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Income Tax Act 2007

Tax credits and other credits - Tax credits for gifts and donations

LD 4: Tax credits for payroll donations

You could also call this:

“How you can get tax credits for donations made through your pay”

You can get a tax credit if you make donations through your pay. This applies if your employer sends your pay information electronically and offers payroll giving. If you choose to donate from your pay, you’ll get a tax credit for that pay period.

The tax credit is calculated as 33⅓% of your total donations for that pay period. However, the credit can’t be more than the tax on your pay for that period.

This tax credit is non-refundable, which means it can reduce your tax bill, but you won’t get money back if the credit is more than what you owe. It applies to the tax year when you made the donation.

If you get this tax credit, you can’t ask for a refund for your payroll donations through section 41A of the Tax Administration Act 1994.

For this section and some related sections, ‘pay’ means your salary or wages, including similar amounts you earn in your normal job.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2781407.

Topics:
Money and consumer rights > Taxes
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LD 5: Calculating amount of tax credit and filing particulars, or

“How your employer calculates and reports your payroll donation tax credit”

Part L Tax credits and other credits
Tax credits for gifts and donations

LD 4Tax credits for payroll donations

  1. This section applies to a person who—

  2. is an employee whose employer—
    1. provides employment income information by electronic means with particulars relating to the person's PAYE income payments for a pay period; and
      1. agrees to offer payroll giving to their employees; and
      2. chooses to make a payroll donation in the pay period from an amount derived as pay.

        1. The person has a tax credit for the pay period equal to an amount calculated using the formula—

          total donations × 33⅓%.

          Where:

          • In the formula, total donations is the total amount of all payroll donations made by the person in the pay period.

          • Despite subsection (2), the amount of the tax credit must not be more than the amount of tax for the person's pay for the period.

          • A credit under this section is a non-refundable tax credit to which section LA 4(1) (When total tax credit more than income tax liability) applies for the tax year in which the period falls.

          • A person who has a tax credit under this section may not make an application under section 41A of the Tax Administration Act 1994 for any refund relating to the amount of a payroll donation.

          • For the purposes of this section, and sections LD 8(1) and 124ZG of the Tax Administration Act 1994, pay, for a person,—

          • means an amount referred to in section RD 5(1)(a) or (b)(i) (Salary or wages); and
            1. includes any similar amount earned by an employee in the normal course of their employment; and

                Notes
                • Section LD 4: added, on , by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section LD 4(1)(a)(i): amended, on , by section 158(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section LD 4(7): amended, on , by section 232 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                • Section LD 4(7)(c): repealed, on , by section 74 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
                • Section LD 4 list of defined terms employer monthly schedule: repealed, on , by section 158(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section LD 4 list of defined terms employment income information: inserted, on , by section 158(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section LD 4 list of defined terms PAYE income payment form: repealed, on , by section 158(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).