Fill - Free fillable Form 2020: Individual income tax return guide (Inland Revenue Department New Zealand) PDF form

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Individual income tax

return guide

2020

Please read page 5 to see if you need to file this return.

Complete and send us your IR3 return by 7 July 2020,

unless you have an extension of time to file or a

non-standard balance date.

The information in this guide is based on current tax laws at

the time of printing.

IR3G

May 2020

IR 3 INDIVIDUAL RETURN GUIDE2

ird.govt.nz

Go to our website for information and to use our services and tools.

• Log in or register for myIR - manage your tax and entitlements online.

• Calculators and tools - use our calculators, worksheets and tools, for example, to check your tax

code, find filing and payment dates, calculate your student loan repayment.

• Forms and guides - download our forms and guides.

Forgotten your user ID or password?

Request these online from the myIR login screen and we'll send them to the email address we hold for you.

How to get our forms and guides

You can get copies of our forms and guides at ird.govt.nz/forms-guides

Nominate someone to act on your behalf

You can nominate someone to act on your behalf to help you with your tax and entitlements. You can

add a nominated person in myIR.

Having a nominated person does not change your responsibilities. You're still personally responsible for

your tax obligations.

How to contact us

See page 63 for a list of phone numbers.

Important changes

New residential property deduction rules (also known as the ring-fencing rules) apply to most residential

rental properties for the 2019-20 income year, which ends on 31 March 2020 for most people. The

changes include:

• limits to the amount of deductions you can claim if your residential rental property makes a loss

• inability to offset excess deductions/rental loss against other income. They are now generally carried

forward and offset against future residential income

• what happens to excess deductions when disposing of residential property

• limits on the amount of interest you can claim for an investment in an entity that rents out

residential property.

ird.govt.nz

Contents

Page

Do you need to file an IR3 return? 5

Children's exempt income 6

Extension of time 7

Are there any penalties? 7

Income year 7

Using this guide 8

Question

Q1 to 5 Personal information 8

Q6 Business industry classification (BIC) code 8

Q8 Bank account number 9

Q9 Adjustments to your income 9

Q10 Non-residents and transitional residents 9

Your income 11

Q11 Family tax credit from Work and Income 11

Q11A Income with tax deducted 11

Worksheet for ACC earners' levy 13

Q12 Schedular payments 14

Q13 New Zealand interest 15

Q14 New Zealand dividends 17

Q15 Māori authority distributions 18

Q16 Estate or trust income 18

Q17 Overseas income 19

Q18 Partnership income 25

Q19 Look-through company (LTC) income 25

Q20 Shareholder-employee salary 27

Q22 Income and expenditure from residential property 27

Q23 Other rents 32

Q24 Self-employed income 33

Q25 Taxable property sales/disposals 34

Q26 Other income 35

Q28 Other expenses and deductions 37

Q30 Net losses brought forward 38

Loss carry-back 38

Your tax credits 39

Q32 Independent earner tax credit (IETC) 39

Q33 Excess imputation credits brought forward 41

IR 3 INDIVIDUAL RETURN GUIDE4

Calculating your tax 42

Tax on taxable income 42

Q34 Tax calculation 44

Excess imputation credits carried forward 45

Student loan 45

Q35 Early payment discount 48

Q36 Refunds and/or transfers 50

Transfers 50

Provisional tax 52

Q37 Provisional tax 52

Initial provisional tax liability 52

Payment options 52

Q38 Foreign rights disclosure 54

Q39 Is your return for a part-year? 54

Q40 Notice of assessment and declaration 55

Paying your tax 55

Your record of payment 56

ACC personal services rehabilitation payments 57

Accident Compensation Act 2001 (ACC) 61

Services you may need 63

Need to speak with us? 63

0800 self-service numbers 63

If you have a complaint about our service 63

Privacy 63

ird.govt.nz

Do you need to file an IR3return?

If we've sent you a message to complete your Individual income tax return - IR3 in myIR, or a paper

copy by post, you must complete the return and send it to us by 7 July 2020, unless you have an

extension of time or a non-standard balance date. If you don't need to file a return but you'd like to

talk to someone about your tax situation, you can call us.

Note

To help you work out if you need to file an IR3, go to ird.govt.nz/end-of-tax-year or call us on

0800 377 774.

If you received any other income apart from salary, wages, interest, dividends (see further information

below), and/or taxable Māori authority distributions, you must file an IR3 return. There are some

exceptions. If you received personal service rehabilitation payments and are an ACC client or caregiver

(who received payments from the client or ACC), please read page 57.

Note

If you had a workplace injury your employer may manage these payments instead of ACC. If you

or your caregiver receives these payments, regardless of who makes them, you'll need to read the

information on page 57.

Other income includes:

• self-employed income (see children's exempt income below)

• over $200 of schedular payments

• income derived overseas - calculated taxable income arising from a withdrawal or transfer from

foreign superannuation schemes acquired while a non-resident of New Zealand

• over $200 in total of:

– interest derived overseas (if it's had tax deducted ornot)

– dividends of certain Australian resident listed companies and other overseas investments that are

not treated as part of foreign investment funds (FIF) income - see page 20

– income attributed to you from your portfolio investment entity (PIE) where the income had the

0% rate applied, or where you had tax calculated by your PIE at a rate lower than your correct

prescribed investor rate (PIR) during the year. If you receive dividends from a PIE that is a listed

company and doesn't use your PIR, you may choose whether to include the dividends in your

return. Note the dividends will need to be acknowledged for Working for Families Tax Credits

(WfFTC) and/or Student Loan purposes.

• FIF income

• rental income

• estate, trust or partnership income

• royalties

• cash jobs or "under the table" payments

• income from illegal enterprises

• income without PAYE deducted, such as shareholder-employee salary or a claim received under a

taxable loss of earnings policy.

IR 3 INDIVIDUAL RETURN GUIDE6

You'll also need to file an IR3 if you:

• left or arrived in New Zealand part-way through the year

• are filing a return for a deceased person to the date of death if there is a requirement to file a return

for this income year

• were declared bankrupt

• changed your balance date part-way through the year.

Children's exempt income

Read this information if for the tax year you:

• were 14 or under, or

• were 15, 16 or 17 and still attending school*, or

• turned 18 on or after 1 January in the previous tax year and continued to attend school*

including a school for people with disabilities, but excluding tertiary institutions.

The following income is required to have tax taken out before you receive it:

• salary or wages

• schedular payments

• interest

• dividends, and

• Māori authority distributions.

If you only receive these types of income you will not need to file an IR3. However, if you are required to

file an IR3 return this income needs to be included.

If you receive income that has not had tax taken out before you receive it eg:

• worked as a self-employed person,

• worked around the home of a neighbour or family friend, and that work was not part of a business

that they carry on, or

• beneficiary income from a trust, such as a testamentary trust (a trust set up from an estate of a

deceased person), that is not listed above as requiring to have tax taken out

and your total income from these sources is less than $2,340 for the tax year, this income is exempt from

tax and is not included in your return. You are not required to file a return just because you earn this

type of income. If you earn $2,340 or more, the exemption does not apply and you will need to file a

return and pay tax on all the income, not just the amount that exceeds the exemption.

If you have to file a return but we haven't sent you an IR3, you must request and file it by 7 July 2020,

unless you have an extension of time or a non-standard balance date.

Please call 0800 257 773 to request an IR3 return. Remember to have your IRD number with you.

ird.govt.nz

Extension of time

If circumstances beyond your control will prevent you from sending in your return on time, call us on

0800377774 and we may grant you an extension. If you have a tax agent you may have until 31March

2021 to file the return. Contact your agent for more information.

Are there any penalties?

You may face penalties and prosecution if you:

• are required to put in a return but don't

• give false or misleading information (including not showing all your income)

• leave out details on purpose so the information is misleading

• file your return late.

Income year

The information in this guide is based on the tax year from 1April2019 to 31 March 2020. If your income

year is different you canstill use this guide, but work out your income and expenses for your income year.

IR 3 INDIVIDUAL RETURN GUIDE8

Using this guide

Did you know you can also file your return online? Go to ird.govt.nz/myIR

The form will prepopulate with your personal details and earnings information.

Before you start filling in the return make sure you have:

• any interest or dividend statements

• any taxable Māori authority distribution statements

• any other income details, such as overseas, rental property, farming or business income

• your 2020 Working for Families Tax Credits (WfFTC) letter, if you applied for WfFTC from

InlandRevenue.

The questions in this guide are in the same order as the questions on the return.

Don't use anyone else's preprinted return because it's precoded with their own IRD number.

Questions 1 to 5 Personal information

This information helps us to contact you. Please make sure we have your details exactly right. If you've

changed your name or address, please update the information in the spaces provided on the return.

Postal address

If you use your agent's postal address leave this panel blank. Your tax agent will let us know if they've

changed their address.

If your address is a PO Box number, please show your box lobby if you have one. If you're unsure of your

box lobby, please contact New Zealand Post.

Date of birth

We ask for this so we don't mix up people with the same name.

Question 6 Business industry classification (BIC) code

We're required to supply the Accident Compensation Corporation (ACC) with a code for your business

or trading activity, for levy classification and calculation.

If your BIC code isn't preprinted on the return or is different from the preprinted one, please enter the

correct code.

To work out your main business or trading activity and its code, go to businessdescription.co.nz

It's important that you choose the code which most accurately reflects your main business or trading

activity. If you're unable to identify the correct code, call ACC on 0508 426 837 for more help.

Note

Please provide the code only. Don't provide a description. If you don't complete your BIC code, ACC

will select one on your behalf. This may mean your ACC levy rate could be incorrect.

ird.govt.nz

Question 8 Bank account number

The fastest and safest way to get any refund is to have it direct credited to your New Zealand bank

account or other deposit account, eg, a building society account. If your bank account number isn't

preprinted on the return, please include it at Question 8.

If your suffix has only two digits, enter them in the first two boxes.

Question 9 Adjustments to your income

If you have a student loan or you are eligible for Working for Families Tax Credits (WfFTC), you may be

required to include adjustments to your income. This is so that Inland Revenue can correctly assess your

student loan repayment obligation and ensure you receive your correct WfFTC entitlement.

To notify Inland Revenue about your income adjustments you can:

• tick 9A on your IR3 and complete an Adjust your income - IR215 form and attach it to your income

tax return or

• log in to your myIR account and complete it there or

• call us on 0800 227 774 and tell us what your adjustments are.

If you don't have an IR215 form you can:

• download it from our website ird.govt.nz or

• call us on 0800 257 773.

What do I need to do to receive my entitlement?

If you haven't already registered for WfFTC and you qualify, go to our website

ird.govt.nz/working-for-families and register online.

When we've received the registration form we'll send you a letter with all your family details for you to

check. Please correct and return it to us if the details are incorrect.

If you've already registered for WfFTC and you need to file an IR3, we'll send you a letter by the beginning

of May with all your family details on it. Please check this information and return the form with your IR3

if the details are incorrect.

Question 10 Non-residents and transitional residents

Non-residents

If you were away from New Zealand for more than 325 days in any 12-month period and don't have a

"permanent place of abode" in NewZealand, you may be a non-resident. Read our guide NewZealand

tax residence - IR292 to find out your status. If you weren't present in NewZealand and are a

non-resident for a full year, but you received income from NewZealand, you may need to complete an

IR3NR return instead.

IR 3 INDIVIDUAL RETURN GUIDE10

Transitional residents

If you became a New Zealand tax resident during the year 1 April 2019 to 31 March 2020 and you've

elected not to be treated as a transitional resident, you have to complete an IR3 declaring your

worldwide income from the date you became a New Zealand tax resident.

Transitional residents don't have to declare their foreign-sourced income except for foreign employment

income and foreign servicesincome.

If you were a non-resident for part of the year, complete Question 39 on your return.

If your return isn't for a full year, we'll calculate your tax and income-related tax credits and let you know

the result - see ird.govt.nz/technical-tax/legislation/2006/2006-81/2006-81-exempt-transitionals/ for

further information.

ird.govt.nz

Your income

If you received family tax credit from Work and Income, salary, wages or schedular payments, the

information you need to complete Questions 11, 11A and 12 will be on your Summary of Income (SOI),

which we'll send you in May 2020. We send this automatically ifwe send you an IR3 return.

Your Summary of Income (SOI) contains the following information:

• all your employers throughout the year

• your total gross income with tax deducted and ACC earners' levypaid

• any family tax credit paid by Work and Income

• your tax credits for payroll donations you've made through payrollgiving.

