Tax codes: Special tax codes
Deductions using special tax codes
How do I know if an employee has a special tax code?
Your employee will give you with a special tax code certificate. This certificate may be addressed to you or "to whom it may concern".
What does the special tax code certificate authorise me to do?
The special tax code certificate may authorise you to do one of the following:
- deduct no tax at all
- deduct tax at a special rate
- make PAYE deductions using a specific rate
- deduct ACC earners' levy only.
The special tax code certificate may also include a special deduction rate for an employee who has a student loan. The special deduction rate may authorise you to make student loan deductions at a lower rate or make no deductions at all.
The certificate will specify the details of the deduction(s) you're required to make.
How long does the special tax code apply for?
The certificate will include the period of time that the special tax code applies for.
If a special deduction rate for your employee's student loan deductions is included on the certificate, the time period for the special tax code may be different to the special deduction rate. You'll need to take note of each expiry period and adjust your employee's tax or student loan deductions as each period ends.
Your employee will need to give you a new certificate when the current one expires so you can continue making deductions at a special rate. If they don't give you a new certificate, you'll need to make deductions at the standard deduction rate based on their tax code, unless your employee has given you a new tax code to use.
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This certificate will not include any rate for KiwiSaver contributions. KiwiSaver contributions deducted for an employee should be in addition to the rate shown on a special tax code certificate. For example, if the rate shown is 30% and the employee is making KiwiSaver contributions of 4% their total deductions from their salary or wages will equal 34%. |
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Date published: 26 Jan 2012
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