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McLEAN AND CO.
Student Loans- Voluntary Payments
Here are some guidelines to help you choose the right one.
For income from your main (or only) job, use M unless one of the following codes applies:
If your main income is from an income-tested benefit, you'll be taxed using the M code. Any other salary and wage income you earn should be taxed using a secondary tax code.
If you receive income from a second job, use S unless one of the following codes applies:
From 1 April 2010 there's a new SB (secondary bottom) tax code for people whose total income for the tax year is $14,000 or less.
If you have a student loan and your income from your main job is over the repayment threshold ($19,084), you need to add SL to the secondary code that applies to you, eg, S becomes S SL, SH becomes SH SL and ST becomes ST SL.
If your income is under the threshold, there's no legal requirement to have student loan payments deducted from your wages. However, if you have income from a second or third source and the combined total is over the repayment threshold you're required to start paying back your student loan.
If you use the S SL tax code for your second job you may end up paying back too much towards your student loan, but if you only use the S tax code you may end up with a student loan bill at the end of the year. In this situation we strongly recommend you apply for a special repayment deduction rate, which we'll work out to best suit your individual circumstances.
To apply for a special repayment deduction you'll need to complete a Special tax code/student loan special repayment rate application - 2011 (IR23BS). You can download a copy from "Forms and guides". on www.ird.govt.nz. This form can be filled in online. Once you've completed it, print it out and post it to the address given. Or you can order a copy by calling IRD at 0800 257 773.
Other tax codes include:
STUDENT LOANS- VOLUNTARY PAYMENTS.
The government has introduced a 10% student loan voluntary repayment bonus for voluntary repayments that total $500 or more in a tax year (1 April to 31 March).
You don't need to make a voluntary repayment in a lump sum. You could make voluntary weekly repayments of $10 throughout a tax year instead of a one-off payment of $500, and still be eligible for the repayment bonus.
You don't need to apply for the voluntary repayment bonus, but you do need to have met all your student loan obligations. These are making your repayments by the due date, using the correct tax code, and filing your income tax returns (if you're required to) to be eligible
You're eligible for a voluntary repayment bonus if:
When you receive your voluntary repayment bonus depends on your circumstances.
|If you...||then you'll receive your voluntary repayment bonus...|
|havenít repaid your loan in full and donít need to file an IR 3 income tax return||by the end of October in the following tax year|
|havenít repaid your loan in full and are required to file an IR 3 income tax return||within 12 weeks of your return being filed|
|are an overseas-based borrower||by the end of October in the following tax year|
|repaid your loan in full by 30 June 2010||by the end of October 2010|
|repaid your loan in full after 30 June 2010||within 4 months of your final repayment|
Associated persons are:
Special rules apply if you make certain supplies to associated persons.
If you supply goods or services to an associated person who can claim a GST credit for the purchase, you account for GST on the amount received.
Jones and Jones, a GST-registered partnership sells a piano to
Dawn, a sister of one of the partners. Dawn is registered for GST and
can claim a GST credit on the purchase.
The open (current) market value of the piano is $2,000 but the sale is for $1,500. The partnership accounts for GST of $166.66 ($1,500 / 9).
If you supply goods or services to an associated person who cannot claim a deduction, you must determine the open (current) market value of the supply and account for the greater of the market value, or the amount you charged, in your return.
If Dawn (see previous example) was not registered for GST, the partnership would account for GST of $222.22. This is the $2,000 market value divided by nine.
Include transactions with associated persons in the return for the taxable period in which you made the supply. However, if you receive payment or issue an invoice before the last date for filing that return, the date of payment or invoice determines which taxable period the supply falls in, depending on your accounting basis.
A partnership has a two-month taxable period. The return for the
period ended 30 April is due on the last working day of May.
The partnership supplies goods with an open (current) market value of $135 to a non-registered brother of one of the partners on 24 April and receives payment of $100 on 16 June. The partnership will account for $15 GST (on the market value of $135) in the return for the taxable period ended 30 April, as this is the period in which the supply was made.
If the partnership had issued an invoice or received payment during May (before the April return was due to be filed), the $15 GST would be included in the return for the taxable period ended 30 June. This is because the invoice or payment would fall in the June period.
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If we can assist further, please email McLean and Co as follows: