Nearly 190,000 New Zealanders had a tax bill quietly wiped last year for a reason that had nothing to do with how much they earned. They simply got paid one extra time.
Figures released to RNZ under the Official Information Act and reported on Thursday show that in the year to March, 189,200 people had a combined $30.9 million of tax written off by Inland Revenue because an extra pay period left them short. In the year before that, just 58,100 people had write-offs worth $6.4 million between them.
The jump has an unglamorous cause. PAYE is deducted on the assumption that a salary is spread over 52 weekly pays or 26 fortnightly pays in a year. Depending on how the dates fall, some years deliver 53 weekly pays or 27 fortnightly ones. Each individual pay is still taxed as though it were one of the standard number, so slightly too little tax comes out of each one. The gap only becomes visible months later, when Inland Revenue does the annual square-up and sends out an assessment showing tax to pay.
Deloitte tax partner Robyn Walker told RNZ the pattern depends on which weekday employers choose. Years with 53 Tuesdays, Wednesdays or Thursdays tend to produce the most write-offs, because those are the most common paydays. “A lot of the public sector is paid on a Tuesday,” she said.
That is why teachers have featured heavily in the complaints. Readers wrote to RNZ earlier this year saying they had been hit with unexpected bills after being paid over 27 fortnights rather than the usual 26 across the 2025 to 2026 tax year. Nobody had overpaid or underpaid deliberately. The payroll system simply could not spread a year’s tax across a number of paydays it was not designed for.
Inland Revenue has a standing rule for this, and it is the reason most people never hear about the problem at all. Under the department’s automatic write-off policy, a bill caused only by an extra pay period is wiped up to a set limit. For the 2026 tax year, someone earning up to $180,000 can have $250 written off if they are paid weekly, $420 if they are paid fortnightly and $790 if they are paid every four weeks. Above $180,000 the caps rise to $460, $840 and $1,630. Any tax bill of $50 or less is written off regardless of the reason.
The catch is that the caps work as a cliff rather than a discount. If the calendar leaves someone owing $445 on a fortnightly pay cycle, they do not pay the $25 above the $420 threshold. They pay the entire $445.
A large group of people are shut out of the write-off altogether. Inland Revenue will not apply it to anyone who was entitled to Working for Families at any point in the year, anyone who used a tailored tax code, anyone whose tax code or rate was wrong, or anyone who did not stay with the same employer for the full 12 months. People who file an IR3 return cannot get it either, and the write-off is only applied once income details are confirmed. In practice, that means the workers most likely to be juggling a second job, a side income or a change of employer are also the least likely to be rescued by the calendar rule.
The current numbers are not the biggest on record. In the year to March 2020, 510,500 people had $37.4 million written off, which Inland Revenue attributed to New Zealand Superannuation recipients receiving an extra payday. Walker said 2020 was unusual because it was a leap year, meaning people paid on both Mondays and Tuesdays were likely to pick up an extra pay.
All of this sits inside a system that now runs largely without anyone filling in a form. Inland Revenue told RNZ in May that 3.63 million customers received end-of-year assessments automatically in 2025. Of those, 2.37 million got a refund and about 342,000 were told they had tax to pay. Assessments are issued from the last weekend in May through to the end of July, and anyone who does end up with a bill has until 7 February the following year to clear it.
For most salary earners the automatic process is a relief, but it also means the first time many people learn about a shortfall is when the letter arrives. Walker has previously pointed out that automatic calculation does not remove the obligation to think about income that has not been taxed at source, such as rent, contracting work or a side business. Those are exactly the sorts of income that disqualify someone from the extra-pay write-off.
Anyone who wants to know whether they got a write-off can check the assessment in their myIR account, which shows the amount of tax calculated and any adjustment applied. Inland Revenue will also arrange instalments for people who owe more than they can pay at once.
The other thing worth noting is that this will happen again, and it is entirely predictable. Walker said the 2031 to 2032 year is the next one to watch, because a leap year will deliver two extra common paydays at once. “However, much like predicting eclipses of the moon, watch this space in March 2032. In 2031-2032 there is a leap year again which will result in two Tuesdays and two Wednesdays… so that might be a year with much higher numbers of write-offs required,” she said. She added that there was probably no better way to manage the issue.
The write-offs are small change against the wider picture of money owed to the department. RNZ reported this month that more than half a million people had tax debt as at March, with total debt of $9.4 billion, of which Inland Revenue considered 62 percent collectable. Set against that, $30.9 million written off for a quirk of the calendar barely registers. For the households that got the letter, it made a difference.
Were you one of the people who got an unexpected tax bill this year, or had one written off without realising it? Tell us what happened in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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