New tax credit

The new voluntary payroll-giving scheme began yesterday, January 7 2010. The scheme provides a tax credit for gifts of money that are deducted from an employee’s pay through an employer’s payroll. Employees receive an immediate reduction in tax by way of the tax credit each pay period, eliminating the need to collect and keep receipts to claim tax relief on gifts of money at the end of the year. To participate in the payroll-giving scheme, a recipient organisation such as a charity or school must be a donee organisation (see www.ird.govt.nz/donee-organisations).
Employers are urged to make employees aware of the availability of the tax credit. Employees not participating in the scheme can still claim tax credits at the end of the year.
Employees are responsible for ensuring that the chosen recipient is in fact a donee organisation and for supplying relevant details to their employer to enable the gifts to be transferred to the selected donee.
Employers are responsible for ensuring that gifts are transferred to the chosen donees within a specifired period.