Question 11 Family tax credit from Work and Income

If you received family tax credit from Work and Income, copy the amount from your SOI to Box 11 if it

doesn't already show. Don't include any Working for Families Tax Credits from Inland Revenue in Box 11.

Question 11A Income with tax deducted

Did you receive any of these types of income with tax deducted between 1April 2019 and 31 March 2020?

• salary or wages

• a student allowance

• any income-tested benefit - unemployment or sickness, transitional retirement, independent youth,

domestic purposes, widow's, invalid's or emergency

• accident compensation payments related to earnings

• New Zealand Superannuation (NZ Super) either income-tested or non-income tested, or a veteran's

pension

• other pensions, annuities or superannuation (read "Pensions" on page14)

• free or discounted shares received under an employee share scheme (previously known as a share

purchase agreement). Note: it is up to your employer whether they deduct tax on these or not

• shareholder-employee salary.

If you received any of these types of income with tax deducted, you need to copy the totals from your

SOI to Question 11A if they don't already show on your return.

Employee Share Scheme (ESS) benefits

If you (or an associate) received free or discounted shares under an employee share scheme the taxable

value will be included on your SOI as long as your employer has provided us with this information.

In most cases your employer will have provided this information but if they haven't you will need to

show the taxable value at Question 26.

You will need to check with your employer whether this information has been provided.

IR 3 INDIVIDUAL RETURN GUIDE12

What to show on your return

Copy the total amounts from your SOI to the corresponding boxes (11A, 11B, 11C, 11D and 11E) on your

return if it doesn't already show.

Amending your income details

If any of the details on your SOI are incorrect (eg, wrong or missing employers), please make the changes

on your SOI and attach it to your income tax return.

You only need to attach your SOI to your income tax return if you've made changes to it.

Please transfer the amended totals from your SOI to the corresponding boxes on your return and use the

worksheet on page 13 to calculate your total tax deducted (11E).

ACC earners' levy

All employees must pay an ACC earners' levy to cover the cost of non-work related injuries, based

on their earnings. We collect this on behalf of the Accident Compensation Corporation (ACC). The

maximum amount of earners' levy is $1,785.73. The earners' levy is set at a rate of 1.39% (1.39cents in

thedollar).

If you need to amend your employment details on your SOI, you'll need to recalculate your earners' levy.

Using employer-provided information

If you received payslips or other earnings information from your employer, you can use this information

to complete your return and don't have to wait for your SOI. You don't include schedular payments in

this calculation.

You'll need to use your total PAYE deducted in your calculations. This is the amount of PAYE shown on

your payslips before any tax credits for payroll donations are deducted.

If you made donations through payroll giving to an organisation that is not on Inland Revenue's

approved donee organisations list, you won't be able to keep the tax credits you received and you won't

have paid enough PAYE throughout the year. You'll have either received a letter telling you about these

extinguished tax credits or they'll show on your summary of income. Put the total PAYE, less the amount

of your extinguished tax credits, in Box 11A.

If the amount of total PAYE deducted isn't clear from your payslips:

• contact your employer, or

• refer to your SOI for details, or

• refer to "Earning summary" in the my income tab in myIR, or

• call us on 0800 227 774.

ird.govt.nz

You'll need to calculate your ACC earners' levy liability and deduct it from your total PAYE, using the

worksheet below.

Worksheet for ACC earners' levy

Copy your total taxable earnings from salary and wages to

Box 1. Copy the amount to Box 11B of your return.

Copy your taxable earnings from salary and wages that

are not liable for earners' levy to Box2. See below for a

list of income not liable. Copy this amount to Box 11C of

your return.

Subtract Box 2 from Box 1. Print the answer in Box 3.

If the answer exceeds the maximum liable earnings of

$128,470, print $128,470 in Box 3.

This is your liable income for ACC earners' levy

Multiply Box 3 by 0.0139 (1.39%). Print your answer in

Box4. This is your ACC earners' levy. Copy this amount to

Box 11D of your return.

Copy your total PAYE from salary and wages to Box 5.

Copy this amount to Box 11A of your return.

Copy your total ACC earners' levy from Box 4 (above) to

Box 6.

Subtract Box 6 from Box 5 and print the answer in Box 7.

This is your total tax deducted. Copy this amount to Box 11E of your return.

The following income isn't liable for ACC earners' levy

- NZ Super - income from a partnership earned by a non-working

partner in that partnership

- income-tested benefits

- non-taxable allowances - pensions from superannuation schemes not registered

with the Financial Markets Authority

- student allowances

- veteran's pension - overseas pensions

- living alone payments - rents

- redundancy payments - estate and trust income

- retiring allowances - royalties

- jury and witness fees - income attributed to you from a portfolio investment

entity (PIE)

- interest and dividends

- taxable Māori authority distributions - income arising from a withdrawal from foreign

superannuation schemes.

- free or discounted shares received under

an employee share scheme

IR 3 INDIVIDUAL RETURN GUIDE14

Pensions

Don't include the following pensions or annuities in your tax return:

• non-taxable pensions or annuities from either life insurance funds or superannuation schemes

registered with the Financial Markets Authority (eg, Government Superannuation)

• pensions that are completely tax-free, such as war pensions (other than a veteran's pension).

Any overseas social security pension you receive is usually taxable. Include it at Question 17 (see the

notes on page 23).

If you receive a United Kingdom national retirement pension and have joined the special banking

option operated by Work and Income, only include the New Zealand Super income and tax deducted at

Question 11A.

For more information read our guides Overseas pensions and annuity schemes - IR257 or Overseas

social security pensions - IR258.

Question 12 Schedular payments

Schedular payments are generally payments made to people who are not employees but are employed

on a contract basis. All ACC personal service rehabilitation payments which are paid by ACC or

your employer are classified as schedular payments. Different tax rates apply to schedular payments,

depending on the work done. A full list is available in the PAYE tables - IR340 and IR341 and on the back

of the Tax rate notification for contractors - IR330C.

People who receive schedular payments will receive a Summary of income (SOI) detailing their

schedular payments received and the tax deducted. If your SOI shows total schedular income over $200,

you must file an IR3 return.

ACC personal service rehabilitation payments

If you are an ACC client or caregiver and received ACC personal service rehabilitation payments, please

read the information on page 57 before you complete Question 12.

Question 12A Total tax deducted

This is the total amount of tax deducted from schedular payments you received during the year.

The amount in this Box should also include any amount of tax deducted from schedular payments made

to a close company which has been transferred directly to you as a shareholder-employee.

Question 12C Expenses related to schedular payments

Show any expenses you can claim against this income here. Don't include it with other expenses at

Question 28.

Question 12D Net schedular payments

This is the total gross schedular payments shown at Box 12B, less any expenses being claimed at Box 12C.

Mineral mining tax credit

Include in Box 12A the amount of refundable tax credit being claimed where a tax loss is incurred on

disposal of land or claiming rehabilitation expenditure. Include the amount of tax loss in Box 12D.

ird.govt.nz

What to show on your return

Copy the total tax deducted (Box 12A) and gross payments (Box 12B) from your SOI to the same box

numbers of your return. Add up the expenses related to your schedular payments and print the total in

Box 12C. Subtract Box 12C from Box 12B and print the result in Box 12D.

Note

If you're registered for GST, your gross schedular payment may include GST. Enter the GST-exclusive

amount at Question 12B.

Shareholder-employee salary

If you received a shareholder-employee salary with no PAYE deducted, show the amount at Question 20.

ACC levies

You'll have to pay ACC levies on schedular payments. ACC will invoice you for these.

Question 13 New Zealand interest

Did you receive any New Zealand interest between 1 April 2019 and 31March 2020 from:

• banks

• Inland Revenue

• building and investment societies

• credit unions

• securities

• a partnership, look-through company, estate or trust

• loans you've made?

If so, show all the New Zealand interest you received at Question 13B. If the interest is from a partnership,

look-through company, estate or trust please tick Box 13C.

If you were charged commission on any of your interest, claim this at Question 28. Read the note about

expenses on page 37.

Interest on broken term deposits

If you've broken a term deposit during the year, you may have "negative interest" to account for. This is

interest you've repaid on the term deposit. It may reduce the amount of interest you need to declare on

your tax return.

If you broke the term deposit in full, use the worksheet on page 16 to deduct the negative interest

from the gross interest amount shown on your Deduction certificate for RWT on interest - IR15 or

equivalent statement. In all other cases, the negative interest is deductible in a later tax return when the

term deposit matures.

IR 3 INDIVIDUAL RETURN GUIDE16

Worksheet

Copy your gross interest from your IR15 to Box 1.

Print any negative interest you've paid in Box 2.

Subtract Box 2 from Box 1 and print the answer in Box 3.

Include this in the amount shown at Box 13B.

RWT

During the year, RWT will have been deducted from some or all of your interest and you can claim a

credit for this.

The interest payer will usually send you an IR15 or similar statement which shows the gross interest paid

and the amount of RWT deducted.

Add up the amounts from each statement or certificate and print the totals in Boxes 13A and 13B.

Don't send us your statements or IR15s, but keep them in case we need to see them later.

Interest of $50 or less

If the interest you received for the year is $50 or less, you may not receive a certificate or statement, but

you still need to show the gross interest and RWT. Get the details from your bank statements.

Interest on joint accounts

If you hold a joint account, you must show your share of the interest in your tax return.

Interest from overseas

If you received interest from overseas, convert your overseas interest and tax credits to New Zealand

dollars and show it at Question 17. Please read the notes about overseas income on page 19.

Farm vendor mortgage or finance bonds

If you received interest from a farm vendor mortgage or farm vendor finance bonds approved by the

Rural Banking and Finance Corporation of New Zealand, only half of the interest is taxable. Show the

RWT deducted and the taxable amount of interest in Boxes 13A and 13B.

Income from financial arrangements

If you are a party to a financial arrangement, such as government stock, local authority stock, mortgage

bonds, futures or deferred property settlements, you may have to calculate the income or expenditure

from the financial arrangement using a spreading method, rather than on a cash basis. To determine

whether a spreading method must be used, see "Financial arrangements" on page 36.

If the financial arrangement matures, is sold, remitted or transferred, a "wash-up" calculation, known as a

base price adjustment, must bemade.

Any RWT will have to be deducted on a cash basis. Show the RWT deducted and any income from the

financial arrangement in Boxes 13A and 13B.

ird.govt.nz

Interest paid by Inland Revenue

If we pay you interest because you overpaid your tax, include the gross interest in Box 13B in the income

year you received the interest.

Interest paid by a person

If you paid us interest because you underpaid your tax, include it as a deduction in the return at

Question 28 for the income year the interest is paid.

Question 14 New Zealand dividends

Dividends are a part of a company's profits that it passes on to its shareholders. Unit trusts are treated as

companies for income tax purposes and unit trust distributions are treated as dividends.

Complete Question 14 if you received any New Zealand dividends between 1 April 2019 and 31 March

2020, including dividends from your local electricity or gas company (but don't include a dividend that's

a distribution of the trust's capital and is tax-free). The company or unit trust that paid you the dividend

will send you a dividend statement.

Include dividends earned by a partnership or estate, or distributed by a trust.

If you were charged commission on any of your dividends, claim this at Question 28. Read the notes

about expenses on page 37.

If you receive dividends from a portfolio investment entity (PIE) that is a listed company and doesn't use

your prescribed investor rate, you can decide whether or not to include the dividends in your return.

Credits attached to dividends

A New Zealand company or unit trust may attach several types of credits to dividends.

"Imputation credits" are credits for part of the tax the company has already paid on its profits so the

dividends aren't taxed twice.

RWT is deducted from your dividend to bring the total credits withheld up to 33% of the gross dividend.

If the dividend is from a listed PIE, it should not have RWT deducted.

What to show on your return

Your dividend statements show the amount:

• you received (net dividend)

• of any imputation credit

• of any RWT credits.

Add all these amounts together to work out your gross dividend.

Add up all the imputation credits, RWT credits and gross dividend totals and transfer them to the

relevant boxes at Question 14.

If the dividends are from a partnership, look-through company, estate or trust, please tick Box 14C.

Don't send us your dividend statements, but keep them in case we ask for them later.

IR 3 INDIVIDUAL RETURN GUIDE18

Shares and other non-cash dividends

If you received shares from a taxable bonus issue or a non-cash dividend , include them as income at

Question 14.

Dividends from overseas

Please read the notes about overseas income on page 19.

Question 15 Māori authority distributions

Complete Question 15 if you received taxable Māori authority distributions between 1 April 2019 and

31 March 2020. The Māori authority that paid you the distribution will send you a Māori authority

distribution statement.

Credits attached to distributions

The Māori authority may attach a credit to the distribution it makes to members. This credit will be

classified as a "Māori authority credit" and includes tax the Māori authority has already paid on its

profits.

What to show on your return

Your Māori authority distribution statement shows the amount of:

• the distribution made to you, including which portion is taxable and which portion isn't

• the Māori authority credit.

Transfer these amounts, not including any non-taxable distribution, to the relevant boxes at Question 15.

For more information read our guide Māori authorities - IR487.

Question 16 Estate or trust income

If you received estate or trust income that relates to the year 1 April 2019 to 31 March 2020, show it at

Question 16.

There are three types of estates or trusts:

• complying

• foreign

• non-complying.

Complying trusts are trusts that have been taxed in New Zealand on all their income since the day they

started.

Allocations of beneficiary income which the minor beneficiary rule applies to are taxed as trustee income.

This means the trust is subject to tax on this income at 33 cents in the dollar, and it's included in the

trustee tax calculation in the trust's IR6 return.

These distributions shouldn't be included in the minor's individual taxreturn.

All other trusts are non-complying or foreign. Read our guide Trusts' and estates' income tax rules -

IR288 for more details.

ird.govt.nz

What to show on your return

Add up the tax paid by the trustee/s and print the total in Box 16A. Print your share of the estate or

complying trust income in Box 16B.

But, if your estate or trust income includes:

• interest with RWT deducted, show this at Question 13 and tick 13C.

• dividends with imputation credits attached, show this at Question14 and tick 14C.

• overseas income and overseas tax paid, show this at Question 17

• taxable Māori authority distributions, show this at Question 15.

Income from foreign and non-complying trusts

If you're a beneficiary of a foreign or non-complying trust please complete a Schedule of beneficiary's

estate or trust income - IR307 form.

Taxable distributions from non-complying trusts

Copy the amount of taxable distributions from the non-complying trust to Box 16C, and attach the

IR307 to your income tax return.

We separate taxable distributions from non-complying trusts because they're taxed at a different rate.

If you have this type of income, your tax calculation at Question 34 may not be correct. We'll do this

calculation for you and send you a notice of assessment.

Question 17 Overseas income

If you received income from, or while you were overseas, between 1 April 2019 and 31 March 2020, show

it at Box 17B in New Zealand dollars. This includes taxable income from withdrawals and transfers from

foreign superannuation schemes while you were a non-resident of New Zealand. Transitional residents

must include any foreign employment or service income at Box 17B.

You can convert all overseas income and tax credits to New Zealand dollars by:

• using the rates tables on our website ird.govt.nz/managing-my-tax

• contacting the overseas section of a trading bank and asking for the exchange rate for the day you

received your overseas income.

Note

Portable NZ Super and/or portable veteran's pension paid while residing overseas are tax exempt and

won't need to be included on your return.

Note

Dividends received from overseas companies that are treated as FIFs (except companies covered by

the exclusions listed under foreign rights at Question38) are not taxable separately. Generally, you

would use the default FIF income calculation method (the fair dividend rate), which doesn't tax

dividends separately.

The foreign tax deducted from the dividend may be claimed as a credit against the tax payable on the

calculated FIF income for that company.

IR 3 INDIVIDUAL RETURN GUIDE20

Foreign superannuation withdrawals or transfers

If you've received a lump sum from a foreign superannuation scheme, have transferred your foreign

superannuation scheme into a New Zealand or Australian superannuation scheme, or you have

transferred a superannuation interest to another person you are liable for income tax unless you qualify

for an exemption. You need to calculate the amount of taxable income from the withdrawal or transfer

(refer below) and include this income in Box 17B, and tick Box 17C.

Lump sums received or transferred in the first four years of New Zealand tax residence are generally

exempt from tax; see "temporary tax exemption from foreign superannuation withdrawals" on page 22.

Lump sums and transfers are taxed using one of two methods:

• schedule method (default method) - this means a certain portion of your foreign superannuation

withdrawal will be income, based on the number of years you've been a New Zealand tax resident

and contributions you've made in that time (certain conditions apply).

• formula method (alternative method) - can be used if your foreign superannuation scheme is a

defined contribution scheme and meets certain requirements. It taxes the actual investment gains

that have accrued to your scheme while you've been a New Zealand tax resident.

KiwiSaver withdrawal facility for tax liability on foreign superannuation withdrawals or

transfers

If you transfer a lump sum to a KiwiSaver scheme you may have income tax and student loan repayment

obligations. You can request a withdrawal of funds from your KiwiSaver account to pay these obligations.

Your KiwiSaver provider will deal with your application.

For more information about foreign superannuation withdrawals or transfers see our guide Overseas

pensions and annuity schemes - IR257 or go to ird.govt.nz/foreign-super

Foreign investment fund (FIF) income

If, at any time during the 2020 income year you held rights such as shares, units or an entitlement to

benefit in any foreign company, unit trust, superannuation scheme or life insurance policy, you may be

required to calculate FIF income or loss. Generally, you'll use the fair dividend rate (FDR) or comparative

value (CV) method to calculate FIF income.

The main exclusions from an interest in a FIF are:

• investments in certain Australian resident companies listed on approved indices on the Australian

stock exchange, that maintain franking accounts (you can check this on our website by going to

ird.govt.nz/asx-fif)

• interest in certain Australian unit trusts

– limited exemptions for interests in certain venture capital interests that move offshore (for

10 income years from the income year in which the company migrates from New Zealand)

• a 10% or greater interest in a controlled foreign company (CFC).

From 1 April 2014 the FIF rules generally no longer apply to interests in foreign superannuation schemes

unless acquired when the holder was a New Zealand tax resident or the interest is grandparented. For

more information see our guide Overseas pensions and annuity schemes - IR257.

There's also an exemption from the FIF rules where the total cost of all the investment for FIF purposes is

below NZ$50,000.

ird.govt.nz

What to show on your return

After you've converted the amounts to New Zealand dollars, add up the available amounts of overseas

tax paid and print the total in Box17A. Add up the gross amounts of overseas income (before tax was

deducted) and print the total in Box 17B.

Attach proof of any overseas tax paid to your income tax return.

If a branch equivalent tax account (BETA) was maintained, complete a Branch equivalent tax account

return - IR308 and attach it to your IR3 return.

Tax paid overseas

If you paid tax overseas on any foreign income derived, you may be able to claim it as a credit against

your NewZealand tax payable. Theamount of credit you receive may be restricted by any double

taxation agreements and is the lesser of the actual amount of tax paid on the overseas income or the

amount of tax you would pay in NewZealand on the foreign income.

To claim an overseas tax credit you must supply proof of the tax deducted, eg, an overseas tax deduction

certificate. If you need one, you'll have to request it from the overseas government agency concerned.

Attach a copy of the certificate to your return.

Also, if you receive a dividend that isn't taxed separately under the FIF rules, you can offset most overseas

tax credit paid on the dividend against your tax payable.

For more information about foreign tax credits read A guide to foreign investment funds and the fair

dividend rate - IR461 pages 25 to 29.

Claiming overseas tax paid on overseas dividends FIF income

You can claim the tax paid up to the amount of NewZealand income tax payable on the FIF income

associated with the attributing interest that has paid the dividend. If you used the FDR method you can

use the overseas tax paid to reduce the tax payable on the FDR income associated with that attributing

interest. Please note that Australian franking credits and tax on dividends from the UnitedKingdom

cannot be claimed as overseas tax paid.

Where there is no FIF income or a FIF loss

Tax paid overseas can only be used to cover your liability for income tax payable on your FIF income.

If there is no NewZealand income tax payable on your FIF investment, no claim can be made for the

overseas tax paid on any dividends received from that FIF.

You cannot get a refund of overseas tax paid, or reduce tax payable on any other income.

For more information read A guide to foreign investment funds and the fair dividend rate - IR461.

Unused overseas tax credits

Generally, these are forfeited (lost).

Carrying forward any excess or unused overseas taxcredits?

You can't carry forward unused overseas credits where you have used the FDR, CV, deemed rate of return

or cost methods to calculate FIF income or loss.

IR 3 INDIVIDUAL RETURN GUIDE22

New Zealand tax credits (imputation or RWT) deducted from overseas

dividends

You can claim New Zealand tax credits on overseas dividends as follows:

• If the credits are RWT, they are used to offset tax payable with any excess refundable.

• If they're imputation credits, they are used to reduce tax payable. If your dividend exceeds your FIF

income, the amount of imputation credit you can claim is calculated on the basis of your FIF income.

If your FIF income exceeds your dividend, you can claim the entire imputation credit attached to the

dividend.

• Any excess imputation credit can't be carried forward to the next year or converted to a loss.

The full amount of these New Zealand tax credits can be entered in the return even where the FIF

income is reduced to zero or there is an FIF loss.

These credits will only be attached to Australian company or unit trustdividends.

If you've shown a tax credit and there is no income in the associated panel, you'll need to include a note

in your return setting out thedetails.

Temporary tax exemption from foreign income

If you're currently claiming the four-year temporary tax (transitional resident) exemption for certain

types of foreign-sourced income, you don't need to declare this income in Box 17B, unless it's foreign

employment or services income. When your tax exemption expires, you must include all your worldwide

income when you file your income tax return.

Go to ird.govt.nz for further information about the temporary tax exemption qualifying criteria and

types of exempt foreign-sourced income.

Temporary tax exemption from foreign superannuation withdrawals

This four-year exemption period is similar to the temporary tax exemption from foreign income and

applies to foreign superannuation withdrawals during the period. The exemption doesn't require you to

be non-resident for a minimum period.

This exemption applies if you:

• first acquired your interest in a foreign superannuation scheme while a non-resident for New Zealand

tax purposes, and

• haven't previously had this exemption.

Foreign superannuation withdrawals during the four-year exemption period do not need to be declared

as income in Box 17B.

Go to ird.govt.nz for further information about the foreign superannuation temporary exemption or

read our guide Overseas pensions and annuity schemes - IR257.

ird.govt.nz

Australian dividends from non-FIF companies

If you received Australian dividends, your dividend statements may show all or some of the following:

• the franked/unfranked amount

• Australian withholding tax

• imputed credit or franking credits

• New Zealand imputation credits.

Add up the amounts of Australian withholding tax deducted and print the total in Box 17A. Dividends

paid by Australian companies may have a NewZealand imputation credit.

To calculate the gross dividend, add together the franked and unfranked amounts, along with the

NewZealand imputation credits and print the total in Box 17B. Don't include any Australian imputed or

franking credits. Claim NewZealand imputation credits in Box 14.

Overseas pensions

If you received an overseas social security pension, convert the amount into NewZealand dollars. Print

the total in Box 17B.

You may also have received other types of overseas pensions, such as foreign private annuities or foreign

investment funds. For more information, please read the note about foreign rights disclosure on page54.

Under most of the tax treaties NewZealand has with other jurisdictions, you cannot claim a tax credit

for tax deducted overseas on pensions. If you paid tax on the pension overseas, generally you need to

claim a refund or tax credit from the overseas tax authority, not from Inland Revenue in New Zealand.

For more information, please read our guides Overseas pensions and annuity schemes - IR257 and

Overseas social security pensions - IR258 or go to ird.govt.nz/international/residency/dta/

Specific dividends

If you received dividends that are treated as interest or that are from an overseas company through an

agent or trustee, who has deducted RWT in New Zealand, show the tax credits and overseas income in

Boxes 17A and 17B. Show NewZealand RWT deducted in Box 14A.

Attach a copy of the dividend statement to your return.

Note

If you've shown a tax credit and there is no income in the associated panel, you'll need to include a

note in your return setting out the details.

IR 3 INDIVIDUAL RETURN GUIDE24

Investments in portfolio investment entities (PIEs)

Certain PIEs attribute the net income/loss and tax credits they derive across their investors. Individual

investors generally don't include the attributed income or loss in their tax return. You can only claim a

loss when it has the zero rate applied. In all other cases you cannot claim a loss from your PIE.

Each year, the PIE is required to provide an investor statement, setting out the details of the income/loss

and the tax it has paid on the income it has attributed to you.

