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Income Tax Act 2007

General collection rules - Refunds

RM 10: Using refund to satisfy tax liability

You could also call this:

“Asking Inland Revenue to use your tax refund to pay your tax debts”

When you’re entitled to a tax refund, you can ask the Commissioner to use some or all of it to pay off your tax debts. This applies to refunds under sections RM 2, RM 4, and RM 5, including refundable tax credits. If you don’t ask, the Commissioner can still use your refund to pay your tax debts.

However, the Commissioner can’t use certain types of refunds to pay your tax debts. These include refunds from tax credits for social policy and other initiatives, or from choosing to use a net loss from 2019-20 or 2020-21 as a tax loss in the previous year.

If you have a FamilyBoost tax credit, special rules apply. The Commissioner can use your refund to pay any amount you owe under section 41C(7) of the Tax Administration Act 1994. If that doesn’t apply or there’s money left over, you can ask the Commissioner to use some or all of the refund to pay your tax debts on a specific date.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520433.

Topics:

Money and consumer rights > Taxes

RM 9: Calculations for attributed and non-attributed fringe benefits, or

“How FBT payments work for different types of fringe benefits”

RM 11: Using GST refund to pay instalment of provisional tax, or

“Using your GST refund to pay some or all of your provisional tax”

Part R General collection rules
Refunds

RM 10Using refund to satisfy tax liability

This section applies when a person is entitled to a refund of an amount of tax under sections RM 2, RM 4, and RM 5. An amount of tax under this section includes an amount of a refundable tax credit under section LA 5(5) (Treatment of remaining credits). Section LB 4 (Tax credits for families) may apply to adjust the amount available.
The person may ask under section 173T of the Tax Administration Act 1994 for the Commissioner to apply some or all of the amount on a particular date to satisfy a liability under the Inland Revenue Acts.
If no request is made under subsection (2), the Commissioner may apply the amount of the refund to satisfy a liability that the person has under the Inland Revenue Acts.
Despite subsection (3), the Commissioner must not apply the amount of a refund under section LA 7(1)(a) (Remaining refundable credits: tax credits for social policy and other initiatives) or RM 8, or arising from an election under section IZ 8 (Election to use net loss for 2019–20 or 2020–21 year as tax loss in preceding year), to satisfy a liability of the person.
Despite subsections (2) to (4), if a person has a FamilyBoost tax credit under subpart MH (FamilyBoost tax credits) and is entitled to a refund under section 41C of the Tax Administration Act 1994,—
the Commissioner may apply the amount of the refund to satisfy a liability that the person has under section 41C(7) of that Act:
if paragraph (a) does not apply or an amount remains after the Commissioner has exercised the discretion given under paragraph (a), the person may ask under section 173L of that Act for the Commissioner to apply some, or all, of the amount on a particular date to satisfy a liability under the Inland Revenue Acts.

Compare

2004 No 35 ss MD 1(3), (3A), MD 1(4)

Notes

Section RM 10(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 543(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10(1): amended (with effect on 1 April 2013), on 17 July 2013, by section 90 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section RM 10(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 543(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10(4): amended (with effect on 15 April 2020), on 30 April 2020, by section 14 of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section RM 10(4): amended (with effect on 1 April 2015), on 24 February 2016, by section 228 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section RM 10(4): amended (with effect on 1 April 2008), on 2 November 2012, by section 153 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section RM 10(4): amended (with effect on 1 April 2008), on 6 October 2009, by section 543(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10(5) heading: inserted, on 1 July 2024, by section 15(1) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
Section RM 10(5): inserted, on 1 July 2024, by section 15(1) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
Section RM 10 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section RM 10 list of defined terms FamilyBoost tax credit: inserted, on 1 July 2024, by section 15(2) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
Section RM 10 list of defined terms refundable tax credit: added (with effect on 1 April 2008), on 6 October 2009, by section 543(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RM 10 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).