October 2010 tax changes... do we need two tax returns?

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Forums › Finance and wealth management › October 2010 tax changes... do we need two tax returns?

tristanb

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#64502 16-Jul-2010 18:03

I have a question for the economics types, or other people who can remember what happens in a mid-financial year tax change.

With tax rates changing on 1 October, but the financial year running from April to March, how will IRD calculate how much tax should have been paid at the end of the year?

For instance if I earned $30,000 from Apr->Sep and $70,000 from Oct->Mar, I would get more in the hand than if those earnings were the other way around. (As tax will be lower in the latter half of the year.)

So in July of next year, when doing our tax return, will we need to know two values (mid-year/end-of-year)? And will we need to know these two values for all sources of income including interest?

robbyp

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#352426 16-Jul-2010 19:17

tristanb: I have a question for the economics types, or other people who can remember what happens in a mid-financial year tax change.

With tax rates changing on 1 October, but the financial year running from April to March, how will IRD calculate how much tax should have been paid at the end of the year?

For instance if I earned $30,000 from Apr->Sep and $70,000 from Oct->Mar, I would get more in the hand than if those earnings were the other way around. (As tax will be lower in the latter half of the year.)

So in July of next year, when doing our tax return, will we need to know two values (mid-year/end-of-year)? And will we need to know these two values for all sources of income including interest?

I think the best people to contact are the IRD, as you are paying them for that information. I do recall something about this situation being discussed in the budget.

tristanb

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#370635 21-Aug-2010 12:17

I found this forum post I made while Googling to find the answer.

Fortunately I did find the answer, and thought I'd leave it here.

"If you pay tax at the end of the year (via an income tax return assessment), an average rate of tax for the whole year will be applied." (emphasis mine)

From: http://www.ird.govt.nz/changes/income-tax/individuals/personal/

Batman

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#370660 21-Aug-2010 13:27

interesting!