Where your PIE has calculated the tax using a prescribed investor rate lower than your correct rate or

you have exited a PIE that doesn't calculate tax when an investor exits, you may need to include the

income in your return to pay the tax.

Where you're required to include attributed PIE income in your return, show the income and tax paid/

credit where the rate lower than your correct rate has been applied. Include any tax credits shown on

your PIE's investor statement where you've exited from a PIE that zero-rates exiting investors. You can

show the net income or loss (after adjusting for the investor level fees) in Question 17B and the general

tax credits shown at 17A. Where any specified tax credits (eg, RWT) are shown, include these in the

appropriate question on the return.

If you have a student loan or if you're eligible for Working for Families Tax Credits you now have to

declare PIE income on an Adjust your income - IR215 form, except if the PIE is a superannuation fund

or a retirement savings scheme (eg, KiwiSaver) where the funds are locked in.

If you have declared PIE income in your return and it is from a:

• non-locked-in PIE it will be taken into account

• locked-in PIE you need to show the amount on the IR215 so we can exclude it from your income.

If you have non-locked-in PIE income or dividends from a listed PIE that are not included in your return you

may need to declare it on the IR215 for either or both student loan and Working for Families Tax Credits.

For more information go to ird.govt.nz/situations

ird.govt.nz

Question 18 Partnership income

Show your share of income from the partnership's trade or business from 1April 2019 to 31 March 2020

in Box 18B, unless it includes:

• interest and any RWT - show this at Question 13 and tick 13C

• dividends and any credits - show this at Question 14 and tick 14C

• overseas income and overseas tax paid - show this at Question 17

• residential rental income - show this at Question 22

• other rental income - show this at Question 23

• other income and, if your share of this income:

– is received in recognition of your capital investment in the partnership and you didn't take any

active part in the day-to-day operation or management of the business (eg, you were a sleeping

partner), or

– is generated from other investment activity (eg, sale of shares), show this at Question 26.

Partnership income earned as a result of "active" involvement is liable for ACC levies, which will be

invoiced by ACC.

Losses from limited partnerships

If you're claiming a loss from a limited partnership and you need help working out the amount you can

claim, go to ird.govt.nz

Expenses

You may be able to claim expenses against your share of the partnership income that wasn't claimed

in the partnership's IR7 return, eg, interest on capital borrowed to purchase a share in the partnership.

Claim these expenses at Question 28.

Question 19 Look-through company (LTC) income

If you received any tax credits and/or income from an LTC write the details at Question 19.

Don't include:

• interest and any RWT - show this at Question 13 and tick 13C

• dividends and any credits - show this at Question 14 and tick 14C

• Māori authority distributions and credits - show these at Question 15

• any overseas income - show this at Question 17, along with qualifying tax credits attached

• residential rental income - show this at Question 22

• other rental income - show this at Question 23.

Note

The LTC will normally supply information about non-allowable deductions and any other information

required to complete your return.

IR 3 INDIVIDUAL RETURN GUIDE26

The loss limitation rule limits the amount of deductions an LTC owner (shareholder) can claim if the

amount exceeds the owner's "owner's basis" (equity) in the LTC.

For the 2017-18 and later income years the loss limitation rule only applies to an LTC which is in a

partnership or joint venture which includes another LTC.

For most LTC owners, you can now claim the full amount of your prior years' non-allowable deductions

brought forward this year. This won't apply if the loss limitation rule continues to apply to limit the

amount claimable.

Example

Daniel is an owner of an LTC which is not in a partnership or joint venture that includes another LTC.

For the 2019-20 income year Daniel has a net loss of $7,000.00 from the LTC.

Daniel also has prior years' non-allowable deductions brought forward of $5,000.00.

Daniel has no tax credits from the LTC for the year.

Daniel's tax return should show these amounts in the following boxes:

• 19A: $0.00

• 19B: $7,000.00-

• 19C: $0.00

• 19D: $5,000.00

• 19E: $12,000.00-

What to show on your return

Add up all other tax credits received from the LTC and print the total in Box 19A.

Add up all LTC income, deduct expenses not already included elsewhere and print in Box 19B. If a loss,

put a minus sign in the last box.

Add up all non-allowable deductions this year and print in Box 19C.

There shouldn't be non-allowable deductions this year unless the loss limitation rule applies.

Add up all prior year non-allowable deductions claimed this year and print in Box 19D.

You'll be able to claim the full amount of non-allowable deductions brought forward from last year if the

loss limitation rule no longer applies.

If you have an amount in Box 19C, add this to Box 19B and put the total in Box 19E.

If you have an amount in Box 19D, subtract this from Box 19B and put the total in Box 19E.

If you don't have any amounts in Box 19C or Box 19D, copy the amount from Box 19B to 19E.

Box 19E is your adjusted LTC income.

You can find more information about LTCs in our guide Look-through companies - IR879.

ird.govt.nz

Question 20 Shareholder-employee salary

If, as a shareholder-employee, you received a salary between 1 April 2019 and 31 March 2020 with PAYE

deducted, include the amounts at Question 11A.

If, as a shareholder-employee, your shareholder-employee's salary or director's fees had no PAYE

deducted, include the amount in Box 20. If you would normally receive a shareholder-employee salary

(even if you didn't receive one this year), please tick Box 20A.

If you are not a shareholder employee and you received director's fees with no tax deducted, show the

income at Question 26.

Over-payments of AIM provisional tax that relate to shareholder employee salary accruals are allowed to

be used to meet the shareholder’s tax liability on that salary at the end of the income year. Include the

amount of any AIM tax credits transferred to you at Box 20B.

The company that paid your salary or fees will be able to tell you exactly how much to show in your return.

Question 20C

In-work tax credit (IWTC) is a payment for families who are normally in paid work.

Prior to 1 July 2020 you need to work a minimum number of hours each week (20 hours for a single

parent family or 30 hours for a two parent family).

From 1 July 2020 the hours are not required to be worked.

You can not receive in-work tax credit if you receive an income-tested benefit or student allowance.

Please refer to our website for more information go to ird.govt.nz/new-to-wff

The eligibility criteria for IWTC changed from 1 April 2011 to include the hours worked without pay by

major shareholders1 in their close companies2. To qualify, the company must derive gross income.

If you're already registered for WfFTC, and now meet the requirements for IWTC you'll need to tick

Box 20C of your IR3.

If you haven’t already registered for WfFTC and you qualify, go to our website

ird.govt.nz/working-for-families and register online.

ACC earners' levy

Shareholder-employee remuneration or director's fees without PAYE deducted are liable for ACC earners'

levy. The company should deduct earners' levy from your remuneration or director's fees when declared.

ACC will invoice the company for this.

Question 22 Income and expenditure from residential property

This question applies to owners of residential rental property, including overseas property subject to the

residential property deduction rules in subpart EL of the Income Tax Act 2007.

1 You are a major shareholder if you either own, control or have rights to acquire at least 10% of shares or voting

rights in a close company, or have by other means at least 10% control of a close company.

2 A company where there are five or fewer shareholders whose total voting interests in the company are greater

than 50%.

IR 3 INDIVIDUAL RETURN GUIDE28

Most residential rental properties are subject to the residential property deduction rules (also known as

the ring-fencing rules). When they apply, your residential rental deductions generally cannot be more

than your residential property income.

If your deductions are more than your income, the difference must be carried forward to the next year

you earn income from your residential property, including income from properties held on revenue

account.

There are two levels of exclusions from the rules.

Any rental income or loss and net income or loss from a taxable disposal is fully excluded from the new

rules if the property is:

• the main home;

• property subject to the mixed-use asset rules (holiday home rented out part-time);

• certain employee accommodation.

For these types of property, the existing rules apply with the rental income or loss shown at Box 23 and

net income or net loss from a taxable disposal shown in Box 25B.

Any rental net loss and net loss from a taxable disposal is partially excluded from the new rules if it is for:

• property that will always be taxed on sale, being revenue account property of a person in the

business of building, developing or dealing in land;

• other revenue account property the person has notified us they want the exclusion to apply to.

For these types of property any rental net loss is shown at Box 23 and taxable disposal net loss shown at

Box 25B. Net rental income and net income from a taxable disposal plus any depreciation recovered is

shown as residential income Box 22A.

Refer to the Rental income - IR264 guide for information on when the rules apply, how to calculate your

income, the amount of deductions you can claim for this year, and the amount of any excess deductions

that must be carried forward.

The residential property deductions rules also apply if you borrowed money to acquire an interest in

certain entities that have significant rental property holdings - a residential land-rich entity - and you

have interest expenditure on the borrowed money.

Residential land-rich entity - a close company, partnership or look-through company that holds more

than 50% of its assets by value in residential land, directly or indirectly. These entities come under the

interposed entities rules as part of the residential property deduction rules.

For more information about the interposed entity rules, see page 60 of the Tax Information Bulletin

Vol31 No.8 September 2019.

ird.govt.nz

Completing Question 22 in your return

You will use this question to record residential income and deductions that are subject to the residential

property deduction rules.

Tick the method you have used to calculate your residential property income and deductions.

You can use one of the following methods:

• Portfolio basis - combine income and deductions for all rental properties in the portfolio.

• Individual, property-by-property basis - income and deductions of individual property calculated

separately to other property. You need to maintain separate records for each property to choose this

option.

• Combination of the property-by-property basis and portfolio basis - choose to apply different

methods to different property. Some properties are held in a portfolio and others are held on

property-by-property basis.

If you are an owner of a look-through company (LTC) and have attributed residential income and/or

residential rental deductions, you need to use the same method the LTC uses (portfolio or individual

property basis) for the residential properties owned by the LTC. If you are a partner in a partnership and

have attributed residential income and/or residential rental deductions, you do not need to use the same

method the partnership uses.

For LTCs and partnerships, the residential property income and deductions calculations are made at

the owner or partner level as they may have other residential income and deductions that need to

be included. An LTC or partnership does not need to calculate its net residential income and excess

deductions. Instead, the LTC or partnership’s residential income and deductions are attributed to the

owners or partners, who then calculate their net residential income and any excess deductions and enter

those amounts on their IR3 income tax return.

You need to calculate and identify the amounts for Boxes 22A to 22F using the method you have chosen

for your rental properties. For the portfolio basis, the allowable deductions from all of the properties in

your portfolio can be offset against income you earn from all of the properties in the portfolio.

Calculate your rental income and deductions as usual, as shown at Boxes 4 and 14 on the Rental income

- IR3R form. You can then enter these figures in the Residential property deductions worksheets -

IR1226 to help calculate the figures required to be entered in your return. You can print a copy off our

website ird.govt.nz

Write the total residential income in Box 22A. This is the total of the following amounts:

(a) all rental income from the portfolio and/or individual property;

(b) all depreciation recovery income for assets disposed of from the portfolio or individual property;

(d) all net rental income, depreciation recovery income and net income from the taxable disposal of the

property from residential property excluded because it is held on revenue account.

Only include the net income from a disposal once.

If you are a partner in a partnership or owner of a look-through company and have been attributed

residential income Box 26G on the IR7P or IR7L, include that here.

Do not include rental losses from properties not covered by the rules in Question 22. Write any net tax

losses from disposals of rental properties that are excluded in Box25B.

IR 3 INDIVIDUAL RETURN GUIDE30

Write the total eligible deductions for the year for all ring-fenced residential rental properties in

Residential rental deductions Box 22B.

If you are a partner in a partnership or owner of a look-through company and have been attributed

residential rental deductions shown in Box 26M on the IR7P or IR7L, include that here.

Do not include purchase costs, capital improvements or costs incurred when disposing of the property

here. They are included when calculating the net income for taxable disposals. This is the total before

adjusting for excess deductions.

Include the amount of any interest paid on an investment in a land rich entity that relates to the rental

activity in Box 22B. Include the amount of interest paid that doesn’t relate to the rental property in Box24.

Write the total excess deductions brought forward from last year in Box 22C. This Box cannot be

completed for the tax year ending 31 March 2020.

Write the total residential rental deductions claimed this year in Box 22D. This is the result of Box22B

plus Box 22C minus the amount of excess deductions for each property and/or property portfolio

calculations shown in Box 22F. Include the amount of interest you can claim on an investment in a land

rich entity that relates to the rental activity in Box 22D.

The amount cannot exceed total residential income at Box 22A, unless there was a taxable sale/disposal

of a rental property.

Combine the net income results (after adjusting for any excess deductions) for each property and/or

property portfolio calculations in Box 22E.

