Some automatic individual write-offs apply to qualifying individuals who receive reportable income and an automatic calculated assessment, not customers that are required to file an IR3 return.
Clients that have been issued an IR3 but have only received reportable income may also be eligible for an automatic write-off, you will need to contact us to update their assessment type.
If a client is eligible for a write off and they have received an Income tax- more information request, once this has been reviewed and confirmed, we will an income tax assessment notice showing the tax outcome for the period. This will show if any relevant write off has been applied.
There are three automatic individual write off types, one being the extra pay write off (effective from the 2020 year). This write off is applied when a client has a tax bill that is solely as a result of receiving an extra pay period when there are 53 weeks, 27 fortnightly or 14 four-weekly pays within a year and it results in a tax bill.
There are exclusions:
- If the client is not employed by the same employer for the full 12 months.
- Residual income tax is more than:
- Weekly pay - $230
- Fortnightly pays - $380
- Four-weekly pays - $720
- Working for families principal caregiver (at any time) and either entitled to or received payments
- Client changed tax codes or tax rates
- IR recommended a change to the customers tax code or tax rate
- Tailored tax
- Investment income had RWT withheld at a rate lower than the correct rate
- Tax was withheld at a rate lower that the correct rate from schedular income, an extra pay, or secondary employment
- Gross income of more than $48000.00 that includes any:
- Maori authority taxable distribution
- Employment as an election day worker (EDW tax code)
- Employment as a casual agricultural worker (CAE tax code)
- Benefit under an employee share scheme agreement when the employer has not elected to withhold tax.
The automatic individual write off for a Tax bill of $50 or less – For the 2020 year only, this was increased to $200, this is back to $50 for the 2021 income year.
For more information on all three types and the exclusions that apply - you can refer to our Automatic write offs page: