For individuals & families: As an ACC recipient

Tax on ACC personal service rehabilitation payments for ACC caregivers (paid directly by ACC or the client)

Since 1 July 2008, tax has been deducted from the following personal service rehabilitation payments before payments are made:

• attendant care
• home help
• childcare
• attendant care services related to training for independence
• attendant care services related to transport for independence.

Reason for the change

Some ACC clients and caregivers (paid by ACC) have not fully understood how to pay tax on these personal service rehabilitation payments before the payments are made.

These payments have always been taxable, but ACC hasn't previously deducted tax from them. The responsibility for this was on the client or caregiver to pay the tax on these payments.

We're aware of inconsistent practices and a lack of compliance in the past for income from personal service rehabilitation payments. We want to improve caregivers' understanding of their tax obligations to encourage their future compliance. Payments to caregivers are income, so they are taxable.

We will not pursue a caregiver's prior year's tax obligations for income from personal service rehabilitation payments if a caregiver or client:

• gives ACC the necessary documents to ensure the correct tax is deducted, and
• files all the tax returns they need to from 1 July 2008.

However, if caregivers don't comply from 1 July, we may review both their past and future tax obligations.

Your responsibilities if you are paid directly by ACC

Giving ACC the correct information

To ensure that ACC deducts tax on your payments at a rate that accurately reflects your tax obligations, please complete a Social Rehabilitation Payment Authority (ACC84) form. The clients you provide care for need to complete some parts of this form and send it to ACC.

If you are a:

• company
• public authority
• local authority, or
• Maori authority

tax will not be deducted before the payments are made. This will be paid at the end of the year when you file your return.

If you have a ...	then ...	and ...
Special tax code certificate (IR23)	please call us on 0800 224 476 to discuss your situation.
certificate of exemption*	please send a copy of it to ACC.	ACC will not deduct any tax from your payments. This will be payable at the end of the income year.

*A certificate of exemption (COE) does not mean that you pay no tax. If you do meet the criteria for a COE and one is granted, it means that you delay the payment of tax until the end of the income year.

Your other tax responsibilities

If your total income from...	then you ...	Note
all sources (eg salary and wages, income-tested benefit payments from Work and Income) for the income year will be over $9,500	may want to consider applying for a special tax rate to ensure the correct amount of tax is deducted during the income year to avoid a tax bill.
all sources (eg salary and wages, income-tested benefit payments from Work and Income) will be over $14,000	need to file an individual tax return (IR3) for the income year.	We will send you an IR3 at the end of the tax year.
services (eg attendant care) for the tax year will be more than $60,000, and you are self-employed (most caregivers won't be)	will need to register GST. GST will be calculated on your gross income (before tax is deducted).	If you're self-employed you can voluntarily register for GST even if your income is under $60,000.

Goods and services tax (GST)

If you are registered for GST, the GST will be paid by ACC. You will charge ACC for the GST component (12.5% of the gross payment before the tax is deducted). You will need to provide ACC with a tax invoice when you submit your ACC86 weekly reimbursement form.

ACC levies

Because ACC levies are paid on income, you may have to pay ACC levies on income earned from providing support. To find out more, please phone ACC on 0800 222 070.

Your student loan repayments, working for families tax credits and child support payments

The personal service rehabilitation payments are income and will be included as income for the purposes of student loan, working for families tax credits and child support.

Claiming expenses

If you are self-employed, you may be able to claim some expenditure. Some examples of deductible expenditure could be the following:

• Vehicle expenses: Travel from home to a place of work is considered private expenditure and can't be claimed. However if you use your vehicle while performing your care duties, you can claim a deduction for using your vehicle.
• Levies paid to ACC by a self-employed person: These are allowed as a deduction.

Your responsibilities if you are paid by an ACC client

ACC will have deducted the 12.5% tax from your payments before they paid the client you provided services to. Prior to 1 October 2008 the rate was 15%.

If your total income from...	then you ...	Note
all sources (eg salary and wages, income-tested benefit payments from Work and Income) for the income year will be over $9,500	may want to consider applying for a special tax rate to ensure the correct amount of tax is deducted during the income year to avoid a tax bill
all sources (eg salary and wages, income-tested benefit payments from Work and Income) will be over $14,000	need to file an individual tax return (IR3) for the income year.	You will need to request one from us at the end of the income year.
services (eg attendant care) for the tax year will be more than $60,000, and you are self-employed (most caregivers won't be)	need to register for goods and services tax (GST). GST will be calculated on your gross income (before tax is deducted)	If you're self-employed you can voluntarily register for GST even if your income is under $60,000.

Goods and services tax (GST)

If you are registered for GST, the GST will be paid by the ACC client. You will need to discuss with the client whether your payments already include GST, or whether you will need to receive additional 12.5% of the gross payment (before the tax is deducted) for the GST.

If GST is included in the payments

You will need to set aside 1/9 of the gross payment (before the tax is deducted) for the GST. See the example below. As tax will have been deducted from the total payment (which included the GST component) you may be entitled to a refund at the end of the income year when you file your return.

If the GST is not included in the payment

You will need to calculate the GST to be charged. This will be 12.5% of the gross payment (before the tax is deducted). You will need to provide the ACC client with a tax invoice when you submit your ACC86 weekly reimbursement form.

Keeping records

If you are paid as a caregiver by an ACC client you need to keep full and accurate records of:

• when you were paid
• how much you were paid
• who paid you.

These records must be kept for seven years.

ACC levies

Because ACC levies are paid on income, you may have to pay ACC levies on income earned from providing support. To find out more, please call ACC on 0800 222 070.

Your student loan repayments, working for families tax credits and child support payments

These haven't changed. The personal service rehabilitation payments are income and will be included as income for the purposes of student loan, working for families tax credits and child support.

Claiming expenses

If you are self-employed, you may be able to claim some expenditure. Some examples of deductible expenditure could be:

• Vehicle expenses: Travel from home to a place of work is considered private expenditure and can't be claimed. However if you use your vehicle while performing your care duties, you can claim a deduction for using your vehicle.
• Levies paid to ACC by a self-employed person: These will be allowed as a deduction.

Find out more

• Find out what the tax obligations are for ACC clients and agencies who provide services for ACC.

For more help

If you have any questions about your tax situation, then please call us on 0800 224 476.

 

 

Date published: 31 Mar 2009

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