Any losses are counted as zero unless the loss is the results of either:

• excess deductions released as the result of the taxable disposal of the rental property or all properties

in a portfolio, or

• claimable interest paid on your investment in a residential land-rich entity. Refer to the Rental

income - IR264 guide.

The amount in Box 22E should equal Total residential income Box 22A minus Residential rental

deductions claimed this year Box 22D.

Write the amount of all excess deductions for the year to be carried forward to next year in Box 22F.

ird.govt.nz

NOTES

Note 1

If you sell/dispose of an individual property and the sale is not taxable; or you sell/dispose of the

last property in a portfolio and at least one of the sales in the portfolio was not taxable, any excess

deductions will transfer to another property or portfolio and carried forward to a future year in which

you earn income from a residential rental property (including properties on revenue account).

Note 2

If you sell/dispose of an individual property and the sale is taxable, or you sell/dispose of the last

rental property in a portfolio, and the sale of all your rental properties in a portfolio were taxable, any

remaining loss/excess deductions are released and can be offset against other income. However, this

does not include any excess deductions transferred to the portfolio/property.

Note 3

If you want to claim that a property is held on revenue account where the sale may be taxable, you

need to notify us of the details of the property. You will be stating the sale will be a taxable sale when

the property is disposed of. You must be able to separately identify the deductions relating to the

property.

For more information read the Rental income - IR264 guide.

IR 3 INDIVIDUAL RETURN GUIDE32

Question 23 Income from other rental activities

Show income you received from other rental activities between 1 April 2019 and 31 March 2020 at

Question 23.

Only include net residential rental income or losses not included at Question 22 and commercial rental

income in Box 23.

This includes rents not caught by the residential rental rules such as rents from:

• a bach or holiday home that comes within the mixed-use asset rules

• the family home

• rental properties held on revenue account, such as part of a business dealing in land or building

residences

• commercial rents.

Prepare a summary of the details for each rental property. You can use either:

• the Rental income - IR3R form, which asks for all the information we need, or

• your own summary.

If you need an IR3R form, you can print a copy from ird.govt.nz

If you prepare your own summary, refer to the IR3R form or the Rental income - IR264 guide to find out

what to include.

What to show in your return

Add up the net rents (total rents after expenses) and write the total in Box23. Attach the IR3R, or your

summary, to your income tax return.

Keep your receipts with your records in case we ask to see them later.

ird.govt.nz

Question 24 Self-employed income

If you received self-employed income between 1April 2019 and 31March 2020, show it at Question 24.

Schedular payment income

Don't show any schedular payment income at Question 24. This income is declared at Question 12. If

you're an ACC client or caregiver and received ACC personal service rehabilitation payments, please read

the information on page 57 before you complete Question 12.

You can claim expenses and deductions against many schedular payments at Question 12C - see page 14.

Attribution rules

The attribution rule may apply where an individual provides services to an associated person (company,

trust, partnership).

In particular, it can apply where the associated person sells those services on, principally to a third party.

To find out how to apply this rule, please read Tax Information Bulletin (TIB) Vol 12, No 12 (December

2000) and Vol 13, No 11 (November2001).

Prepare a summary of details

You can use any of the following:

• your financial records

• the Farming income - IR3F form for agricultural businesses

• the Business income - IR3B form for other businesses

• the Financial statement summary - IR10 form.

Attach one of the above forms to your return and print your profit (net income) in Box 24.

The Financial statement summary - IR10 is a short form of the financial statements of a business. Use an

IR10 and speed up processing of the return. We don't need a set of accounts if you use the IR10. You still

need to complete a set of financial accounts and keep them in case we ask for them later. For help with

filling out the IR10, see our IR10 guide.

Keep your receipts with your records in case we ask to see them too.

Providing childcare services in a home

Based on the Education (Home-Based Care) Order 1992 and/or the Licensing Criteria for Home-

Based Education and Care Services 2008, Inland Revenue's Determination DET 09/02: Standard-Cost

Household Service for Childcare Providers sets out the types of expenditure generally incurred

(standard cost) by individuals providing childcare services in theirhome.

But, if you're a childcare provider who's registered for GST, this determination doesn't apply to you.

Individuals providing childcare services in their homes may use the standard costs (set out in the

determination) or their actual costs and income for calculating their tax. If your childcare activities began

part-way through the year, calculate your tax from that date using either the standard costs or actual

costs. See our Tax Information Bulletin (TIB) Vol 17, No 4 (May 2005) for details.

IR 3 INDIVIDUAL RETURN GUIDE34

Show your childcare income at Question 24 if:

• the determination applies to you, and your childcare taxable income is greater than nil, after

standard costs have been deducted, or

• you keep full records of your childcare income and actual expenses, and you make a taxable profit or

loss after expenses have been deducted.

If you need help deciding whether you need to declare childcare income using standard costs, please call us.

Note

You can't offset any loss calculated using standard costs (see the determination) against other income

in any income year.

Childcare services not under the Education (Home-Based Care) Order 1992

These childcare providers can't use the determination. They must keep full records of actual income and

expenses and are liable for tax on their total income after actual expenses are deducted for childcare

services provided.

At Question 24 show any childcare taxable income or loss after expenses have been deducted.

ACC levies

Income from self-employment is liable for ACC levies which ACC will invoice you for.

Question 25 income from taxable sale/disposals of property

Income from the sale of land and/or buildings

Include all income from land sales that are that are excluded from the residential property deduction

rules. Also include taxable sales of the main home or holiday homes taxed under the mixed-use asset

rules.

Tax losses from disposals of residential property are also included under this question.

Net income from a bright-line sale other than your main home or a property taxed under the mixed-use

assets rules is included under Residential income at Question 22.

Profits are taxable if you bought a property for the purpose of reselling it, or are in the business of buying

and selling land and/or buildings.

The profits may also be taxable if you:

• are a builder and improved a property before selling it,

• developed or subdivided land and sold sections, or

• had a change of zoning on your property and sold it within ten years of buying it.

If you purchased a residential property on or after 1 October 2015 and sold/disposed of it within a

certain period, any profit will be taxable, even if you didn’t intend to sell when you purchased it.

This is called the bright-line test. The bright-line test applies to:

• properties purchased/acquired on or after 1 October 2015 through to 28 March 2018 inclusive and

sold/disposed of within 2 years, and

• properties purchased/acquired on or after 29 March 2018 and sold within 5 years.

The bright-line test needs to be considered when none of the other land sale rules apply to the disposal

of the property.

ird.govt.nz

Income and losses for property captured by the bright line test are treated differently in the tax return:

• After a bright line sale, when net income (a profit) is made, the profit is included in the residential

rental income Box (22A). However, this does not apply to disposals of your main home or a property

taxed under the mixed-use assets rules. Unless the property is included in a portfolio expenses from

other properties cannot be offset against the net income from the disposal,

• After a bright line sale, when a net loss is made, any excess deductions must be carried forward to a

later income year when they can be used to offset net income from the land sale provisions, or future

disposals captured by the bright line rules.

Show the total profit from other property in Box 25B.

For more information on property sales see our guide Buying and selling residential property - IR313.

Complete a Property sale information - IR833 form for each property sold/disposed of and include it

with your return. The form explains how to calculate and correctly return the resulting profit or loss.

You can download the form at ird.govtnz/forms-guides Complete the form even if the details have been

included in a Financial statements summary - IR10 or set of accounts.

If the property was taxable under the bright-line test and made a loss, any excess deductions cannot be

claimed unless they can be offset against net income from other residential property sales.

For more information on property sales, refer to our guide Buying and selling residential property - IR313.

Question 25A Residential land withholding tax (RLWT) credit

If you are an "offshore RLWT person" and have sold or transferred residential property located in

NewZealand, RLWT may have been deducted from the sale price. You should have received a statement

on the completion of the sale process showing the amount of RLWT deducted. You can claim a credit

for any RLWT deducted. Show the amount of RLWT deducted, less any RLWT paid back to you and/or

transferred to outstanding amounts during the income year.

If there was more than one amount of RLWT deducted, show the combined amount, less any RLWT paid

back to you and/or transferred to outstanding amounts during the income year.

Attach a note showing the name of your withholder(s) to the return.

Question 26 Other income

If you received any other income between 1 April 2019 and 31 March 2020, show it at Question 26.

Thismay include:

• the sale of non-FIF shares or other property

• financial arrangements

• cash jobs, payments made ‘under the table’, tips, bartering or income from an illegal enterprise

• any share of partnership income as a result of capital investment

• free or discounted shares received under an employee share scheme if your employer has not

provided us with this information

• amount of loss carry-back to 2019.

If you're not sure if your income is taxable, please call us.

If you're a New Zealand tax resident you'll need to pay tax on your worldwide income under

NewZealand tax law. This includes any property sales worldwide whether caught under the bright-line

test for residential property sales or the other property rules.

IR 3 INDIVIDUAL RETURN GUIDE36

Income from the sale of non-FIF shares or other property

The profits are taxable if you bought:

• and sold shares or other property as a business

• shares or other property for the purpose of resale

• shares or property to make a profit.

This doesn't apply to shares that are FIFs. Write the total profit in Box26. Attach the details of your

income and expenses from these sales to your return.

Sale or disposal of assets

If you sold or disposed of a depreciated asset for more than its adjusted tax value, call us or refer to our

Depreciation - IR260, General depreciation rates - IR265 or Historic depreciation rates - IR267 guides.

Losses from the sale of land, buildings, shares or other property

If you made a loss and can show that if you'd made a profit, it would have been taxable, you may be able

to claim the loss as a deduction.

Show the total in Box 25B.

If the property was taxable under the bright-line test, any excess deductions can't be claimed unless they

can be offset against net income from other property sales in the same year. Any excess deductions not

allocated to the income year will be treated as the cost of revenue account property and carried forward

to the next income year. The Property sale information - IR833 form has more information on this.

For more information on property sales see our guide Buying and selling residential property - IR313.

Financial arrangements

If you're a party to a financial arrangement, you must account for income from those arrangements on an

accrual basis. Financial arrangements include government stock, futures contracts and deferred property

settlements, excluding short-term agreements for sale and purchase of property.

A cash-basis person doesn't need to use the accrual method to calculate income. You qualify as a

cash-basis person if:

• on every day in the income year the absolute value of all financial arrangements added together is

$1,000,000 or less, or

• the absolute value of your income and expenditure in the income year under all financial

arrangements is $100,000 or less, and

• the deferral of income or acceleration of expenditure using the cash method rather than the accrual

method is $40,000 or less.

If you held the financial arrangement prior to 20 May 1999 the amounts above may be reduced to

$600,000, $70,000 and $20,000 respectively.

Please note the "absolute value" is the value of an amount whether it's positive or negative.

ird.govt.nz

Sale or maturity of financial arrangements

Whether or not the exemption from the spreading method applies, you must do a "wash-up" calculation

in certain circumstances. For example:

• a financial arrangement matures, is sold, remitted or transferred

• there is an absolute assignment of the financial arrangement

• a party to a financial arrangement is released from making all remaining payments under the

Insolvency Act 1967, the Companies Act 1993 or the laws of a country or territory other than

New Zealand

• you cease to be a resident of New Zealand.

The calculation ensures that the total gains or losses from the financial arrangement are brought to

account. This applies in every case - you don't have to be in the business of buying or selling financial

arrangements, or have bought them for the purpose of resale, as you would with shares.

When calculating the income or expenditure on sale, use our Sale or disposal of financial arrangements

- IR3K form.

Income from cash jobs, tips, "under the table" payments, bartering or an

illegal enterprise

If you received any other type of income that didn't have tax deducted from it, show it in Box 26.

Attach the details of your income and any expenses to your return.

Share of partnership income as a result of capital investment

If your share of partnership income is received in recognition of your capital investment in the

partnership and you didn't take any active part in the day-to-day operation or management of the

business (ie,you were a sleeping partner), show your share of partnership income inBox 26.

Question 28 Other expenses and deductions

If you paid any of these expenses, between 1 April 2019 and 31 March 2020, you can claim them in

Box 28.

• a fee to someone for completing your tax return

• commission on interest or dividend income (but not bank fees - they're a private expense)

• additional expenses incurred in earning partnership income, eg, interest on capital borrowed to

purchase a share in the partnership

• interest on money you borrowed to buy shares or to invest - as long as the investment will produce

some taxable income

• premiums on loss of earnings insurance (income protection), provided the benefit from the

insurance policy is taxable

• interest paid to Inland Revenue for late payment of tax, only if the interest is not already included as

a deduction in your accounts.

