MyTax University: Student Taxes 101Categories News & Updates
Some students don’t have the luxury to kick back and relax during school terms or even during school holidays anymore.
Of course, it’s not all bad. Working while you study is an excellent opportunity to develop key skills that will only serve to help you land a secure job upon graduation. Not to mention that extra weekly cash that will supplement your student loans. While balancing your work life with your course obligations is a must, there’s something possibly even more important: your tax obligations.
You really don’t want the IRD on your back when you’re already stressed enough about your academic performance! Knowing how student taxes work is a necessity, so take a seat, grab a pen and paper for note taking, and let’s get started on Student Tax 101!
Can I Work and Study at the Same Time?
Absolutely. And for more and more New Zealanders, it’s impossible not to work and study at the same time, even if you’re a foreign student. That said, there are a few things you want to take into consideration before you start handing out your CVs:
Student Work Visas
If you’re not a New Zealand national and you’re here on a student visa to study full-time you can work up to 20 hours per week from March to October, and 40 hours a week over the summer break from November to February.
If you’re studying here for a short time, say a semester, or you’re here as a Study Abroad Student or an English Proficiency student, you can’t work at all. It’ll be tempting for you to work under the table, but we’ll get to the pros and cons of that kind of work shortly…If you need more information on the legal implications of working legally or illegally, check in with Immigration New Zealand. They’ll let you know whether or not you’re entitled to work.
Congratulations on your scholarship! And now for the bad news…most New Zealand university scholarship students can only work for up to 600 hours per year. This may sound like a lot but really only works out to being 10-12 hours per week. Ouch.
If you’re lucky, you’re eligible for student allowance, but how much you’re entitled to is based on your financial situation. This means that if you’re hoping to top up this allowance by working during the weekends, the extra money you make is going to result in a much smaller allowance. Don’t let the word “allowance” fool you – this isn’t just pocket money from the Government. You’ll be paying this back, so it’s up to you to decide whether working at the same time is going to be beneficial to your personal finances in the long run.
Types of Jobs for Students
Once you’ve decided whether or not working at the same time as studying is going to work for you, it’s time to start considering the kinds of jobs that are available to students. From seasonal jobs like picking fruit, to more steady incomes via the hospitality scene, there are many opportunities to work and study at the same time.
The best jobs for most students pay well and have flexible hours. Ideally you don’t want to be working full-time on top of your full-time study. Twenty hours a week should cover your bills and then some.
Here’s our top ten:
- Movie attendant
- Retail clerk
- Grocery store clerk/bagger
Temp agencies and sites such as Student Job Search can help you find part-time work and shorter contracts if you’re just looking for a quick top-up of funds rather than something steady. You’re young, willing and able so the employment world is your oyster!
Under-the-Table vs. Paycheck
Nothing is more tempting for a student than cold, hard cash, which is why the working under the table, or “cashies”, is rife, especially in the hospitality and trade sectors which are predominantly student based. Being paid under the table means you’re getting paid cash without any documentation. Sounds good, right? No annoying paperwork, no waiting for pay, and best of all, no paying taxes.
When your boss pays you under the table, New Zealand law doesn’t recognize you as an employee. This is a big deal because you miss out on both benefits and legal protection. So, if you’re a parent, say goodbye to Working for Families Tax Credits. You can also say “ciao” to Kiwi Saver, ACC and tax refunds. If you get injured on the job, tough luck, there will be no ACC cover for loss of income.
Oh, and job security? You can forget about that too as you’re technically not an employee and therefore your boss can let you go at any time for any reason and… there’s not a thing you can do about it. No holiday pay either, friend.
Cashies aren’t looking so good all of a sudden!
As you can see, taking a job under the table comes with a lot of risks. But none are scarier than the legal risks these kinds of employers are taking. From massive fines to jail time, the New Zealand government doesn’t favor businesses that aren’t working above board. If you’re an employer trying to save money by paying your students under the table, you could be in for some serious pay-back behind bars.
Here’s the thing: whether or not you’re a student, if you’re living in New Zealand you have a legal obligation to report every cent you make to the IRD.
And then it’s your job to pay the appropriate tax on this cash.
And then it’s also in your best interest to file your taxes correctly, unless you want to deal with accuracy-based penalties. If you don’t file a return at all, you’ll face failure-to-file penalties to top it all off.
Sound daunting? Don’t let it freak you out – we can help.
Claiming Student Tax Right
So many students are filing their taxes incorrectly and are owed thousands of dollars by the IRD. And this is how it happens: students work part-time during college or uni over the course of two tax years. Couple this with being on the wrong tax code, and earning less than what the IRD thinks you’re earning leads to you paying more in taxes than you should be without even realizing it. Full-time summer jobs are great at convincing the IRD that you’re rolling in dollars!
Even if you’re on a tiny student salary, you’re probably being over-taxed. Wouldn’t you rather have that money in your pockets, or at least your bank account to pay the rent? More than 90% of New Zealand students are owed tax refunds because of these silly mistakes, don’t be part of the statistic. This is where we come in.
Filing your student taxes doesn’t need to be yet another thing that you have to do but don’t have the time to. You’re busy studying so that you can have a better future, and you’re working on the side because you’re a responsible young adult who’s just trying their best. Leave your student taxes in the hands of the experts – that’s us, in case you didn’t know. Not only will we be able to get your taxes in order but we’ll get you any outstanding refunds within five days. That’s right – five. And if it looks like you’re the one who owes the money, we don’t file that information with the IRD. You can do that when you’re able to pay back the money. As a student, more often than not, you’ll be the one who is owed. Especially if you’ve got a student loan.
Remember, working and studying at the same time is a noble effort, but do it right. While working under the table may seem like a great idea, it’s only going to cost you with the lost employee benefits, superannuation, safety and legal rights. If you insist on working for cash, then you’ve got to claim it. We’ll do it for you. Get in touch today if you have any further questions.