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School students

As part of the Government's Budget this year, the tax credit for children has been repealed, which may change how you tax students. The new legislation affects the current tax year (1 April 2012 to 31 March 2013) so some transitional rules apply.

Children who earn less than $2,340 for a tax year and have no tax deducted from their wages can continue to have no tax deducted until 31 March 2013. From 1 April 2013 they will need to complete a Tax code declaration (IR330) and give it to their employer so tax can be deducted from their wages.

If your employees file a return or request a personal tax summary they may be assessed as having tax to pay, as the tax credit already received will no longer be taken into account. If they think they need to file a return we suggest they complete an IR330 now to change their tax code, so their employer can start deducting tax at the correct rate. This will help avoid or reduce any tax bill at the end of the year.

Tertiary students and other staff

All other staff, including any university, polytechnic or other tertiary students, must complete an IR330 and give it to you so you can deduct the correct PAYE or tax on schedular payments from their pay.

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