IR 3 INDIVIDUAL RETURN GUIDE38

ACC personal service rehabilitation payments

If you're an ACC client and received ACC personal service rehabilitation payments and have retained

some of these, you may claim the payments you've made to your caregiver as a deduction at

Question 12C. Read the information on page 57 before you complete Question 12C.

Schedular income expenses

If you incurred expenses while earning income that's had tax from schedular payments deducted,

youclaim these at Question 12C, not here.

Other expenses

For other expenses, attach the details to your return. Include your name and IRD number.

You can't claim expenses against income from:

• salary and/or wages

• election day services

• casual agricultural work

• commissions, if you're also paid a salary or retainer from the same employer.

You can still claim expenses for having your tax return completed for you and loss of earnings insurance

premiums from these income sources.

Note

If you're GST-registered you must deduct any GST included in any expenses. GST-registered people

claim the GST portion of their expenses in their GST return, not the IR3.

ACC levies

ACC will take into account all expenses shown in Box 28 when calculating any ACC levies due.

Question 30 Net losses brought forward

You can find the amount of net loss you have to bring forward on the loss carried forward letter we sent

you after your 2019 return acknowledgement or notice of assessment.

Add up all net losses to be brought forward to 2020 and print the total in Box30A. Print the amount you

can claim this year in Box 30B.

Loss carry-back

Where on your return to claim loss carry-back

You must let us know if you are going use the loss carry-back scheme. You can do this in the ‘I want to’

section of your income tax account in myIR and selecting “Opt-in to carry-back loss”.

Claiming a loss carry-back in 2019 from 2020

If you have a 2020 loss you want to carry back to 2019, enter the loss amount in Box 26 (Other income)

in your 2020 income tax return.

ird.govt.nz

You will then need to amend your 2019 income tax return (if already filed) to include the loss. In myIR

choose amendment reason “loss carry-back”. Select income type “you are claiming net losses brought

forward” and enter the amount of the loss carried-back in Box 28B (Amount of loss claimed this year).

Claiming a loss carry-back in 2020 from 2021

If you are claiming a loss carry-back in 2020, based on an estimated loss in 2021, enter the amount of the

estimated loss carry-back in Box 30B (Amount claimed this year).

Your tax credits

Tax credits can reduce the tax you have to pay on your income.

Other tax credits

Donation tax credits are claimed separately on a Tax credit claim form - IR526 or you can submit a

receipt for donations in myIR. Go to ird.govt.nz/donations for more information.

Question 32 Independent earner tax credit (IETC)

You can calculate your IETC:

• by using the worksheets provided in this section

• by calling our self-service line - see page 63.

IETC

The IETC is a tax credit for individuals whose annual net income* is between $24,000 and $48,000. Your

annual net income is shown at Box29 "Income after expenses" in your return.

If you're eligible for IETC, but earn over $44,000, your annual entitlement to IETC decreases by 13 cents

for every dollar earned above $44,000.

For the period 1 April 2019 to 31 March 2020, you'll be entitled to IETC for any months:

• you were a New Zealand tax resident

• you or your partner weren't entitled to Working for Families Tax Credits (or received an overseas

equivalent) and you didn't receive:

– an income-tested benefit

– NZ Super

– a veteran's pension or

– an overseas equivalent of any of the above.

You're a tax resident if you lived in New Zealand for more than 183days in the last twelve months, or

have a permanent place of abode in NewZealand. For more information, read our guide New Zealand

tax residence - IR292.

To work out the months you're entitled to this tax credit, use the total number of whole months the

criteria applied to.

If you didn't meet the above criteria for even one day of any month you won't be entitled to IETC at

all for that month, so don't include itin your calculation.

* Net income means your total income from all sources, less any allowable deductions or current year losses (not

including any losses brought forward).

IR 3 INDIVIDUAL RETURN GUIDE40

Calculating your IETC

Enter the start and end dates when you had any overseas income that excludes you from being eligible

for IETC at Box 32B on your return.

If the overseas income continued past the end of the year enter the end date for the income as

31/03/2020.

If you have more than one date range for the overseas excluded income, attach a note telling us of the

date ranges. You'll also need to include any dates you weren't a New Zealand taxresident.

Tick the boxes below for each month (between 1 April 2019 and 31March 2020) you were entitled to the

IETC for the full month.

A M J J A S O N D J F M

Total number of months eligible

Box A

Add the number from Box A to Box32C of your

return.

Use this worksheet if your income is between $24,000 and $44,000

Number of months eligible for IETC IETC

1 43.33

2 86.66

3 130.00

4 173.33

5 216.66

6 260.00

7 303.33

8 346.66

9 390.00

10 433.33

11 476.66

12 520.00

In Box B enter the IETC that corresponds with

the eligible months at Box A.

Box B

This is your IETC. Copy it to Box 32 of your

return.

ird.govt.nz

Use this worksheet if your income is between $44,000 and $48,000

Number of months eligible for IETC (from Box A on page 40) A

Enter your income from Box 29, of your return, in Box B B

In Box C, enter the amount in Box B less $44,000 C

Multiply Box C by 0.13 and enter the amount in Box D D

Subtract Box D from $520 and put the amount in Box E E

Multiply Box E by Box A and put the amount in Box F F

Divide Box F by 12 and enter the amount in Box G G

This is your IETC. Copy it to

Box 32 of your return.

Question 33 Excess imputation credits brought forward

If you had unused imputation credits in your 2019 tax return, they are not refundable and must be

brought forward and claimed against this year's tax payable.

Where to find your excess imputation credits to bring forward

You can find the amount on the loss/excess imputation credits carried forward letter we sent you after

your 2019 year return acknowledgement or notice of assessment.

If you have excess imputation credits to bring forward but didn't receive confirmation of the amount,

please call us.

What to show on your return

Print the amount of excess imputation credits to be brought forward to 2020 in Box 33 of your return.

Also print this amount in Box 8 of your tax calculation on page 44 in this guide.

IR 3 INDIVIDUAL RETURN GUIDE42

Calculating your tax

Tax on taxable income

You can calculate your tax:

• on our website ird.govt.nz/tools-calculators

• by using the worksheets on the following pages

• by calling us on our 0800 self-service line - see page 63.

If your taxable income is: Calculate your tax on taxable income:

$0.00 to $14,000 below

$14,001 to $48,000 below

$48,001 to $70,000 on page 43

$70,001 and over on page 43

Use this worksheet if your taxable income is from $0 to $14,000.

Your tax rate is 10.5cents in the dollar.

Copy your taxable income from Box 31 of your return to

Box 1.

Multiply Box 1 by 0.105 (10.5cents in the dollar).

Print the answer in Box 2.

This is the tax on your taxable income. Copy it to Box 2 on page 44 of this guide.

Use this worksheet if your taxable income is from $14,001 to $48,000.

Your tax is $1,470 plus 17.5 cents for each dollar in this tax bracket.

Copy your taxable income from Box 31 of your return to

Box 1.

14,000 00

Subtract Box 2 from Box 1. Print the answer in Box 3.

1,470 00

Multiply Box 3 by 0.175 (17.5cents in the dollar).

Print the answer in Box 5.

Add Box 4 and Box 5. Print the answer in Box 6.

This is the tax on your taxable income. Copy it to Box 2 on page 44 of this guide.

ird.govt.nz

Use this worksheet if your taxable income is from $48,001 to $70,000.

Your tax is $7,420 plus 30 cents for each dollar in this tax bracket.

Copy your taxable income from Box 31 of your return to

Box 1.

48,000 00

Subtract Box 2 from Box 1. Print the answer in Box 3.

7,420 00

Multiply Box 3 by 0.30 (30 cents in the dollar). Print the

answer in Box 5.

Add Box 4 and Box 5. Print the answer in Box 6.

This is the tax on your taxable income. Copy it to Box 2 on page 44 of this guide.

Use this worksheet if your taxable income is $70,001 and over.

Your tax is $14,020 plus 33 cents for each dollar in this tax bracket.

Copy your taxable income from Box 31 of your return to

Box 1.

70,000 00

Subtract Box 2 from Box 1. Print the answer in Box 3.

14,020 00

Multiply Box 3 by 0.33 (33 cents in the dollar).

Print the answer in Box 5.

Add Box 4 and Box 5. Print the answer in Box 6.

This is the tax on your taxable income. Copy it to Box 2 on page 44 of this guide.

IR 3 INDIVIDUAL RETURN GUIDE44

Question 34 Tax calculation

Use this worksheet to work out the amount of tax to pay or amount to be refunded.

Copy your taxable income from Box 31 of your return to

Box1. If the amount is a loss, print "0.00".

Work out the tax on taxable income from pages 42 and 43

in the guide. Print your answer in Box 2.

Copy this amount to Box 34 of your tax return.

Copy your tax credit from Box 32 of your return to Box 3.

Subtract Box 3 from Box 2. Print your answer in Box 4.

If Box3 is larger than Box 2 print "0.00".

Copy your overseas tax paid, if any, from Box 17A of your

return to Box 5.

Subtract Box 5 from Box 4. Print your answer in Box 6.

If Box 5 is larger than Box 4 print "0.00", then read Tax paid

overseas on page 21 in this guide.

Copy your imputation credits, if any, from Box 14 of your

return to Box 7.

Copy your excess imputation credits brought forward from

Box 33 of your return to Box 8.

Add up your total imputation credits from Boxes 7 and 8,

and print the total in Box 9.

Subtract Box 9 from Box 6. Print the answer in Box 10.

If Box 9 is larger than Box 6 print "0.00", then read excess

imputation credits carried forward on page 41.

Copy your tax credit subtotal from Box 21A of your return

to Box 11.

Subtract Box 11 from Box 10. Print your answer in Box 12.

If Box 11 is larger than Box 10, the result is a credit. If Box10 is

larger than Box 11, the result is a debit.

(Tick one)

Credit

Debit

Box 12 is your residual income tax. Copy this amount to Box 34A of your tax return.

Print any 2020 provisional tax paid in Box 13.

If Box 12 is a credit, add Box 13. Print the answer in Box 14.

This is your refund.

If Box 12 is a debit, subtract Box 13 from Box12. Print your

answer in Box 14. This is your tax to pay. (If Box 13 is larger

than Box 12 the difference is your refund.)

(Tick one)

Refund

Tax to pay

Please copy the answer in Box 14 above to Box 34B of your tax return.

ird.govt.nz

Excess imputation credits carried forward

Imputation credits are treated differently from RWT. If you received dividends from a New Zealand

company that gave you imputation credits or an Australian company that gave you New Zealand

imputation credits, you may have excess imputation credits to carry forward. This will only happen if

your total imputation credits (including any excess imputation credits brought forward from 2019) are

greater than your total tax payable.

Use the worksheet below to work out the excess imputation credits that must be carried forward to your

2021 tax return. We'll send you a letter confirming the amount.

Worksheet

Copy your total imputation credits from Box 9 of your tax

calculation on page 44 in this guide to Box 1.

Copy your total tax payable from Box 6

of your tax calculation on page 44 in this guide to Box 2.

Subtract Box 2 from Box 1. Print your answer in Box 3.

This is your excess imputation credits amount to carry forward to 2021.

Student loan

We'll work out how much of your student loan you need to repay, based on your income. If you have

an end-of-year repayment obligation we'll send you a notice showing how much is due. If you want to

calculate the amount yourself, either use the worksheet provided here or go to ird.govt.nz/myIR and use

our student loan repayment calculator.

Interest-free student loan

If you've lived in New Zealand for six months (183 days) or more, your student loan is interest-free.

Even if you haven't been in New Zealand for six months, you may qualify for an interest-free student loan

if you meet the criteria for an exemption.

Go to our website ird.govt.nz/sl-interest-free for more details.

End of year repayment obligation

Repayment deductions from salary or wages are generally considered your final obligation on that

income and don't form part of your end-of-year repayment obligation.

Income from casual agricultural work and election day work doesn't have student loan deductions. This

income is excluded as salary and wage income and becomes part of adjusted net income.

If you have a loss from an investment or business activity, any income or deductions are excluded in

calculating your adjusted net income. If you have separate business or investment activities which are

normally carried out in association with each other, you can offset a loss from one business or investment

activity against other like income. For example, Rory has an overall loss from his landscaping business of

$7,500. He has also made a profit from his lawnmowing service of $50,000. The activities are carried out

in association with each other, so Rory can claim the $7,500 loss against the $50,000 profit.

