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How to avoid an end-of-year bill

There are a number of things you can do to reduce your chances of having an end-of-year bill. These are dependent on how you currently receive your income.

If you earn salary or wages or are on a benefit 

To reduce your chances of having a bill to pay next year make sure you use the right tax code. Your tax code is important because it helps your employer know how much tax to deduct from your income.

If you... then...
have more than one job use a secondary tax code on your second job. Using more than one M code at the same time means you won't have enough tax deducted. This can cause an end-of-year bill.
receive an income-tested benefit and work at the same time use a secondary tax code on your employment income. Your benefit will automatically be taxed on the M code.
use the ME or ME SL code to receive the independent earner tax credit make sure you're eligible for the independent earner tax credit. You'll have an end-of-year bill for any tax credits claimed incorrectly.

Find out more about tax codes

Find out more about the independent earner tax credit

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If you're self-employed or earn business income 

To reduce your chances of having a bill to pay next year plan ahead to pay your income tax. The amount of income tax you'll have to pay is based on your net profit for the year. It's a good idea to use a separate bank account to put money aside to cover the income tax you'll need to pay.

If you pay provisional tax during the year make sure you:

  • use the right calculation option for your situation, and
  • make your payments on time.

If you follow the estimation option, be careful when estimating the amount you pay. Remember to re-estimate whenever your income or situation changes.

Find out more about provisional tax

If you aren't required to pay provisional tax, your income tax assessments will always come at the end of the year.

Find out how to manage your business tax

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If you earn income that's not from salary or wages and have a student loan 

You need to make other payments towards your loan if your income isn't from salary or wages. You'll need to work out your repayments if you have adjusted net income requiring:

  • IR3 income tax return, or
  • personal tax summary.
If you... then...
study full-time you may not have to use the SL repayment code if you qualify for a repayment deduction exemption.
receive an income-tested benefit this will automatically be taxed on the M code. If you also have secondary income you'll need to use a secondary code with SL, unless you qualify for a special deduction rate.
earn salary or wages in New Zealand your student loan deductions each pay will generally meet your repayment obligation for that income period, unless there's a significant over or under-deduction.
are an overseas-based borrower and not on a repayment holiday your repayment obligation is based on the size of your loan balance. Make sure you pay the right amount on time. Contact us if you're having difficulty meeting your obligations.

Find out more about tax codes

Find out more about student loans

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If you receive Working for Families Tax Credits 

To reduce your chances of having a bill to pay next year make sure you only receive the tax credits you're entitled to. One way you can do this is by telling us about any changes to your family or income situation when they happen.

If your income is uncertain, consider receiving your entitlement as one lump sum at the end of the year instead of weekly or fortnightly.

Find out what changes you need to tell us about