Changing your tax code to a standard rate is a simple process. To do so, you must complete the “Change Tax Code” form. If you receive NZ Super, you can change your tax code through the website of the Ministry of Social Development. If you are still employed and receive income from another source, your tax code will be different depending on whether NZ Super is your primary or secondary source of income. Custom tax options are available to help you pay the right amount of tax if your circumstances mean you often have a large bill or tax refund.
It is also important to ensure that any money you get from investments or interest is taxed at the correct rate. If you do not renew or change your custom tax code before the end of the financial year, your tax rate will default to 45% on April 1.You must renew your custom tax code with Inland Revenue at the end of each financial year. It may look like a renewal, but you will actually be re-applying for a custom tax code, which will reflect any changes in your income. There is also the option to apply for a special tax code if you think your tax rate is too high or too low. This helps to prevent you from being paid more taxes than you should during the fiscal year or to help you avoid receiving a bill at the end of the fiscal year.
Tax codes help your employer or payer determine the amount of tax that should be deducted from your salary, benefit, or pension. The exception to this is if you have a student loan, in which case your correct tax code must be M SL. If you believe that you are paying excessive or insufficient taxes, you can request a tax code that fits your situation, known as a custom tax code. When it is time to renew your custom tax code, Inland Revenue will send you a letter through MyIR and you can complete the online form. Additionally, any income from savings or investments must also be taxed at the correct rate.