Split Income Sharing – A Positive for 2 Parent Families

Offering tax relief to families and parents who don’t qualify for other government assistance, leader of the United Future Party, Peter Dunne, has launched an income splitting bill that’s currently before the select committee hearings.

Income sharing benefits two-parent families – potentially assisting 310,000 families nationwide. The Bill is designed to financially assist those who choose to be more active in caring for their children (often sacrificing a full time income) and would inevitably help high income families the most.

The Bill proposes that each partner in a relationship caring for children under 18 can opt to be taxed on an equal share of their combined income. At the end of the tax year they could apply for a tax credit based on the difference between the tax paid on an individual basis and what they would pay based on half of their combined income.

The maximum a couple could get from the tax credit is $9,080 (based on current tax rates and thresholds). This would be a single income household earning up to $140,000. People who have a larger combined income can split it but don’t gain more than the $9080 maximum a year.

Some scenarios… A family with one income of $60,000 would be eligible for an income sharing tax credit of $2,480.

Where one partner earns $80,000 and the other partner earns $40,000 they would be eligible for an income sharing tax credit of $1,300.

A qualifying family where one partner earns $80,000 and the other partner earns $10,000 would be eligible for an income sharing tax credit of $4,580.

Income splitting appears to be a fair financial initiative for high income earning parents. Couples and families are already treated as one for various asset and income testing purposes, although this tax relates to annual combined income only – the number of children you have has no bearing.

The group that will benefit from income splitting generally wouldn’t qualify for government assistance if one parent opted to stop work for a time to provide childcare due to the strength of their annual income.

Government top ups available to low income earners are also based on a combined income calculation. Currently a low income earner may qualify for assistance with childcare, family support and other benefits that increase in value to accommodate the children added to the family unit. 

The Labour Party opposes the Bill, claiming United Future’s Peter Dunne of a form of moral blackmail, while revenue spokesman Stuart Nash said it favoured wealthy parents over families that really needed extra support. There have also been smatterings of comment around the definition of “parents”. Decades past when income splitting was available in the 60s the two parent family was easier to decipher.

At this stage parents will have to be spouses, civil union partners or de-facto partners and NZ tax residents for the whole tax year before claiming a tax credit. 

Income Sharing Tax Credits would be voluntary, so as with most tax rebates, credits and refunds, you’d get it if you

a) qualify

b) ask for it

If the legislation becomes law and depending on uptake, it could cost around $450 million a year. It would be in effect for the 2012/13 tax year – with tax credits paid after 31 March 2013.

At TaxRefunds.co.nz Ltd we are the specialists in refunding over paid tax and claiming tax credits. We know what to claim on your behalf and identify for you which tax options will give you the biggest benefit.

We are New Zealand’s largest online tax refund service and we’ve already refunded over $130 million to salary and wage earners. We’ve made it easy, safe and fast to claim what you’re owed.

Visit us at www.taxrefunds.co.nz for a free estimate. You Owe It To Yourself!

 

 

 

 

Donations & Childcare Tax Credits – What’s The Gist?

The growth in rebates paid out for donations from 2001 to 2009 has really taken off as more individuals educate themselves on what they’re entitled to claim back at the end of each tax year.

Tax Credits are a refund of tax you’ve paid during the year. There are several things you can claim tax credits for including charitable donations, school fees and childcare.

Donations to Charity

Donations are unconditional gifts (you are not entitled to anything in return) and include church tithes, door to door appeals and street collections, bequests and voluntary school fees (but not school activity fees).

If you have valid receipts that show you have donated $5 or more to approved “donee” groups, including charitable or religious organisations, medical research schools and universities, approved overseas aid funds. This doesn’t include tuition fees, university, polytech or other tertiary education fees, or other fees paid to early childcare providers.

Kindergarten associations fees (not including private providers of early childhood care), school fees (voluntary school fees but not school activity fees) from state and integrated schools as well as Board of Trustees fees (payments can either be “donations” or payment of “school fees” that go into the school’s general fund) all qualify for a 33% rebate of the donation total. 

There are some donation exceptions including payments for classes with a take-home component, voluntary attendance, transport to school activities like field trips and camps. 

The amount you can claim varies slightly but generally speaking from 31 March 2009 onwards you can claim 33.33% of the total donations paid. Claims can be backdated so it might be worth ringing around to get copies of receipts if you don’t have them already.

A valid receipt needs to include the date the receipt is issued, the donors full name, the amount donated, confirmation that the payment was a donation, the signature of the authorized person and the official stamp of the donee organization, receipts printed on the organizations letterhead are accepted as official.

If you make donations directly from your salary or wages (known as payroll or workplace giving) you receive the tax credit at the time of donation, therefore you can’t claim them again.

