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Top Tips For Making The Most Of Your Tax

Categories   News & Updates

Want to get some of your tax money back? Tax can be complicated, but getting back what you might be owed should be easy. Here are a few ideas about the types of claims you can make, and we’ll tell you why you should act sooner rather than later!

Make sure you’re on the right tax code

First things first. You need to make sure you’re on the right tax code. Being on the wrong tax code means you might be taxed too much, or taxed too little. Getting taxed too little isn’t a bonus, by the way, as it may mean you just end up paying more later on – plus penalties!

So which tax code is right for you?

You can work out your tax code with this handy form on the Inland Revenue site.

Tax codes depend mostly on your work situation and any extra benefits you’re entitled to, or loans you may have. For example, if you’re a New Zealand resident, starting a new job, you earn under $48,000 per year, you have a student loan and you aren’t entitled to other benefits, then your tax code will be ME SL.

Another common example concerns schedular payments. If you receive these types of payments, as many self-employed contractors do, then your tax code will always be WT. These payments are still required to have tax deducted.

Make sure you know what tax credits you can claim

You can reduce the amount of tax you pay using tax credits.

A common tax credit is called the independent earner tax credit. This is an entitlement for people who earn between $24,000 and $48,000 – after expenses and losses – a year. It can only be claimed on your main source of income.

How much can you get? Let’s say you earn between $24,000 and $44,000. Using the independent earner tax credit, you can get around $520 a year.  Between $44,001 and $48,000, your entitlement reduces by 13 cents for every dollar that you earn over $44,000.

Claim your donations

Did you know that donations over $5 may be tax deductible? Yep! There are a few conditions, though.

If you’re donating to an organisation, the donation must be to approved donee organisations. You can find a list of approved organisations on the Inland Revenue website. You also need to keep receipts. There are various other ways of giving that qualify, including religious organisations, medical research, schools and universities, approved overseas aid funds and school fees.

Some people opt to give to charities via payroll giving. The donation is made direct from their pay whenever the payroll is run, and they receive immediate tax credits. This reduces the PAYE payable, and if you’re donating this way you don’t need to file a rebate return at the end of the year to receive your tax credits.

Claim deductible expenses

If you run a business, either full time or part time, there are a range of deductible expenses. These include travel, computers, office stationery, workspace in your home – in fact, just about any expense associated with earning your income. There is a full list of tax deductible expenses on the Inland Revenue website.

If you’re an employee, however, there are not a lot of expenses you can claim.  You can’t claim any work related expenses, but you may be able to claim fees involved with filing a tax return and income protection premiums. Insurance companies will typically send you notification at the end of every financial year showing the portion of your premium that is tax deductible.

Know your obligations for other income

Most people are concerned with their main source of income, but sometimes forget about any additional income they may have received. All income is taxable, so needs to be declared.

For example, tips are cash payments. If you’re working in the hospitality trade and receive a tip from a customer, or a share of combined tips from other employees, this cash is regarded as income by Inland Revenue.

Once your full tax obligations are assessed, then you, or your tax advisor, can work out any deductions to which you’re entitled.

Don’t leave it too late!

Be quick!

You can claim tax back for the last five years. The bad news is that you can’t claim tax back over five years, so if you feel you’re owed a significant amount, or just want to find out, it doesn’t pay to leave it too late. It would be frustrating to know that you were owed a chunk of cash but left it just a few days too late to make a claim.

Let MyTax help!

If all this sounds a bit confusing, we don’t blame you. Tax law can be complicated, obtuse and it changes often. This is why New Zealand has so many accountants!

However, rather than paying an accountant to find out if you’re owed tax back, we have an easier way. All you need to do is take 5 minutes to fill out our application form with some basic information.

We do all the maths. We’ll quickly calculate whether you have any tax refunds owed to you from the past 5 years. If you’re not owed a refund, we don’t charge you a fee!

If you are entitled to a refund, we’ll take care of it all, send your refund by cheque or direct credit to your bank account, less our fee. You also collect Fly Buys points on your fee.

Easy!

Further Reading: 

  • Find out more about the different types of tax credits you can claim in New Zealand.
  • Tax deductible expenses for business in New Zealand.