our secure online services and new payment options.
If you haven't already, why not register to set up an online services account so you can manage your tax online? We've made our online services easier to use to give you more time to do whatever you'd rather be doing.
You can now request and confirm your personal tax summary (PTS) online through your online services account. This means you'll be able to receive any refunds or tax credits more quickly. You can request a 2011 PTS from July onwards.
Once you've registered for an online services account you'll be able to view a summary of your account, your personal details and bank account details, plus much more. Tabs at the top of the page will take you to the different tax types relevant to you, such as:
- My income - to file an IR3 or request and confirm a PTS
- My family - for Working for Families Tax Credits and child support information
- My student loan - for student loan account balances and recent transactions
- My business - for GST, employer and FBT account information and access to ir-File
- KiwiSaver - this takes you directly to KiwiSaver online services.
There's also a handy calendar that shows important dates.
If you estimated your income for the 2011 child support year, we compare what you actually earned with what you estimated you would earn (unless you've cancelled your estimation) and reassess your child support if necessary. This process is called the "square-up".
Your square-up assessment will be sent to you:
- in July after you've called to confirm your personal tax summary, or
- in August if no personal tax summary was issued to you and you weren't required to file a tax return, or
- after you've filed your tax return for the year, or
- in February, using income information from your employer or Work and Income if a personal tax summary was issued to you but you haven't confirmed it.
If you've paid too much we'll use the credit to reduce your future child support. However, in some cases you can ask for the credit to be refunded.
If you've underpaid your child support, you'll be given 30 days to pay the balance. In some cases we'll charge you an underestimation penalty. We charge a 10% penalty if your estimated assessment is less than 80% of your child support assessment based on your actual income.
You had to pay $3,600 based on your estimate but your actual income means you should have paid $6,000. We'll charge a penalty because $3,600 is less than 80% of $6,000. The 10% penalty is charged on the difference between the estimated and actual amounts - so your penalty would be $6,000 minus $3,600 equals $2,400; $2,400 multiplied by 10% equals $240.
If you need to talk to us about your situation, please call 0800 221 221 between 8 am and 6 pm Monday to Friday. Remember to have your IRD number with you when you call.
The redundancy tax credit, which had ended on 31 March, has been extended to redundancies paid before 1 October this year.
Tax credit claims for redundancy payments made on or after 1 April 2011 can be submitted by lodging a Redundancy tax credit (IR524) form with us. Claims will be paid at the rate of 6 cents in the dollar up to the maximum of $3,600 for each redundancy payment.
Only community agencies, not individual taxpayers, can receive printed copies of this newsletter. Individuals can view current and past copies, as well as all our newsletters under "Newsletters and bulletins".
If you need to update your postal details, or want to add another agency to the mailing list, please email the details to us at email@example.com.
When we worked out your initial child support assessment for the 2012 year starting 1 April 2011, we didn't know your income for the full year so we used an income figure made up of:
- your earnings from 1 April 2010 to 31 January 2011, and
- what we thought you would earn from 1 February 2011 to 31 March 2011 (we worked this out using 20% of your total earnings from April to January).
In July 2011, we'll compare the income we used in your assessment with the income you actually earned for the full 12 months.
If the amount has changed by more than $500 we'll send you a Child Support Reassessment Notice confirming the changes to your child support amount for the year. The amount will be backdated to 1 April 2011.
We'll then let you know if you have a credit or an extra amount to pay.
Custodians will automatically receive a new Notice of Entitlement if their entitlement has changed.
There have been changes to the types of income you must tell us about when applying for and receiving Working for Families Tax Credits. If you receive business income you may also need to reassess your family income.
Adjusting your family income
For the year starting 1 April 2011, we need to know if (in addition) you receive income from the following sources:
- attributable trustee income - including income of a company controlled by the trust - if you're a settlor of a trust
- attributable fringe benefits - when 50% voting is held by shareholder employees or their associates
- unlocked PIE income - excluding superannuation funds or a retirement savings scheme
- passive income of children - includes interest, dividends and rent. Amounts over $500 a year (per child) are included as family income
- income of non-resident spouse - worldwide income
- tax exempt salary or wages - under specific international agreements in New Zealand (eg, United Nations)
- main income equalisation scheme deposits - made by you, your trust or a company controlled by you or your trust
- certain pensions and annuities - includes 50% of payments from life insurance policies or a superannuation fund (excluding NZ Super)
- other payments - received from any person or entity and used for the family's day-to-day living expenses. This is only included if the total amount exceeds $5,000 per family.
The above income types will need to be included in the "other income" box of the Working for Families Tax Credits registration (FS1) form along with income from interest, dividends, rents, royalties, estates, trusts and Māori authorities.
