Choose the correct tax code for your student loan repayments
From 1 October 2008 personal income tax rates will change. For more information see the News and Updates article. We'll update this page when the changes take effect.
Why it's important
If you use the correct tax code your employer will deduct the correct amount of student loan repayments from your pay. If you use the wrong tax code you could end up with a bill to pay at the end of the tax year.
Who is responsible
It's your responsibility to ensure your employer has the correct tax code for you. If your employer uses the wrong tax code without you knowing, you'll still need to pay if you receive a bill at the end of the tax year.
If you have more than one job
You'll need to ensure you have the correct tax code for each job. You'll need to use different tax codes depending on which job is your highest source of income. See "Special situations" below for more detail.
When your loan is completely repaid
You'll need to change your tax code once you've repaid your loan in full. If you don't, your employer will continue to take student loan repayments from your pay.
Check the amount you should be repaying
Use the:
- Student loan repayment calculator to find out how much your student loan repayments should be, and
- PAYE/KiwiSaver calculator to find out the tax and student loan deductions your employer should be taking from your pay.
What you need to do
Follow these steps to choose your tax code.
- Use the table below to find out your tax code for each source of income if you earn more than the repayment threshold ($18,148).
- If you have one job: use the M SL tax code.
- If you have more than one job: you need a tax code for each job. Use the tables below to find out what tax codes to use.
Choose a tax code for:
Highest (main) source of income
Total annual income for your main job
use tax code
more than $18,148
M SL
$38,001 - $60,000
M SL
more than $60,000
M SL
Second and subsequent jobs
Total annual income from all your jobs
use tax code
$18,148 - $38,000
S SL
$38,001 - $60,000
SH SL
more than $60,000
ST SL
Note: If you earn less than the repayment threshold or you've repaid your loan in full, you'll use the standard tax codes. Refer to "Tax rates and codes" at the bottom of the page.
- Complete the Tax code declaration (IR330) form if:
- you start a new job
- your salary or wage changes and you need to change your tax code
- you've repaid your loan in full, or
- you already have a job and you think your tax code is wrong (you may need to ask your employer which tax code you're on).
- Give the completed and signed form to your employer.
What happens next:
Your employer will update your tax code and the student loan repayments that come out of your salary or wage. It's a good idea to check you're on the correct tax code on your next payslip.
Example
Kim's finished studying and graduated with a BCom. She's working part-time as a graduate accountant and is earning $20,000 a year. She also helps out at the local council. She estimates she'll receive $5,000 a year from this extra work.
As Kim earns most of her income from the accounting firm, this is her highest source of income. She'll earn more than the repayment threshold from this job, and should use the M SL tax code.
Her job at the council and her job at the accounting firm give her a total annual income of $25,000. This is between $18,148 and $38,000 so she should use the S SL tax code for her job at the council.
Kim will have to fill in an IR330 form for each employer advising them which tax code to use.
Special situations
If the income from your main job is under the student loan repayment threshold then legally you don't have to have student loan repayments deducted. However if you have income from second or third job, and the combined total of your income is over the student loan repayment threshold we strongly recommended that you apply for a special tax code. This can be done by filling in an IR23BS and sending it to Inland Revenue.
Using the S tax code will result in a student loan bill at the end of the year and using the S SL tax code will mean that you repay too much towards your student loan.
A special tax code is a tax deduction rate worked out to suit your individual circumstances.
Example
Rangi is in his second year at university. He earns $16,000 from part-time work as a bar tender in the evening and weekends, as this is his main job and it is under the under the repayment threshold he has selected the M tax code.
This year during the holidays he will also work at the local CD store where he will earn around $3,000. As his total income is over the threshold he needs to start making repayments to his student loan.
If he selected S SL as his tax code he would pay too much towards his student loan, so he has applied for a special tax code.
Find out more
Next steps
Date published: 06 Jun 2008
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