Is your child paying too much tax? And how do you go about getting the excess back?

If your child (or any individual) has a bank account and has not supplied the bank with an IRD number the bank is obligated to deduct tax at the non declaration rate, a whopping 33%

Once the bank is supplied with an IRD number tax is deducted at rates between 10.5% and 33% depending on taxable income. So well worth checking the bank has an IRD number on record.

To obtain an IRD number for an individual you will need to complete an IRD number application – individual IR595 form. You can download this form from IRD here.

Take this form with originals of two identification documents (if application is for a child you will need documents for you too, you will find the details of all the required documents on the front page of the IR595 form) as well as a legible photocopy of those documents for an ‘in person verification’ to either your local Automobile Association (AA) Driver Licensing Agent or selected New Zealand Postshops.

Confirmation of your IRD number will be sent within 8-10 working days of receiving the application form.

Once the bank has been notified of the IRD number and the correct tax rate is applied you then need to make arrangements for any tax refunds owing.

In order to calculate the value of any refunds owing you will need to complete a Personal Tax Summary (PTS) for each year the incorrect rate of tax was deducted (you can go back 5 tax years).

Click on a tax year to go to the IRD’s PTS Calculator for that year.

PTS 2013
PTS 2012
PTS 2011
PTS 2010
PTS 2009

Use the calculator to check if you’ve paid the correct amount of tax, or whether you’d have a refund or tax to pay.

You will need:

* your full year’s earnings and PAYE deducted if you received a salary, wages, benefit, or taxable pension.

* any interest, dividend or taxable Māori authority distribution details.

* relevant information if you’re entitled to one of the low income rebates.

* details of any expenses you can claim.

The calculation is only as accurate as the information you enter. Please be aware that if you leave out some income or claim a tax credit when you’re not entitled to it, then the result calculated will be wrong.

Use of this tool does not result in data being submitted to IRD.

If the result of your calculation is a refund, you’ll need to request a personal tax summary by using the link at the bottom of the calculation page (this requires registration for MyIR – IRD’s secure online service, which as I understand it can not be used for minors), or by ringing IRD on 0800 377 774. If the result of your calculation is tax to pay, you don’t need to do anything.

Note: If you do go on to request a personal tax summary and it works out you have tax to pay, you will have to pay that tax.

Should you decide to proceed with filing a PTS for any given tax year, in most cases there is no ongoing obligation to continue to file them in subsequent years. Although of course it is still worth completing the relevant years calculations to check if you are due a refund.

If you have queries, concerns or difficulties regarding this or any other tax matter do not hesitate to contact me.