Extension Announced for Redundancy Credits
October 1, 2010 New Zealand Taxation
The recent earthquake in Christchurch has prompted the Inland Revenue Department to extend its tax redundancy tax credit system.
In a media statement released on September 30th Peter Dunne, Revenue Minister of New Zealand, announced an extension to the redundancy tax credits system. It was previously announced in Budget 2010 that tax credits would be repealed on October 1st 2010. However as a result of the earthquake, and the financial situations in which its victims are placed, the tax availability of redundancy tax credits will be extended to March 31st 2011.
The redundancy tax credit system was originally launched to with the aim of providing some tax relief to taxpayers receiving redundancy payments. Peter Dunne explained, saying “Without the tax credit, in some situations, people could be taxed too highly if they had worked part of the year.” It was not uncommon for individuals receiving a redundancy payment to be inadvertently shifted to a higher income tax bracket, and being liable for a greater tax liability. The tax credit extension is intended to ease financial burdens on individuals who lose their jobs and welfare in the recent disaster in the South Island.
The redundancy tax credit will be applicable to all redundancies occurring before April 1st 2011, and will be paid at 6 cents per dollar.
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