Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Tax credits and other credits - General rules for tax credits

LA 3: When total tax credit less than or equal to income tax liability

You could also call this:

“What happens when your tax credits don't cover all the tax you owe”

If your total tax credit for a tax year is less than your income tax liability for that year, you have unsatisfied income tax liability. This means you still owe some tax.

The amount you still owe is the difference between your total tax credit and your income tax liability for the tax year. You will satisfy this amount when you pay your terminal tax for that year.

For example, if your total tax credit is $1000, but your income tax liability is $1500, you have $500 of unsatisfied income tax liability. You’ll need to pay this $500 when you pay your terminal tax.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517897.

Topics:
Money and consumer rights > Taxes
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LA 2: Satisfaction of income tax liability, or

“How to use your tax credits to pay your income tax”

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LA 4: When total tax credit more than income tax liability, or

“How to use tax credits when they exceed your income tax bill”

Part L Tax credits and other credits
General rules for tax credits

LA 3When total tax credit less than or equal to income tax liability

  1. If a person’s total tax credit for a tax year is less than their income tax liability for the tax year, the person has an amount of unsatisfied income tax liability for the tax year.

  2. The amount of unsatisfied income tax liability is—

  3. equal to the difference between the person’s total tax credit for the tax year and their income tax liability for the tax year:
    1. satisfied when the person pays their terminal tax for the tax year.

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