Collecting receipts along the way and keeping them in a collective place until the start of the new tax year will make it easier. Looking forward to the paperless receipt – think papercut.

 

Childcare Tax Credits

If you are an individual who earned a taxable income eg salary or wage, benefit, NZ Super or self-employed income and have children under 18 during the year you are claiming for you are entitled to claim tax credits for paid childcare. It’s calculated based on the cost of childcare for all children that are eligible, not per child.

For those with recognized partners, the spouse can claim the balance of donation and childcare payments up to the relevant maximum (not exceeding your taxable income). This applies whether the receipt is in one persons name or both.

You can claim the lesser of 33% of the total payments made, or $310 ($940 x 33%) or 33% of your taxable income.

After School Care, Early Childhood Learning Centres, Creche, Holiday Programmes are all included under the banner of childcare providers.

Childcare payments add up over time and it’s definitely one tax credit that people should claim for. The cost of professional childcare services for a family can be significant.

There are anomalies that apply around dates, thresholds and relationships. But generally speaking you can claim back 33% of your annual childcare costs and 33% of the total of your annual donations to charity – it’s worth the trouble of collecting and storing the receipts!

 

Check out Tax Credits for Under 19s and Independent Earner Tax Credits to find out more about what you or others you know may be entitled to claim.

 

Tax Credits For Kids – Under 19s Get The Jump

Had a holiday job, part time work or after school job? Wondering how much tax you should be paying and if you’re in for a refund? Congratulations on entering the working world – start good habits like regular saving and claiming your tax refunds and credits!

If you’re under 19 and have been working for a wage or salary you could be due a tax refund or credit. A tax credit (formerly known as rebates) is usually calculated at the end of the income year and reduces the total tax you need to pay. If you meet the criteria you could be entitled to a refund.

There are several types of tax credits available, eligibility for each varies, but generally speaking, people should claim the largest and most favourable tax credit.

This article specifically looks at the following two for under 19s – the Tax Credit for Income Under $9880 and the Tax Credit for Children.

It’s not always easy to work out what your best course of action is when it comes to claiming one or the other. That’s where we can help. As New Zealand’s largest tax agent www.taxrefunds.co.nz has refunded over $135 million in overpaid taxes. We’re the experts when it comes to claiming tax refunds and tax credits. It’s our job to make sure you get back every dollar you’re entitled to.

The Child Tax Credit or Tax Credit for Children is available if you are earning income and at any time during the income year you’re 14 or under, 15, 16 or 17 and still attending school, or if you turned 18 on or after 1 January in the previous tax year and continued to attend school.

You can claim the child tax credit if you received income other than interest, dividends or taxable Māori authority distributions (for example, if you earned salary or wages).

You can’t get the child tax credit if you’re under 19 and studying at a tertiary institution and/or if your only income was from interest and/or dividends.  Just to clarify – attending school includes any educational facility for disabled children but excludes tertiary institutions.

If you left school during the year you can claim either the tax credit for children or the tax credit for income under $9,880 – whichever is largest.

Tax Credit for Under $9880 is available if you earned under $9,880 in a financial year, you can claim a tax credit for every week that you were in paid work for 20 hours or more. An example of this might be someone who left school halfway through the year and worked for the rest. Remember you can’t claim both the Tax Credit for Income Under $9880 and the Tax Credit for Children at the same time.

As long as you select correct tax codes with your employers you’ll be taxed according to the tables set by the IRD, but you may still be eligible for a tax credit or refund if you meet the criteria and earn within specific thresholds.

Tax year dates run from 1 April to 31 March the following year. So the 2010 income year is 1 April 2009 to 31 March 2010.

We believe it is smart to claim what you’re owed at the end of the tax year (eg after 1 April) to mitigate having to pay tax and to collect refunds and credits in a bulk amount.

All young people who earn salary or wages in after school and holiday jobs should check to see if a refund or tax credit is due at the end of each tax year.

We are the experts in claiming your full tax refund and tax rebate entitlements to the highest dollar value. Get started today by visiting www.taxrefunds.co.nz to ensure you’re getting the full monetary benefit of tax refunds and tax credits you may be entitled to for any of the previous 5 tax years, this includes any paid employment from then until now. It’s fast, simple and convenient.

 

Independent Earner Tax Credits – Are You Eligible?

The Independent Earners Tax Credit (IETC) can now be claimed along with other tax refunds – and it’s providing a pleasant surprise for many. An additional $520 (for 2010) or $620 (for 2011) in tax credits for some has been a welcomed bonus on top of traditional tax refunds. But don’t jump the gun and claim it monthly unless you’re 110% certain you’ll earn within the eligibility thresholds. For peace of mind it is safer and smarter to to check your IETC entitlement at the end of the year to remove the risk of having tax to pay as a result of misjudging eligibility.

