Changes to tax regime next month

Changes are being made to the way you work with Inland Revenue Department (IRD) from April 1 2013.

These changes would include updates to KiwiSaver, tax credits and student loan deductions.

These changes come from Budget 2012 decisions.

It is important to understand them as they may affect you and your family.

KiwiSaver Contributions

From April 1, 2013, the minimum contribution rate for employers and employees would increase from 2% to 3% of gross salary or wages.

If you are an employee, your employer will sort this out for you. However, if you employ staff, you must ensure these changes have been made.

Please visit our website for help and more information.

Primary and secondary school children must have PAYE deducted from their wages from April 1, 2013 and no tax credit will available to them.

If you have children who work, please make sure that their tax is in order.

This is a good time to make sure that you are on the right tax code. ML and ML SL tax codes will no longer be in use.

The best way to find out the correct tax code is to visit our website, use the search term ‘tax code’ to find the right information. Being on the right tax code means you are more likely to pay the correct amount of tax throughout the year

Student Loans

There are also several changes to student loans with effect from April 1.

The student loan repayment rate increases from 10% to 12%

The voluntary repayment bonus will be removed from April 1.

Any extra repayments made for student loan obligations between the 2010 to 2013 tax years (April 1, 2009 to March 31, 2013) may still qualify for the bonus.

Additional payments made after April 1, 2013 will not qualify for the bonus, but they will help you pay off your loan faster.

Employers who use a payroll software package must update their software before April 1, 2013 to ensure that deductions are calculated at the correct rate.

If you have any queries or wonder how these changes will affect you, please visit our website (www.ird.govt.nz).

Free Workshops

If you are in business, you may like to attend one of our free tax seminars or workshops held in various parts of the country. Please visit our website for details.

Abdul Rafik is Inland Revenue’s Community Relationships Advisor based in Auckland. He will answer your queries emailed to venkat@indiannewslink.co.nz

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