Tax codes and student loans

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › Tax codes and student loans

mdav056

580 posts

Ultimate Geek

Subscriber

#261847 17-Dec-2019 21:40

Hi -- someone out there might know the answer.

Daughter is at Uni, and working over the holiday. Does she have to have a M SL tax code, and have some of her pay deducted to pay off her student loan? Or is there a way around this (naturally she wants to pay it off when she is finished)

thanks

gml

yitz

1874 posts

Uber Geek

#2377356 17-Dec-2019 21:44

If first time student loan in 2019 the tax code doesn't change until April 2020 when the records get passed on from Studylink to IRD.

GoodSync

GoodSync. Easily back up and sync your files with GoodSync. Simple and secure file backup and synchronisation software will ensure that your files are never lost (affiliate link).

JarrodM

962 posts

Ultimate Geek

#2377358 17-Dec-2019 21:47

Yes she’d need to use M SL, but if she just used M, it’d take a few weeks for the ird to catch up and get it changed by the employer.

But also she can apply for an exemption https://www.ird.govt.nz/student-loans/repaying-my-student-loan/repaying-my-student-loan-when-i-earn-salary-or-wages/student-loan-repayment-deduction-exemption this is of course assuming she’ll be earning less than the threshold over the summer/till the 31 March.

mdav056

580 posts

Ultimate Geek

Subscriber

#2377359 17-Dec-2019 21:53

Thanks, I'll get her to try the exemption thingy.

Geekzone is REALLY useful! But you know that.

gml

GV27

5429 posts

Uber Geek

#2377486 18-Dec-2019 09:01

The repayment threshold is something like $19,900. If she's going to earn less than that she won't have to make payments. It's 12 cents in the dollar after that.

If she does make more than that in the tax year IRD assesses her as such, she could have an obligation to pay later if she has not had any student loan payments deducted.

Most payroll systems will work this out for her but she will still be required to use the MSL tax code.

GV27

5429 posts

Uber Geek

#2377491 18-Dec-2019 09:15

antoniosk:

it appears it’s based on the propensity to earn more than $19900 in the year, rather than when you actually pass that threshold.

daughter find that one out the hard way - she’s working in the holidays and on an annual basis will earn more than $19900, but actually won’t because it’s a holiday job. She still has to pay her loan - verified with IR. She can apply for a refund as she’s still studying, once the year starts again but it the meantime....

Weird. I've seen some payroll systems that can handle it, but it's usually based on how many hours they'd be expected to work in a pay period. Variable hours or short periods of employment at full-time hours confuse the hell out of them though 😅

Depressing that the threshold in Australia before making repayments is literally double what it is here.

pom532

147 posts

Master Geek

#2377496 18-Dec-2019 09:37

The payroll system will calculate the student loan deduction based on the pay period frequency threshold (i.e. weekly, fortnightly), assuming you've got the SL tax code.

The IRD also changed their methods a few years back and they now look at over payments etc based on monthly (I think), rather than annually. So even if you earn less annually, if you haven't applied for an exemption, but you earn over $380 in that week, student loan repayments will be due.