I usually try to keep up with the news but I only just found out about the tax credit that some taxpayers will be eligible for from April 1, 2009. I found details on the IRD’s website to clarify the details of this tax credit. Seems like you can wait to claim it at the end of the year or you can get it now, but you need to change your tax code.
Independent earner tax credit (IETC)
The independent earner tax credit (IETC) is a tax credit for individuals who are New Zealand tax residents, and whose annual net income is between $24,000 and $48,000. In order to receive the IETC the following must apply:
- you or your partner are not entitled to working for families tax credits
- you or your partner do not receive an overseas equivalent of working for families tax credits
- you are not receiving an income tested benefit, NZ super, veterans pension or an overseas equivalent
Your entitlement to IETC is determined monthly so, if you don’t meet the criteria for any part of a month then you won’t qualify to receive the IETC for that entire month.
From 1 April 2009 if your annual net income is between $24,000 and $44,000 inclusive youâll receive a tax credit of $520 – or $10 per week. If youâre eligible, but earn over $44,000, your annual entitlement to the IETC decreases by 13 cents for every additional dollar earned.
From 1 April 2010 the maximum credit will increase to $780 (ie, $15 per week) for eligible persons.
Receiving the tax credit
If you’re eligible you can choose to receive the IETC through your pay or as a lump sum at the end of the year. If you work for a salary or wage, you will receive the IETC through your pay. If you are self employed, or work as a contractor, you can claim the IETC as a lump sum after the end of the year.
If you will receive the tax credit through your pay after 1 April 2009 you’ll need to choose a new tax code: either ME or ME SL (if you have a student loan).You’ll need to let your employer know by completing a new Tax code declaration (IR330) form. You can only use this new tax code for your main job or source of income. Updated IR330 forms will be available from the start of March 2009.