If you’re eligible (earn between $24-48k net), but earn over $44k your annual entitlement to the IETC decreases 13 cents for every additional dollar earned, gradually decreasing to 0 at $48k.

Those not eligible include anyone who receives Working for Families Tax Credits, any income tested benefits and anyone receiving NZ Super or Veterans benefits.

If you receive a student allowance, ACC, paid parental leave or accommodation supplement you may still qualify for the IETC if you meet the eligibility criteria. 

Seasonal workers are still eligible for IETC for periods not worked as long as there’s no other reason to exclude themselves. Those who work 6 months of the year and earn within the thresholds are eligible for the whole year providing they don’t claim benefits (or do anything else to be excluded) for the period they’re not working. Ski staff who work in the first 6 months of the financial year will be in a better position for projecting their annual income than perhaps fruit pickers who work the latter part and may have already been earning with previous employment.

It makes good sense and is safer to claim your tax credits at the end of the year along with any other tax refunds owed. If you can survive without the weekly maximum of $10, claiming it in a lump sum eliminates the risk of overpayment and maximizes the likelihood of a refund. 

The reality is we don’t always know what we’re going to earn, opportunities for extra income pop up (pay rise, secondary employment) and unforeseen circumstances may reduce our income (cutbacks and redundancies).

The net income that thresholds are calculated on means your total income from all sources less any allowance deductions or current year losses (including LAQC losses, but not including any losses brought forward). 

If your only income is from salary or wages (gross income less allowable expenses, such as income protection insurance) your net income is your annual salary or wage before tax.

For those claiming it monthly through salary or wages be aware of potential for overpayment, if your income increases to exceed $44k, your annual net income exceeds $48k – or at the other end of the scale if your annual income is less than $24k and you’ve claimed the IETC through wages. This is a danger zone.

To get the IETC paid monthly you’ll need to alter your tax code (complete an IR330) and give it to your employer. Tax codes are ME for non-student loan borrowers who qualify and MESL for student loan borrowers who qualify. You can only choose a new tax code for your main or highest source of salary/wage income. 

If you’re not an employee (self-employed, etc) then you need to claim the IETC in your IR3 return at the end of the tax year. You’ll need to advise that you’re entitled to the IETC and provide the number of whole months you were eligible for the credit. 

Too complicated and confusing, or too scared to enquire? Having trouble deciphering what you can and can’t do? Not sure your monthly earnings are stable? Working out eligibility has got even trickier with the IETC.

One way to remove the risk and hassle is to have us to work it out for you. Visit www.taxrefunds.co.nz to find out what you might be owed for the 2010 tax year, including any IETCs owed. The benefit of using us to claim back your tax refunds is it protects you from having to pay tax if you do owe anything.

The process is very simple, quick and convenient.

If you haven’t checked what tax refunds you’re owed for the previous 5 tax years then you could be sitting on a tax refunded nest egg!

2011 is shaping up to be even bigger as far as tax credits and refund values go – IETCs are going up, tax rates are coming down and it’s a 53 week pay cycle – so don’t miss out – You Owe It To Yourself!

  

Also check out our upcoming blog on tax codes – being on the right one can make a massive difference to your personal end of year.

 

 

 

10 iPhone4 Giveaways – Check Your Details 2BIn2Win

Here’s a terrific chance to win one of ten iPhone 4 prizes…

You qualify to enter if you’ve created an account with us and

a) asked for a refund but didn’t get one

b) entered your details on our site but for whatever reason didn’t request a free estimate

c) didn’t apply to claim your tax refunds

 

It’s ultra easy – all you have to do is update your details online at www.taxrefunds.co.nz. 

Log into your account, check the details on your profile are correct and you’ll go into a draw to win a free iPhone 4 – there are up to 10 to be won before Christmas! 

It’s quite possible you could now have a tax credit owed from the recently introduced Independent Earner Tax Credit (IETC)… In fact you could be entitled to up to 5 years of tax refunds, apply for a free estimate and we’ll let you know.

Forgot your password? – Receive a newly generated password to your email account.

We are New Zealand’s biggest tax agency and it’s our job to get our clients what they’re due!

 

Terms & Conditions – The terms and conditions for this promotion are available from TaxRefunds.co.nz on request

Filing Fee – TaxRefunds.co.nz claims your refund with the Inland Revenue Department. Your refund amount less a filing fee of 12.5% (at a minimum of $12.50 and a maximum of $500 per refund) will be deposited directly into your bank account.