If you're already receiving Working for Families Tax Credits, and you receive any of the above income types, you'll need to tell us about them now so we can make sure you receive your correct entitlement. You can do this through your secure online services account or by calling us on 0800 227 773.
Adjusting your business income
If you receive business income and you receive, or are entitled to receive, Working for Families Tax Credits you may need to work out your and/or your spouse or partner's business adjustments for the tax year. An Adjusting your business income for Working for Families Tax Credits (IR215) form will be sent to you with your Individual income tax return (IR3). If you have business adjustments you must complete and return the IR215 form with your IR3 so we can work out your Working for Families Tax Credits entitlement correctly. Your business adjustments don't change the amount of income you need to show in your IR3 tax return.
The Government recently announced relief for customers affected by the 22 February 2011 earthquake who have funds invested in KiwiSaver by making it easier for those members to withdraw their contributions. Members are entitled to withdraw their own contributions and those made by their employer. Government contributions can't be withdrawn.
Apart from the physical and emotional damage, February's earthquake has seen many suffer financially as well. The events that have resulted from the earthquake have been added to the list of events that can qualify for an early withdrawal under the significant financial hardship withdrawal provisions.
Any resident of Canterbury who had funds invested in KiwiSaver at the time of the earthquake is entitled to refer to the following circumstances when applying for an early withdrawal:
- the destruction or damage of property as a result of the earthquake
- the loss of employment as a result of the earthquake
- costs incurred as a result of the earthquake, including costs associated with moving home or dealing with trauma.
Any person who has been a KiwiSaver member for more than 3 months must contact their scheme provider. If the person has been a member for less than 3 months they should contact Inland Revenue.
If a KiwiSaver member doesn't want to withdraw or cannot withdraw their savings but needs short-term relief from their ongoing employment-related contributions, they can apply for a contributions holiday.
This provision is available to all members who have been a member for 12 months. If a person has been a member for less than 12 months they can apply for a contributions holiday under the financial hardship provision.
Find out how to apply for a contributions holiday on our KiwiSaver website, or call 0800 549 472.
Customers who are required to pay their own tax (such as PAYE and any other deductions like student loan or KiwiSaver) from the money they earn by working in specified areas are referred to as IR56 taxpayers.
The specified work areas are:
- part-time private domestic workers
- embassy staff
- New Zealand-based representatives of overseas companies
- United States Antarctic programme workers.
Private domestic workers include home helpers, caregivers, nannies and gardeners who:
- work in someone else's home, and
- do work that doesn't relate to their employers' business, and
- are paid directly by their employer, and
- work on average 30 hours or less a week for each employer.
If you work part-time for an employer as a private domestic worker you're an IR 56 taxpayer and are responsible for paying your tax to us. If you work full-time for an employer, you're an employee and your employer is responsible for paying your tax to us.
If you're an IR56 taxpayer you'll need to register online or by filling in an IR56 registration (IR359) form.
Once you're registered as an IR56 taxpayer we'll start sending you the Employer monthly schedule (IR348) and Employer deductions (IR345) form each month.You'll need to fill these in and make your PAYE payment to us by the due date, ie, by the 20th of the following month.
Our IR56 taxpayer's handbook (IR356) has more information about your responsibilities as an IR56 taxpayer. You can view the guide here.
Government has announced changes to KiwiSaver, Working for Families and student loans as part of Budget 2011.
The member tax credit (MTC) is to be halved from the next MTC year (year ending 30 June 2012). The Government will now contribute 50c for each $1 contributed by individual KiwiSaver members, up to a maximum of $521.43 per year, equivalent to $10 per week.
All employer contributions to employees' KiwiSaver accounts will be subject to employer superannuation contribution tax (ESCT) from 1 April 2012. ESCT is applied at a rate equivalent to an employee's marginal tax rate. This change will therefore have less of an impact on lower-income earners than on higher-income earners.
The following changes were announced but have yet to be enacted:
- The minimum employee contribution rate will rise from 2% to 3% for all members, new and existing, from 1 April 2013. The default contribution rate for new employees who do not select a rate will also be 3%.
- Compulsory employer contributions will also rise from 2% to 3% from 1 April 2013.
Working for Families Tax Credits changes
T he following changes are all effective from 1 April 2012:
- The abatement rate is increased by 1.25 cents every inflation adjustment round until it reaches 25 cents in the dollar.
- The current abatement threshold of $36,827 is lowered by approximately $450 every inflation adjustment round until it reaches $35,000.
- The inflation adjustment to family tax credits for children 16 and over is removed.
