What is the independent earner tax credit and how do I get it?

The Independent Earner Tax Credit (IETC) provides tax relief for individuals earning between $24,000 and $70,000 per year who do not receive other forms of government support. Eligible individuals can receive up to $520 per tax year, calculated as $10 per week.

You can get IETC if you meet all of the following conditions: 

You can use this tool provided by the IRD to check if you’re eligible for IETC.

If your pre-tax income is between $24,000 and $66,000 per annum, you can get the full $10 per week tax credit.

If your annual pre-tax income is between $66,001 and $70,000, IETC reduces by $0.13 for every dollar of income exceeding $66,000.

For salary or wage earners, use the tax code ME or ME SL so that your employer reduces your PAYE deductions each pay period. Alternatively, if you use the more common M tax code, the IRD will automatically calculate your tax credit entitlement when they process end-of-year tax assessments and issue a refund to your nominated bank account (i.e. the bank account you have listed in your myIR account). The latter is a better option if your main salary/wage is close to the upper threshold and you have other income sources (such as interest from a savings bank account), as you could end up with a tax bill if your assessed income ends up over $70,000 and you haven’t paid the correct amount of tax during the year.

For self-employed individuals or business owners, the tax credit is claimed at the end of the financial year when your individual (IR3) tax return is filed.

If you’re a Beany client, your accountant will automatically calculate and apply any eligible credit when completing your tax return.

For more details, read the Independent Earner Tax Credit information on the IRD website.