Make sure you're using the right tax code
You may have received a letter from us advising you that your employer will change your tax code so the right tax and student loan deductions are made on your salary or wage.
Your tax code depends on how many sources of income you have, and whether you have a student loan.
If you have a student loan
Making sure you're on the right tax code is especially important if you have a student loan. Recent changes to student loans mean that from 1 April 2012, all student loan borrowers with salary or wage income must use tax codes with "SL", regardless of how much they earn.
If you have a student loan, the repayment deductions made on your salary or wage every pay period will usually be considered as meeting your repayment obligation on this income for that period, unless there's been a significant over- or under-deduction of the amount that should have been paid. You won't need an end of year assessment to determine your repayment obligation, and you won't have a student loan bill or refund after the tax year.
This change will affect all student loan borrowers receiving salary or wages, including those who are receiving NZ Super and Veteran's Pension payment or student allowance, as these payments are considered income.
If you have a student loan and receive NZ Super/Veteran's Pension or student allowance payments
From August 2012, the Ministry of Social Development will update your tax code to include the "SL" repayment code, and start deducting student loan repayments fortnightly from your NZ Super/Veteran's Pension or student allowance payment when you earn over the pay period repayment threshold, eg $367 weekly. The amount to be deducted will depend on whether NZ Super/Veteran's Pension or student allowance is your main or secondary income.
Depending on your circumstances, you can apply to change the amount of your repayments. Full-time students who are working can apply for a repayment deduction exemption, while those who have two or more jobs may apply for a special deduction rate for their secondary earnings.
Note
Your NZ Super/Veteran's Pension payment or student allowance is considered income when you apply for the repayment deduction exemption or special deduction rate.
Date published: 17 Jul 2012
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