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Income Tax Act 2007

Tax credits and other credits - Tax credits for natural persons - Tax credits for independent earners

LC 13: Tax credits for independent earners

You could also call this:

“Tax credit for eligible earners not receiving other benefits or credits”

You can get a tax credit called the ‘independent earner tax credit’ if you meet certain conditions. This credit applies to you if you’re a natural person for a period in a tax year when:

You’re not getting a main benefit, a veteran’s pension, or New Zealand superannuation. You’re also not entitled to a Working for Families (WFF) tax credit, and you’re not the partner of someone who is. You’re not receiving any similar payments from outside New Zealand, and you’re not the partner of someone who is getting a similar tax credit from overseas. You must also be living in New Zealand.

If you meet these conditions, you can get a tax credit. The amount you get depends on your income. If you earn $24,000 or more in a tax year, your credit starts at $520. But if you earn more than $66,000, the credit gets smaller. For every dollar you earn over $66,000, the credit goes down by 13 cents.

The actual amount you receive is calculated using a formula. This formula takes into account how many months in the tax year you were eligible for the credit. It’s worked out by dividing the number of months you were eligible by 12, then multiplying this by your credit amount (after any reductions for high income).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1949201.

Topics:
Money and consumer rights > Taxes
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Part L Tax credits and other credits
Tax credits for natural persons: Tax credits for independent earners

LC 13Tax credits for independent earners

  1. This section applies for a natural person, for a period (the credit period) in a tax year when the person—

  2. is not receiving a main benefit; and
    1. is not receiving a veteran's pension; and
      1. is not receiving New Zealand superannuation; and
        1. is not entitled to a WFF tax credit; and
          1. is not the spouse, civil union partner, or de facto partner of a person who is entitled to a WFF tax credit; and
            1. is not receiving an amount that is—
              1. granted outside New Zealand; and
                1. in the nature of, and paid for similar purposes as, a benefit, pension, superannuation payment, or tax credit described in paragraphs (a) to (d); and
                2. is not the spouse, civil union partner, or de facto partner of a person who receives an amount that is—
                  1. granted outside New Zealand; and
                    1. in the nature of, and paid for similar purposes as, a tax credit described in paragraph (d); and
                    2. is resident in New Zealand.

                      1. For the credit period, the person has a tax credit equal to the positive amount calculated using the formula—

                        (person's credit − full year abatement) × credit period months ÷ 12.

                        Where:

                        • The items in the formula are defined in subsections (4) to (6).

                        • Person's credit is, if the person's net income for the tax year is equal to or more than $24,000, $520. Otherwise it is zero.

                        • Full year abatement is, if the person's net income is greater than $66,000 for the tax year, 13 cents for each complete dollar of the excess.

                        • Credit period months is the number of whole months in the credit period.

                        Notes
                        • Section LC 13: added, on , by section 31 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
                        • Section LC 13(1)(a): amended, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section LC 13(5): amended, on , by section 26 of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                        • Section LC 13 list of defined terms income-tested benefit: repealed, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section LC 13 list of defined terms main benefit: inserted, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).