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If you have a dependent child who receives more than $500 a year from passive income, the amount over $500 is treated as income for Working for Families.

What passive income is

Passive income includes:

  • amounts such as interest, dividends, a taxable Māori authority distribution (but not retirement savings scheme contributions) and replacement payments under a share-lending arrangement
  • royalties
  • rent
  • beneficiary income from a trust (but not beneficiary income that is excluded under the minor beneficiary rule, for example income from a parent’s estate left in trust)
  • distributions from a listed PIE
  • attributed income from a PIE that is not a superannuation fund or retirement savings scheme.

You need to include the amount over $500 for each child who receives it. If you share the care of a child or children, divide the amount over $500 equally between the principal caregivers.

Example 1

Curtis is a child in the care of his mother Kim. Kim receives Working for Families for him.

Curtis is gifted $15,000 from his grandmother in April. This money is invested in term deposits.

At the end of the tax year Curtis receives a letter from the bank showing he earned $600 interest. As the total interest earned by him is over $500, Kim will need to include the amount over $500 (ie, $100) as part of the family income for Working for Families purposes.

Example 2

Mary is the principal caregiver for 2 children, Josie and Max, and receives Working for Families.

Josie receives $900 interest and Max receives $200 interest.

Mary will have to add the amount over $500 ($400) of Josie's interest to her family income for Working for Families. Max's interest is under $500 so Mary does not need to tell us about it.

Last updated: 28 Apr 2021
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