Payroll giving, where offered by your employer, gives you the opportunity to donate to approved donee organisations direct from your pay and receive immediate tax credits that reduce your PAYE payable. You don't need to wait until the end of the year to claim your tax credit.
Only employers who electronically file their employer monthly schedule and deduction form can choose to offer payroll giving to their employees.
A donee organisation is an organisation that has Inland Revenue-approved donee status. Anyone on the approved list is eligible to receive payroll giving donations.
If your employer offers a payroll giving scheme and you want to join, you need to:
If your employer’s scheme allows, you can alter the frequency, amount and donee organisations you choose to donate to.
Tax credits for payroll donations are calculated at 33.3333 cents for each dollar donated which is deducted from your PAYE.
Employers are responsible for calculating the correct tax credits for each payroll donation made by their employees.
The tax credit for payroll donations is 33.3333 cents for each dollar donated. Once the tax credit has been calculated, the employee’s PAYE is reduced by the amount of the tax credit.
Hannah makes a payroll giving donation of $12 to her church. She is paid $2,140 every four weeks. This is her only job so her tax code is "M". Before the tax credit is applied her PAYE is $435.48.
The tax credit for Hannah's payroll donation is $3.99. Her employer applies the tax credit when working out Hannah's pay and Hannah's PAYE is reduced to $431.49 for that pay period.
Hannah's new take-home pay is now:
|plus||tax credit for payroll donation||
|equals||take home pay||
Individual employees will not be issued with receipts as the tax credits for donations made as part of payroll giving will be immediate in the form of reduced PAYE. They will not be eligible to be claimed again through the end of year Tax credit claim form (IR526).
If you have made donations directly to an approved donee organisation and you have receipts you claim them on the Tax credit claim form (IR526).