IR 3 INDIVIDUAL RETURN GUIDE46

From the 2015 tax year onwards income adjustments are now required to be part of your adjusted net

income. For a full list of the adjustments required go to ird.govt.nz/adjust-income

You'll only have an end-of-year repayment obligation if you:

• have adjusted net income of $1,500 or more with a total income (including salary or wages) of

$21,260 (annual repayment threshold plus $1,500) or more

• had an interim assessment for the year.

Note

Adjusted net income is your annual gross income, excluding salary or wages and less annual total

deductions you may claim. If you have a loss from an investment or business activity, neither the

income or the deductions from that activity are included in calculating your adjusted net income. If

you have separate business or investment activities which are normally carried out in association with

each other, a loss from one business or investment activity can be offset against other like income.

Annual total deductions are the expenses and deductions you can claim for the tax year.

Note

If you're required to file an Adjust your income - IR215 form, you can't use this worksheet to

calculate your 2020 repayment obligation. Once we have received your IR3 and your IR215 we will

send you your end-of-year repayment obligation for 2020.

ird.govt.nz

Use this worksheet to calculate your 2020 repayment.

Annual repayment threshold.

19,760 00

Copy any gross salary or wage income (excluding casual

agricultural or election day income) from Box 11B of your

return to Box 2.

If Box 2 is more than Box 1 print $0.00 in Box 3, otherwise

subtract Box 2 from Box 1 and print the result in Box 3.

This is your unused repayment threshold you can use against your other income.

Enter your income after expenses from Box 29 of your return

(excluding any losses), less any salary and wage income from

Box 2 in Box 4.

Subtract Box 3 from Box 4. If the result is less than $1,500.00

print $0.00 in Box 5. Otherwise, print the result in Box 5 (this

is your total liable income).

Multiply the amount in Box 5 by 0.12 (12%).

This is your end-of-year payment obligation for the 2020 tax year.

Print any 2020 voluntary repayments made to Inland

Revenue in Box 6A.

Print any 2020 interim payments made to Inland Revenue in

Box 6B.

Add Boxes 6A and 6B together and print the result in Box 7.

Subtract Box 7 from Box 6 and print your answer in Box 8.

If Box 7 is less than Box 6, the difference is your end-of-year

loan repayment.

(Tick one)

Loan repayment

If Box 7 is larger than Box 6, the difference is your end-of-year

overpayment.

Overpayment

IR 3 INDIVIDUAL RETURN GUIDE48

Question 35 Early payment discount

An early payment discount is available for people who:

• are new in business

• haven't begun to pay provisional tax

• made payments within the corresponding income year up to their balance date, eg, a standard

balance date taxpayer, who has made a payment or payments on or before 31 March 2020 as income

tax for the period 1 April 2019 to 31 March 2020.

The discount is calculated at the rate of 6.7% of either:

• the amount paid during the year, or

• 105% of your end-of-year residual income tax liability,

whichever is the lesser, and is credited against your end-of-year tax bill.

To check if you qualify, work through the following flowchart.

ird.govt.nz

Do you qualify for an early payment discount?

Terms we use

Provisional tax - this is tax paid in instalments during the year, based on what you expect your

income to be, or what it was last year.

Assessable income - income that is not exempt income or excluded income (eg, a government grant

to a business). Assessable income includes undeclared business income you may have earned (eg,

cash jobs).

Year - as referred to in the diagram below, year means the standard tax year from 1 April to 31 March,

unless you have an approved different balance date, in which case your income year will end then.

If you have any questions about your entitlement to the discount, please contact us.

Yes

Are you self-employed or in a partnership

and

you don't use a company or trust to run

your business

and

most of your income is from your business -

not interest, dividends, rents or benefits?

Were you liable

for provisional tax

during 1April 2015 to

31March 2020?

Have you ever paid

provisional tax?

You don't qualify

Have you ever claimed

the early payment

discount?

You qualify for an early

payment discount. To

apply, tick the box at

Question 35 on your

tax return.

Have you made a

voluntary payment

of income tax for the

2020 year on or before

31March 2020?

Yes

Did you earn assessable income from a business in a

four-year period since you last paid provisional tax?

For example:

Year 5.

Eligible

for early

payment

discount

Year

No assessable income

from a business during

this period

Year 0.

You last paid

provisional

tax

Did you earn assessable income from a business in a

four-year period since you last claimed the early payment

discount? For example:

Year 5.

Eligible

for early

payment

discount

Year

No assessable income

from a business during

this period

You claimed

an early

payment

discount

Yes

You qualify

for an early

payment

discount. To

apply, tick

the box at

Question 35

on your tax

return.

You don't qualify

Yes

IR 3 INDIVIDUAL RETURN GUIDE50

Question 36 Refunds and/or transfers

If you're entitled to a refund, you can:

• transfer all or part of it to your student loan

• transfer all or part of it to cover someone else's income tax or student loan

• transfer all or part of it to your 2021 provisional tax

• have it direct credited to a bank or other deposit account, eg, a building society account shown at

Question 8.

If you’ve made payments towards your 2021 provisional tax and, after completing this return, you find

that you have less or no provisional tax to pay, the over payment can be included in the amount we

refund or transfer. Attach a separate note to your return to request this.

Direct credit

If you choose direct credit you get your refund faster and you can withdraw your money as soon as it's

credited because there's no clearance time.

We pay any refund over $1.00 direct into your New Zealand bank account or other deposit account, eg,

a building society account as soon as we've processed your return. Make sure your correct bank account

number is printed at Question 8 on the front page of your return.

Transfers

If you'd like your refund transferred to another account or to arrears being paid off through an instalment

arrangement, you'll need to tell us the date you'd like your excess tax transferred (the"transferdate").

The date you can choose depends on what tax has been overpaid and whose account you want the

credit transferred to.

Requesting transfers on your return

You can ask us to transfer a refund to another account by filling out the boxes on page 5 of your return.

If you ask for a transfer on your return, we will transfer your refund at one of the following dates:

Transfer to your own account or an account of someone associated to you, the later of:

• the day after your balance date (or 1 April if your balance date is before 31 March), or

• the due date in the destination account.

Transfer to an account of someone not associated to you:

• the day after your return was filed.

If you don't tell us the date you'd like your credit transferred, we will transfer it at a date we think gives

you the greatest advantage. If you'd like the credit transferred at a different date, you can contact us and

ask for the transfer date to be changed (including if we've transferred your credit to cover a debt).

ird.govt.nz

Associated taxpayers

The following are associated taxpayers for the purposes of transferring overpaid tax:

• a company you're a shareholder-employee in

• a partner in the same partnership

• a relative (eg, child, parent)

• spouse or partner

• a trustee of a family trust you're a beneficiary of.

Transfers requiring a separate note attached to the return

Situations such as requesting a transfer at a future date, transfer to arrears being paid off by an instalment

arrangement and transfers at a different date will require you to attach a separate note to your return

advising the following specific details.

• The amount you want transferred.

• The account you want it transferred to, eg, name, IRD number, tax type and period end date (and if

it's another person, whether they're associated).

• The date you'd like the credit transferred.

• If it is to be transferred to debt covered by an instalment arrangement.

Special rules apply if the return period has had tax pooling funds transferred in.

IR 3 INDIVIDUAL RETURN GUIDE52

Provisional tax

Question 37 Provisional tax

Provisional tax is generally payable because you earned income during the year that either:

• wasn't taxed, or

• was taxed at the wrong rate.

It's usually payable in three instalments during the year (28 August 2020, 15January 2021, 7 May 2021), unless:

• you have a non-standard balance date, or

• you pay GST on a six-monthly basis, or

• you use the GST ratio method to calculate provisional tax.

If your 2020 residual income tax (RIT) (Box 34A of your return) is more than $5,000, you'll become a

provisional tax payer and will be liable to pay 2021 provisional tax.

For more information read our guides Provisional tax - IR289 or Penalties and interest - IR240.

Initial provisional tax liability

Special rules apply when interest may be charged for an initial provisional tax liability.

You will have an initial provisional tax liability if:

• you begin to derive income from a taxable activity during the tax year, and

• your RIT in any of the four preceding tax years didn’t exceed $5,000 ($2,500 for the 2019-20 and

earlier years), and

• your RIT for the current year is $60,000 or more.

If this applies to you, please read our guide Provisional tax - IR289.

The date you cease employment determines when interest will be charged from.

You are not liable to pay provisional tax in the year you have an initial provisional tax liability. You may

make voluntary payments to reduce your interest liability.

Interest rules if you have an initial provisional tax liability

Special rules apply to when interest may be charged for an initial provisional tax liability. If this applies to

you, please read our guide Provisional tax - IR289.

Payment options

You have three options for paying provisional tax - the standard option "S", the estimation option "E" or

the ratio option "R".

Standard option

Under this option, your 2021 provisional tax is the same as your 2020 RIT (if it is more than $5,000) plus 5%.

Copy this amount to Box 37B of your return and print "S" in Box 37A. Divide the amount by 3 to get

the amount you must pay for each instalment - record this on page 56. If you're filing your return after

28August, your instalment amounts may be different.

ird.govt.nz

Note

If you think your income for 2021 will be more than your 2020 income, you can make voluntary

payments over and above the amount you have to pay under the standard option.

Use this worksheet to calculate your 2021 provisional tax using the standard option "S"

Copy your RIT from Box 34A of your return to Box 1.

Multiply Box 1 by 0.05 (5%). Print your answer in Box 2.

Add Box 1 and Box 2. Print your answer in Box 3.

Box 3 is your 2021 provisional tax.

Copy this amount to Box 37B of your return and print "S" in Box 37A.

Divide the amount in Box 3 by 3 to get the amount you must pay for each instalment. Record this

on page 56.

If you're filing your return after 28 August, your instalment amounts may be different.

Estimation option

Anyone can estimate provisional tax. If you expect your 2021 RIT to be lower than your 2020 RIT,

estimating will keep you from paying more than you have to.

If you choose to estimate, your estimate must be fair and reasonable at the time you make it and at each

instalment date.

You can be charged a penalty and/or interest if you don't take reasonable care when you estimate your

provisional tax.

Use this worksheet to calculate your 2021 provisional tax using the estimation option "E"

Print your estimated 2021 taxable income in Box 1.

Work out the tax on the amount in Box 1.

Print your answer in Box 2.

Print your estimated 2021 credits, such as tax credits,

PAYE deducted, in Box 3.

Subtract Box 3 from Box 2. Print your answer in Box 4.

Box 4 is your 2021 provisional tax.

Copy this amount to Box 37B of your return and print "E" in Box 37A.

Divide the amount in Box 4 by 3 to get the amount you must pay for each instalment. Record this

on page 56.

IR 3 INDIVIDUAL RETURN GUIDE54

Ratio option

If you're GST-registered you may qualify to use the ratio option to calculate your provisional tax.

You must apply to use the ratio option, before the beginning of the income year you want to use it in.

If you've already elected to use the ratio option and want to continue using it, enter R at Box 37A.

Read our guide Provisional tax - IR289 for more information about the ratio option.

Question 38 Foreign rights disclosure

If you calculated controlled foreign company (CFC) or foreign investment fund (FIF) income at

Question 17, you may be required to complete an additional disclosure form for that investment. The

types of foreign investment that may not require an additional disclosure are investments in countries

NewZealand has a double tax agreement with as at 31March 2020 and have used the comparative value

or fair dividend rate method.

Full details of the disclosure requirements are available in the May issue of our Tax Information Bulletin

(TIB) each year.

If you need help making a disclosure please call 0800 377 774.

What to show in your return

At Question 17 of your return include:

• any income and tax credits from a CFC or FIF

• any claim for BETA credits.

See page 19 to find out how to convert your overseas income and tax credits to New Zealand dollars.

For further information about CFCs and FIFs, go to ird.govt.nz

Question 39 Is your return for a part-year?

Read the situations listed in Question 39. If any apply to you, tick the "Yes" option and then tick the

situation that applies and fill in the start and end dates of the return period.

If you were a tax resident for the full year, but only worked part of the year, please tick the "No" option.

If you ticked "Yes", this means that your return isn't for a full year. We'll calculate your tax and

income-related tax credits and let you know what they are.

ird.govt.nz

Question 40 Notice of assessment and declaration

You must read the declaration and sign the return as being true and correct.

Self-assessment by taxpayers

Taxpayers have to assess their own liability as part of their return filing obligations. This applies to the

2002-03 and later income years. We may amend your assessment if a correction is required.

