Kiwi family hit with $4000 tax bill after moving to Australia in 2021

A New Zealander named Kenneth is facing a $4000 repayment demand from Inland Revenue after moving to Australia in early 2021. The issue stems from how his final earnings were calculated for Working for Families tax credits, leaving his family with unexpected debt in one of the world's most expensive cities.

Kenneth left New Zealand for Australia with his family in January 2021. His total earnings for the 2021 tax year were just under $84,000. However, Inland Revenue annualised his income, treating it as though he had earned closer to $110,000 over the full year.

The problem arose because Inland Revenue counted one-off payments—such as final holiday pay and back pay—as daily wages rather than irregular income. This method inflated his calculated earnings, reducing his entitlement to Working for Families credits. The abatement threshold for these credits starts at $42,700, with a 27% reduction for every dollar earned above that amount.

Kenneth's wife had already used the credits to support their family while living in a high-cost city. Tax expert Terry Baucher explained that Inland Revenue's approach aims to prevent people from paying less tax if they leave early in the tax year. Yet, in 2022, only 24% of households receiving weekly or fortnightly payments got the correct amount of credits.

The Government is now reviewing the Working for Families scheme to stop households falling into similar debt.

Inland Revenue's calculation method has left Kenneth owing $4000. The case highlights ongoing issues with the accuracy of Working for Families payments. A review is underway to address these problems and prevent future financial strain on families.