For individuals & families: As an ACC recipient

Tax on ACC personal service rehabilitation payments for ACC clients (before onpaying their caregivers)

Since 1 July 2008, tax has been deducted from the following ACC personal service rehabilitation payments before they 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 have not fully understood how to pay tax on these personal service rehabilitation payments.

These payments have always been taxable, but ACC hasn't previously deducted tax from them. The responsibility for this was on the clients, agency 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 and so encourage their future compliance. Payments to clients and caregivers are income, so they are taxable.

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

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

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

Receiving payments to pay your caregiver

If you are receiving these payments to onpay your caregiver(s), please read the following information.

Give ACC the documents to ensure tax is deducted from your caregiver's payments

Because you are receiving the payments before they are passed onto your caregiver, you will need to give ACC the documents to ensure tax is deducted from your caregiver's payments. ACC will send you a Social Rehabilitation Payment Authority (ACC84) form - please complete this and sent it back to them.

Keeping records

Because you receive payment and then pass the money on to your caregivers, you need to keep full and accurate records for seven years of:

• how much you received for each ACC payment and on what date, and 
• the name of each caregiver you then paid, when and how much was paid.

Child support, student loans and working for families tax credits

As you receive this income to pay your caregivers, the information ACC sends us contains your details - not your caregiver's.

At the end of the year you will be sent an IR3

There's another option

There are other options for paying your caregiver that will mean you won't have any tax obligations for these payments.

For more help

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

Other pages in: As an ACC recipient

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

Date published: 28 Jul 2008

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