Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

LD 7: When donation returned to person

You could also call this:

“What happens when a payroll donation is returned to you”

This section explains what happens when a payroll donation is returned to you. If you make a donation through your payroll and it’s given back to you for any reason, the tax credit you received for that donation is cancelled.

When the tax credit is cancelled, two things happen:

The amount of the credit is taken away from your PAYE income payment tax credits for the tax year when the pay period happened. You can find more information about PAYE income payment tax credits in section LB 1.
If cancelling the credit means you now owe tax on a PAYE income payment, you need to pay that amount to the Commissioner. You can find out how to do this in section RD 4.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2781416.

Topics:

Money and consumer rights > Taxes

LD 6: When donation is paid to ineligible recipient, or

“What happens if your payroll donation goes to an unapproved organisation”

LD 8: Meaning and ranking of payroll donation, or

“How payroll donations work and when you can make them”

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

LD 7When donation returned to person

This section applies for the purposes of section LD 4 when the amount of a payroll donation is, for whatever reason, returned to the person.
The tax credit is extinguished.
The consequences that arise when a tax credit is extinguished under subsection (2) are—
the amount of the credit is removed from the person's tax credits for PAYE income payments under section LB 1 (Tax credits for PAYE income payments) for the tax year in which the pay period falls:
when the extinguishing of the credit results in a shortfall in an amount of tax for a PAYE income payment, section RD 4 (Payment of amounts of tax to Commissioner) applies to the shortfall.

Notes

Section LD 7: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 7(3)(a): amended, on 7 January 2010, by section 76 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).