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Glossary of income tax terms

List of income tax words and terms
Income-tested benefit Self-employed
Main source of income Tax code
Net income Tax credits
New Zealand tax resident Tax year
PAYE Working for Families Tax Credits
Salary or wages  

Income-tested benefit

For tax purposes, income-tested benefit means one of the following:

  • emergency benefit
  • jobseeker support
  • sole parent support
  • supported living payment
  • youth parent payment
  • youth payment.

Main source of income

The highest source of income you receive, which includes income such as salary, wages, a benefit, weekly accident compensation payments, New Zealand Superannuation, or a student allowance. If you receive an income-tested benefit (other than New Zealand Superannuation) this will be treated as your highest source of income.


Net income

Net income means your total income from all sources less any allowable deductions or current year losses (including LAQC and LTC losses, but not including any losses brought forward).

If your only income is from your salary or wages (and you don't have any allowable expenses, for example income protection insurance) your net income will be your annual salary or wages before tax.


New Zealand tax resident

The tax laws state who is a New Zealand resident for tax purposes. Find out more on tax residency.


PAYE

PAYE is an amount your employer deducts from your salary and wages. It includes:

  • income tax, based on a rate determined by your income, and
  • an ACC earners' levy.

Salary or wages

A payment made to a person in connection with their employment.


Self-employed

A person who works for themselves. This person controls, manages and owns the business.


Tax code

A code you give to your employer to help them determine the correct amount of tax and other payments to deduct from your salary or wages.


Tax credits

An amount you can claim that reduces the tax you would otherwise have to pay on your income.


Tax year

The year that starts on 1 April and ends on 31 March (although some people may have arranged to use different dates).

Example

The 2013 tax year runs from 1 April 2012 to 31 March 2013.


Working for Families Tax Credits

Working for Families Tax Credits (previously called family assistance) are an entitlement for families with dependent children aged 18 or younger.