Part of a distribution from a superannuation scheme is treated as income for Working for Families and student loans if both the following apply:
- You receive the distribution from a superannuation scheme, not counting a KiwiSaver scheme or complying superannuation fund.
- Your employer has made contributions in either the tax year you received the distribution, or either of the 2 years before.
However, you'll only need to include the distribution if both:
- you continued to work for the employer for 1 month or more after the date of the distribution
- the distribution was not made because of your retirement.
You do not need to include the portion of the distribution that came from the contributions you had made to the scheme.
If the distribution also includes any investment returns on the funds in the scheme such as interest, dividends or foreign investment funds, then the part that came from the employer's contributions would also need to be included as income.
Over the year Dennise's employer contributes $10,000 to Dennise's superannuation scheme. Dennise herself contributes $15,000 to the scheme.
In that same year, Dennise receives a distribution from her scheme of the $25,000 that she and her employer contributed in that year, which earned $250 in interest.
She still works for the same employer.
Dennise needs to include the $10,000 contributed by her employer and the $250 in interest as part of her income for Working for Families and student loans. She does not need to include the $15,000 which she had contributed toward the distribution.