Payroll giving for individuals
Payroll giving, where offered by your employer, gives you the opportunity to donate to approved donee organisations / registered charities direct from your pay and receive immediate tax credits that reduce your PAYE payable. You don't need to wait until the end of the year to claim your tax credit.
Only employers who electronically file their employer monthly schedule and deduction form can choose to offer payroll giving to their employees.
How tax credits for payroll donations work
Tax credits for payroll donations are calculated at 33.33 cents for each dollar donated which is deducted from your PAYE. Employers are responsible for calculating the correct tax credits for each payroll donation made by their employees. The tax credit for payroll donations is 33.3333 cents for each dollar donated. Once the tax credit has been calculated, the employee's PAYE is reduced by the amount of the tax credit.
Example showing how the tax credit affects tax payable on salary or wages
Hannah makes a payroll giving donation of $12 to her church. She is paid $2,140 every four weeks. This is her only job so her tax code is "M". Before the tax credit is applied her PAYE is $435.48.
The tax credit for Hannah's payroll donation is $3.99. Her employer applies the tax credit when working out Hannah's pay and Hannah's PAYE is reduced to $431.49 for that pay period.
Hannah's take home pay is now:
| Income | $2,140.00 | |
| less | PAYE | $435.48 |
| less | donation | $12.00 |
| plus | tax credit for payroll donation | $3.99 |
You will not be given receipts for your payroll donations
Individual employees will not be issued receipts as the tax credits for donations made as part of payroll giving will be immediate in the form of reduced PAYE. They will not be eligible to be claimed again through the Inland Revenue Department end of year tax credit claim form IR526.
If you have made donations directly to us and you have received your receipt(s), you claim them using the IR526 claim form.
If you are interested in setting up your BiblesinAction donations as payroll giving please our office for further details.