Student loan changes
A number of changes to student loans will be implemented over the next two years (these have yet to be enacted):
- The repayment holiday for overseas-based borrowers will be shortened to one year and borrowers will need to apply for a repayment holiday before they leave New Zealand from 1 April 2012.
- Students won't be able to offset losses against income to reduce their student loan repayment obligation from 1 April 2012.
- A contact person will be required for all new loan applications for study from 1 January 2013.
- Students with an overdue repayment obligation of $500, which has been overdue for a year or more, won't be eligible for new lending from 7 February 2013.
- The repayment threshold will be held at $19,084 until 31 March 2015.
Other changes to student loans can be found on the Ministry of Education's website.
Our Community Relationships staff are responsible for educating customers on entitlements, obligations and compliance responsibilities. Check the list below for the Community Relationships staff in your area.
|Area and name||Contact number|
|Luana Poata||09 986 6028|
|Mary Beuker (Kaitakawaenga Māori)||09 986 6186|
|Jules Newman||09 986 6012|
|Nicola Sharp||09 984 1641|
|Tangi Folau||09 984 1494|
|Donna Porter||09 984 1228|
|Fred Astle (Kaitakawaenga Māori)||09 984 1323|
|Helen Lisiua||09 984 2230|
|Christina Fifita||09 984 2376|
|Paul Tuisaula||09 984 2343|
|Mala Singh||09 984 2438|
|Latisha Moana||09 984 2141|
|Gina Katipa||09 984 2484|
|Preetika Dean||09 984 2487|
|Dil Kaikobadi||09 984 2257|
|Maari Hiakita (Kaitakawaenga Māori)||09 984 2368|
|Meremaihi Aloua (Kaitakawaenga Māori)||09 984 2042|
|Chris Novak||07 959 0267|
|Christine Greer||07 959 0655|
|Maureen Thornton (Kaitakawaenga Māori)||07 959 0238|
|Lorraine Morten||07 927 5361|
|Angela Myers||07 927 5355|
|Anthea Te Moana (Kaitakawaenga Māori)||07 927 2761|
|Edward Nathan||07 921 3824|
|Nikki Emery (Kaitakawaenga Māori)||07 921 3809|
|Kelly Henry (Kaitakawaenga Māori)||07 921 3822|
|Danny Fong||06 986 2003|
|Ian Procter (Kaitakawaenga Māori)||06 986 2028|
|Emma-Jane Lund||06 968 4124|
|Naida Tuirirangi (Kaitakawaenga Māori)||06 968 4026|
|Gemma Hughes||06 974 6319|
|Krystal Haimona||06 974 6311|
|Chrystal Kireka (Kaitakawaenga Māori)||06 974 6419|
|Philippa McNae||06 953 3096|
|Jo Hiscox||06 953 3054|
|Aroha Rongo||06 953 3050|
|Charmaine Ratima (Kaitakawaenga Māori)||06 953 3026|
|Rhys Mohi (Kaitakawaenga Māori)||06 953 3105|
|Aroha Paranihi (Kaitakawaenga Māori)||06 953 3199|
|Iriea Williams||04 890 3294|
|Tracey Taylor||04 890 1153|
|Jason Ratima (Kaitakawaenga Māori)||04 890 1284|
|Jo Matiaha (Kaitakawaenga Māori)||04 890 4689|
|Margaret King||03 989 6158|
|Dayveen Stephens (Kaitakawaenga Māori)||03 989 6146|
|Juliette Henry||03 906 0317|
|Tina Smith||03 906 0307|
|Christchurch (these staff may be unavailable)|
|Heather Anderson||03 968 0475|
|Mary Jane Heu (Kaitakawaenga Māori)||03 968 0792|
|Pip McArtney||03 968 0762|
|Linda Fraser||03 956 7027|
|Cindy Henry||03 951 2071|
|Christine Holtham (Kaitakawaenga Māori)||03 955 7482|
|Rebecca Smith (Kaitakawaenga Māori)||03 948 4164|
Personal tax summaries are sent to customers who are required to have an end-of-year "square-up".
Income tax returns need to be filed by 7 July, unless you have a tax agent with a valid extension of time.
Customers who didn't receive a personal tax summary can request one.
Student loan interim repayments are due by 28 August.
For students who aren't on a repayment holiday the second student loan instalment for non-resident borrowers living overseas is due by 30 September.
Community Wise comments generally on topical tax issues relevant to the community. Every attempt is made to ensure the law is correctly interpreted, but articles are intended as a brief overview only. The examples provided are not intended to cover every possible factual situation.
PDF | 566kb | 6 pages
Date published: 22 Jun 2011
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