The taxman is making a grab for up to $245 a year from children working at the local supermarket, shop or on a paper run – tax they used to be able to claim back.
Children earning less than $2340 a year will no longer be able to claim back the tax they pay through formal employment.
However, the taxman is not going after the tax-free income they might earn from baby-sitting or mowing the neighbour's lawn.
In the past, a child under 14 or under 18 and still at school, working in a shop or some other formal workplace could claim back the 10.5 per cent tax their employer paid at source.
In the 2012-13 tax year, those children will no longer be able to claim the tax back.
In the past, children could claim back up to about $245 a year if they made the maximum under the tax break.
Next year, they will not be able to claw back the tax.
Deloitte chief executive Thomas Pippos said if a child worked at a shop making about $2000 a year, PAYE tax would be deducted, but they could get a refund on that or choose a different tax code so the tax was not deducted.
There will only be a tax-free exemption for the cash jobs such as cutting grass or baby-sitting. Children will not have to file a tax return on the money they make in such cash jobs, as long as it is under $2340 a year.
"The supermarket stuff gets taxed at source and falls into the tax take," he said.
Essentially, Inland Revenue was saying if children did a proper job, if fell inside the rules and tax had to be paid.
SORRY ALEX, TIME TO MEET THE TAXMAN
Kapiti College pupil Alex McLaughlin, 17, is disappointed his meagre earnings delivering two local newspapers a week look set to be taxed.
He saves the $10 a week he earns delivering the papers to contribute towards things that come up, including trips away.
"My parents make me pay for things because I am old enough now," he said. "It is only a tiny amount of money, it is going to be a bit irritating, but money is money – I am lucky to have a job at all."
He delivers about 120 papers each run, which takes him about an hour each time, and has been doing it for about a year. He is already looking for a better-paying job.
"It will be frustrating," he said of the tax changes. "I only get a little bit of money – any taken away makes you wonder about it."
Shannon Barclay, 15, also from Kapiti College, has been delivering a local newspaper and circulars for several years and is not impressed to discover she will be taxed.
She delivers circulars twice a week after school, normally taking about an hour for each delivery. "We don't get paid too much – usually less than $20 a fortnight. It rains and stuff but you still have to do it. I was probably going to give it up anyway and get a better job."
Teenagers who deliver the Kapiti Observer earn 2.5 cents a paper. The average paper run is between 100 and 200 papers.
- © Fairfax NZ News
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