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LA 5: Treatment of remaining credits
or “How unused tax credits are handled and refunded”
You could also call this:

“How your remaining tax credits are used or refunded”

This section talks about what happens to your remaining tax credits for a tax year. These credits can come from different sources like PAYE income payments, provisional tax payments, resident withholding tax, and others.

If you have these credits left over, here’s what the Commissioner of Inland Revenue will do with them:

  1. First, they’ll use them to pay off any income tax you owe from earlier tax years.

  2. Then, they’ll use them to pay off any income tax you owe for later tax years, starting with the earliest year first.

  3. Next, they’ll use them to pay your provisional tax for future tax years, again starting with the earliest year.

  4. After that, they’ll treat the credits as extra tax you’ve paid. This extra tax might be transferable under certain rules.

  5. Finally, if there’s anything left, they’ll refund it to you following specific refund rules.

The Commissioner can change an assessment or decision to make this happen, even if it would normally be too late to make changes.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: LA 7: Remaining refundable credits: tax credits for social policy and other initiatives

or “Rules for handling leftover tax credits for social support and other initiatives”
Next

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

LA 6Remaining refundable credits: PAYE, RWT, and certain other items

  1. This section applies to a person’s tax credit remaining for a tax year under section LA 5(5) if it is a tax credit under—

  2. section LB 1 (Tax credits for PAYE income payments):
    1. section LB 2 (Tax credits for provisional tax payments):
      1. section LB 3 (Tax credits for resident withholding tax):
        1. section LB 6 (Tax credits for RSCT):
          1. section LB 6B (Tax credits for RLWT):
                1. subpart LO (Tax credits for Maori authority credits):
                  1. section LS 1 (Tax credits for multi-rate PIEs):
                    1. section LS 2 (Tax credits for investors in multi-rate PIEs) and the person is not a natural person, or is a natural person who—
                      1. has the tax credit as a beneficiary of a trust:
                        1. uses the tax credit in the calculation of their PIE schedular income under section HM 36B (Calculating PIE schedular income adjustments for natural person investors):
                        2. section LS 3 (Tax credits for zero-rated investors), and the person is not a natural person or is a natural person having the tax credit as a beneficiary of a trust:
                          1. section LS 4 (Tax credits for certain exiting investors) and the person is not a natural person, or is a natural person who—
                            1. has the tax credit as a beneficiary of the trust:
                              1. uses the tax credit in the calculation of their PIE schedular income under section HM 36B:
                              2. subpart LT (Tax credits for petroleum miners):
                                1. section LU 1 (Tax credits for mineral miners).

                                  1. The Commissioner must—

                                  2. first, use a tax credit to satisfy the person’s income tax liability for a tax year that is before the tax year referred to in subsection (1):
                                    1. second, use a tax credit to satisfy the person’s income tax liability for a tax year that is later than the tax year referred to in subsection (1), applying this paragraph to earlier tax years before later tax years:
                                      1. third, pay the person’s provisional tax for a tax year that is later than the tax year referred to in subsection (1), applying this paragraph to earlier tax years before later tax years:
                                        1. fourth, treat a tax credit as tax paid in excess and as transferable under section LB 1B (Treatment of tax credits of certain companies with shareholders who are employees) or Part 10B of the Tax Administration Act 1994:
                                          1. fifth, refund a tax credit by applying sections RB 4, RM 2 to RM 8, and RM 10 (which relate to refunds and their use), as applicable, and the Tax Administration Act 1994.

                                            1. The Commissioner may amend an assessment or a determination to give effect to this section despite the time bar.

                                            Compare
                                            Notes
                                            • Section LA 6(1)(cb): inserted, on , by section 433(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                            • Section LA 6(1)(cc): inserted, on , by section 43 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
                                            • Section LA 6(1)(d): repealed, on , by section 153(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                                            • Section LA 6(1)(db): repealed (with effect on 1 April 2009), on , by section 153(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                                            • Section LA 6(1)(e): amended (with effect on 1 April 2008), on , by section 308(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                            • Section LA 6(1)(f): added (with effect on 1 April 2008), on , by section 308(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                            • Section LA 6(1)(f): amended, on , by section 68(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                            • Section LA 6(1)(f): amended, on (applying for the 2010–11 and later income years), by section 308(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                            • Section LA 6(1)(g): replaced, on , by section 156(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                            • Section LA 6(1)(h): inserted, on , by section 68(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                            • Section LA 6(1)(i): replaced (with effect on 1 April 2020), on , by section 115 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                                            • Section LA 6(1)(ib): inserted, on , by section 152(1) (and see section 152(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                            • Section LA 6(1)(j): inserted, on (applying for the 2014–15 and later income years), by section 102(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                                            • Section LA 6(2)(d): amended, on (with effect on 1 April 2017), by section 152(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                            • Section LA 6 compare note: amended (with effect on 1 April 2008), on , by section 68(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                            • Section LA 6 compare note: amended, on , by section 433(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                            • Section LA 6 list of defined terms PIE schedular income: inserted, on , by section 156(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).