If you dispute our assessment please go to ird.govt.nz/disputes for more information. The four-month

period for you to issue a notice of proposed adjustment (NOPA) to your self-assessment will start on the

date Inland Revenue receives your return.

Paying your tax

If you have tax to pay, you must pay it by 7 February 2021. If you have an agent and a standard or late

balance date you may have until 7April 2021 to pay. If you think this may apply to you, please contact

your agent for more information. You can pay earlier if you want to.

How to make payments

Go to ird.govt.nz/pay to find out about paying by:

• direct debit

• credit or debit card

• internet banking.

Late payment

We may charge you a late payment penalty if you miss a payment or it's late. We'll also charge you

interest if you don't make your tax payment by the due date.

If you can't pay your tax by the due date, please call us. We'll look at your payment options, which may

include an instalment arrangement, depending on your circumstances.

Go to ird.govt.nz/penalties for more information.

IR 3 INDIVIDUAL RETURN GUIDE56

Your record of payment

When you've worked out how much you have to pay, write the amounts on the schedule below. Keep it

as a record so you don't miss a payment.

The dates on the schedule apply to a person with a 31 March balance date. If your balance date is

different or you are registered for GST on a six-monthly filing frequency or if you have a tax agent, your

payment dates may be different too. If you aren't sure, check with your tax agent or call us.

Payment schedule

These dates may vary if you have a non-standard balance date, if you have a

tax agent or if you are registered for GST on a six-monthly filing frequency.

Amount Date payable

2020 income year

Tax to pay (Box 34B of your return)

7 February 2021

2021 income year

Total provisional tax (Box 37B of your return)

First instalment (one-third)

28 August 2020

Second instalment (one-third)

15 January 2021

ird instalment (one-third)

7 May 2021

Adjusting an income tax return already filed

If you want to amend or adjust an income tax return that's already been filed, please send us a Notice of

proposed adjustment - IR770 (NOPA) through the disputes resolution process. Don't send us another

return.

ird.govt.nz

ACC personal services rehabilitation payments

If you've had a workplace injury your employer may manage these payments rather than ACC. If you or

your caregiver receive these payments, regardless of whether ACC or your employer makes them, you'll

need to read this information before you complete your return.

Any ACC personal service rehabilitation payments paid by ACC or your employer direct to the client or

caregiver, are schedular payments and will have tax deducted before the payments are made.

If you received these payments you may not be required to complete an IR3, let us know and we’ll

update our records.

Do I need to file?

Are you a caregiver receiving payments from ACC, or a caregiver paid by a client?

If this is your only income, you are not required to complete an IR3 and can receive an automatic income

tax assessment instead. However, you may have another reason to complete an IR3 - see page 5 for more

information.

Are you a client who received these payments from ACC and then passed on those payments to your

caregiver?

You're are required to file an IR3 if:

• you have other income

• you have other reasons to file - see page 5.

Note the above rules apply whether or not you've passed these payments on to your caregiver.

If you're a client or caregiver who is required to file, please read the information on the following

pages before you complete Questions 12 and28.

Question 12 Schedular payments

If you're a caregiver paid directly by ACC

Use the income from schedular payments information on your Summary of Income (SOI) to help you

complete your IR3. Ifyou haven't received an SOI, call us on 0800377 774 and we'll send you a copy.

If you haven't given ACC your IRDnumber, please include any payments that aren't on your SOI in

your IR3.

Enter the amount of tax deducted in Box 12A. Enter the total gross payments in Box 12B.

If you're a caregiver paid by the ACC client

Using the records you've kept on the amount of personal service rehabilitation payments you received

throughout the year, work out the gross payments to show in your return.

IR 3 INDIVIDUAL RETURN GUIDE58

Calculating your gross payments

Worksheet 1. Calculating your gross payments that had 10.5% tax deducted

Print in Box 1 the total amount of payments received that

had 10.5% tax deducted.

Divide Box 1 by 0.895.

Print the answer in Box 2. This is the gross payment.

If any of your payments had the 45% no-notification tax rate applied, you will need to complete the

following worksheet.

Worksheet 2. Calculating your gross payments that had 45% tax deducted

Print in Box 3 the total amount of payments received that

had 45% tax deducted.

Divide Box 3 by 0.55

Print the answer in Box 4. This is the gross payment.

Total gross payments amount for the year

Worksheet 3. Calculating your total gross payment

Add Boxes 2 and 4 together and print the answer in Box 5.

This is the gross payment received for the year. Copy it to Box 12B of your return.

Note

If you're registered for GST, your gross schedular payment may include GST. Enter the GST-exclusive

amount at Question 12B.

Calculating your tax deducted

Worksheet 4. Calculating your available tax credit

Add Boxes 1 and 3 together and print the answer in Box 6.

Subtract Box 6 from Box 5 and print the answer in Box 7.

ird.govt.nz

Note

If the payments you received didn’t have tax deducted from them or you received any other income

that didn’t have tax deducted from it, print it in Box 24 of your return. Attach the details of your

income to your return.

If you're an ACC client

If you've kept all payments and haven't paid any of the money received from ACC to your caregiver(s),

use the amounts from schedular payments information on your SOI.

Enter the tax on schedular payments in Box 12A and enter the total gross payments in Box 12B.

If you haven't received your SOI, you can get these details from myIR or call us on 0800 377 774 and we

will send you a copy.

If you haven't provided ACC with your IRD number, please include any payments that aren't on your SOI

in your IR3.

If you've passed on all the income to your caregiver(s) you don't need to include these from your SOI at

Question 12. This is because these payments, when they're all passed to your caregiver(s) throughout the

year, are considered exempt income to you.

You won’t need to put any amount in Boxes 12A or 12B.

If you’ve been reimbursed by ACC for amounts that you’ve paid to caregiver(s) before 1 April 2018 you

won’t need to put any amount in Box 12B but you’ll include the tax on schedular payments from your

SOI in Box 12A.

If you've kept some of the income, you'll include the total gross payments from your SOI at Box 12B but

claim any of these payments you've passed on to your caregiver(s) as a deduction at Question 12C. Read

Question 12C Expenses related to schedular payments below.

If you haven't given ACC your IRD number, please include any payments that aren't on your SOI in

yourIR3.

Please use worksheet 4 "Calculating your available tax credit" on page61 to determine your tax

deductions. This total will be added at Question12A. You'll also need to complete worksheets 1 to 3 on

page 60 before you can calculate your available tax credit.

Question 12C Expenses related to schedular payments

If you've kept some of the income

To help determine your allowable deduction, you'll first need to determine your caregiver's gross

payments. Complete worksheets 1to3 and include the amount from Box 5 at Box 12C of your IR3 return.

Please attach a copy of the payments you made to your caregiver(s) with your IR3.

IR 3 INDIVIDUAL RETURN GUIDE60

Calculating your deduction

Worksheet 1. Calculating the gross payments you have passed to your caregiver that

had 10.5% deducted

Print in Box 1 the total amount you paid to your caregiver

that had 10.5% tax deducted.

Divide Box 1 by 0.895. Print the answer in Box 2.

This is the gross payment you made to your caregiver.

If any of your payments had the 45% no-notification tax rate applied you'll need to complete the

following worksheet.

Worksheet 2. Calculating the gross payments you have passed to your caregiver that

had 45% tax deducted

Print in Box 3 the total amount you paid to your caregiver

that had 45% deducted.

Divide Box 3 by 0.55. Print the answer in Box 4.

This is the gross payment you made to your caregiver.

Your allowable deduction

Worksheet 3. Calculating your allowable deduction

Add Boxes 2 and 4 together and print the answer in Box 5.

This is the allowable deduction. Include this amount in Box 12C of your return.

Please attach a copy of the payments you made to your caregiver(s) with your IR3.

Please use worksheet 4 on the next page to calculate the tax deducted, which you'll need to include at

Question12A.

ird.govt.nz

Calculating your tax deducted

Worksheet 4. Calculating your available tax credit

Copy the amount from Box 5 on worksheet 3 to Box 1.

Add Boxes 1 and 3 on page 60. Print the answer in Box 2.

Subtract Box 2 from Box 1 on this worksheet and print

the answer in Box 3. This is your caregiver's available tax

credits.

Copy your total tax deducted amount from your SOI to

Box 4.

Subtract Box 3 from Box 4. Print the answer in Box 5.

This is the total tax deducted available to you. Copy it into Box 12A of your return.

More information

If you have any questions about your tax please go to our website ird.govt.nz

Accident Compensation Act 2001 (ACC)

Under the Accident Compensation Act 2001, Inland Revenue is required to provide earnings information

from your IR3 return to the Accident Compensation Corporation (ACC). ACC will begin invoicing

self-employed levies from August. ACC gets the information from IR3 returns as follows:

• Question 11A Gross earnings with PAYE deducted and earnings not liable for ACC earners' levy

• Question 12 Schedular payments

• Question 17 Overseas income

• Question 18 Share of partnership income ("active" income) from the partnership's trade or business

• Question 19 Look-through company (LTC) active income

• Question 20 Shareholder-employee salary with no tax deducted

• Question 24 Self-employed income

• Question 26 Other income

• Question 28 Other expenses.

RESET FORMRESET FORM

IR 3 INDIVIDUAL RETURN GUIDE62

Shareholder-employees

Other income

In addition to your shareholder's remuneration, you may also have received other income liable for

ACC levies, such as self-employed income. ACC will take your shareholder-employee remuneration into

account if invoicing for additional levies.

Maximum earnings from multiple companies

The maximum amount of ACC earners' levy deductions is $1,785.73. You may be due for a refund from

ACC if your shareholder-employee remuneration is from two or more companies and the combined total

is over $128,470. Please call ACC on 0508 426 837 to find out more about the refund process.

Mixed income

Mixed income earners are those who have a combination of employee (including shareholder-employee

remuneration without PAYE deducted) and self-employed earnings. If you're in this situation you have

to pay ACC levies on both sources of income, up to the maximum. ACC will invoice you for the amount

you'll have to pay.

Current year losses

If you were in full-time employment and have recorded a loss, or your earnings are below the minimum

earnings threshold, you're still liable for ACC levies. These will be calculated at the minimum level.

IR56 taxpayers

If you're a private domestic worker, you've already paid ACC earners' levy on your IR56 income as part of

your PAYE.

ACC will invoice you as an employer for other levies payable on your IR56 income. If you also receive

other income liable for ACC levies, we'll pass this information to ACC to invoice levies on this income.

ACC will make allowance for levies paid as an employer.

Further information

If you have any queries about ACC or levies payable, go to acc.co.nz/productslevies or contact the

ACCBusiness ServiceCentre:

Phone 0508 426 837

Fax 0800 222 003

Email business@acc.co.nz

ird.govt.nz

Services you may need

Need to speak with us?

Have your IRD number ready and call us on one of these numbers.

General tax, tax credits and refunds 0800 775 247

Employer enquiries 0800 377 772

General business tax 0800 377 774

Overdue returns and payments 0800 377 771

We're open 8am to 8pm Monday to Friday, and 9am to 1pm Saturday. We record all calls.

Our self-service lines are open 7 days a week - except between 5am and 6am each day. They offer a range

of automated options, especially if you're enrolled with voice ID.

Find out more at ird.govt.nz/contact-us

0800 self-service numbers

Our 0800 self-service numbers are open 7 days a week - except between 5am and 6am each day. Make

sure you have your IRD number ready when you call.

For access to your account-specific information, you'll need to be enrolled with voice ID or have a PIN.

Order forms, guides and returns 0800 257 773

All other services 0800 257 777

When you call, confirm what you want from the options given. If you need to talk with us, we'll re-direct

your call to someone who can help you.

If you have a complaint about our service

We're committed to providing you with a quality service. If there's a problem, we'd like to know about it

and have the chance to fix it.

If you disagree with how we've assessed your tax, you may need to follow a formal disputes process.

Find out more about making a complaint, and the disputes process, at ird.govt.nz/disputes

Privacy

Meeting your tax obligations means giving us accurate information so we can assess your tax and

entitlements under the Acts we administer. We may charge penalties if you do not.

We may also exchange information about you with:

• some government agencies

• another country, if we have an information supply agreement with them, and

• Statistics New Zealand (for statistical purposes only).

You can ask for the personal information we hold about you. We'll give the information to you

and correct any errors, unless we have a lawful reason not to. Find our full privacy policy at

ird.govt.nz/privacy

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