 

 

 

We’ve Changed The Way We Work – The System Needs to Catch Up

The tradition of a 9-5 work day and one steady job is slowly but surely declining as people look for more flexible working conditions to suit their individual lifestyles.

Although the taxation system in New Zealand is broadly accurate, those employed seasonally, part time, shift or overtime workers, those who work a partial tax year, employees who work several jobs and/or commission or bonus earners are all likely to receive tax refunds.

What tends to happen is people outside the traditional employment (eg 9-5 or salaried) have income peaks that are taxed at a higher rate than their overall income warrants for the year – this is why many employees unwittingly overpay personal taxes and become eligible for tax refunds.

Even those in salaried positions may find they’re in the money; a pay rise or bonus throughout the year might push them into the next tax bracket but when calculating their annual income at the end of the tax year they’ve often been taxed too highly.

Payroll staff pay employees weekly, fortnightly or monthly, according to the tables set by the IRD – employees need to consider the implications if part of their income is taxed at peak rates.

To be on the safe side the IRD leave just a little fat in the system, it’s geared for overpayment – and before you know it there’s hundreds of millions in overpaid taxes waiting to be claimed.

You can claim back overpaid taxes for the previous 5 tax years – it’s easy, fast and convenient.  You Owe It To Yourself!

www.taxrefunds.co.nz

 

IRD Can’t Find Owners for $55m Unclaimed Cash…

What’s wrong with this picture?

The obligatory annual IRD announcement about unclaimed cash had me chuckling to myself as I thought here’s yet another pool of money just waiting to be claimed – $55 million made up of bank deposits, insurance proceeds, financial institutions, cheques and wages – earmarked for the government’s coffers.

Last year they managed to return 1.7 million. Now in my opinion returning only 1.7 million is a very poor effort… which begs the question exactly how much effort goes into returning this money?

The IRD claims “because people move around so much it can be hard to track them down”. According to the IRD the $55 million of odds and ends can’t be easily offloaded.

Hang on – if the IRD wants to get in contact with you they find a way – surely!

Get me the list of names, phone books, electoral rolls, internet and the IRDs powers and I’m pretty confident I could make a serious dent in returning the $55 million – what a pleasure that would be!

It’s a similar story when it comes to claiming tax refunds… It’s estimated hundreds of millions exists with the IRD waiting to be claimed.

TaxRefunds.co.nz has refunded over $120 million in 2 years, a drop in the bucket when you consider every year an estimated $100 million moves unnoticed, without fanfare, into the patiently waiting government’s coffers – not into the pockets where it belongs.

www.taxrefunds.co.nz – You Owe It To Yourself!

 

 

 

Get Your Cash Back in time for Christmas…

Needing dosh, moolah, doleros, coin or just extra cash for Christmas? 

Summer spending… Lets face it, money for the extra ice creams, cold beers, chilled vino and good coffee we’ll be indulging in over the coming months (not to mention gifts) can be hard to come by, unless we’ve been busily saving for this time of the year.

There is hope – Claiming back your tax refunds is one way to get a quick cash injection, along with claiming any tax rebates for childcare and donations, (think kindy fees, paid childcare, holiday programmes, church tithes) you can claim back 33% which can turn out to be a real bonus!

Claiming what you’re owed doesn’t take long and it’s utterly painless in comparison to credit card debt.

So for personal tax refunds go to www.taxrefunds.co.nz and get started – the sooner you complete the process the sooner you’ll be enjoying your extra cash – You Owe It To Yourself!

 

SOCIAL MEDIA acronym strikes again

It’s hard to keep a good thing down – try this on for size

Soliciting Organic Content Inside A Labyrinth Module Entertaining Distantly Incognito Associates – Margot Thompson

Fear of the Unkown

Do you get a nervous twitch when closeted tax thoughts pop into your mind?

Are you hesitant to check if you might be owed a tax refund each year?

Take a deep sigh and breath out with relief because we’re here to provide you with a free estimate of what you’re owed before you officially file, eliminating the risk of generating an unwanted tax bill – instead you get the good news (a tax refund yeah!).

Now being a responsible company we’re going to let you know if we estimate you owe the IRD. You wont suddenly get a bill, it’s more like an incognito enquiry that makes you aware of where you stand and we encourage you to settle anything outstanding.

When it comes to overpaid taxes and unclaimed tax rebates – you owe it to yourself – so why not retrieve it from the tax departments bank account and get it into yours!

Get your free estimate at http://www.taxrefunds.co.nz at a convenient time for you, while you’re there check refunds for the previous 5 tax years.

No paperwork, no form filling, no postage – it’s all done online and it’s really very easy.

So what are you waiting for? Are you waiting for the IRD to tell you they owe you money?

Oh dear, bless you