Refunds from the main income equalisation scheme are:
- included as income in your Individual income return (IR3)
- not included as income for the calculation of Working for Families.
For student loans the refund is not included when it is a refund of a deposit that was made on or after 1 April 2014.
This also applies to refunds to a:
- company you're a major shareholder in
- trust you're the settlor of (except for some types of trust)
- company controlled by a trust you're the settlor of (the trust controls the company if the trust and associated persons hold a voting interest of 50% or more in the company).
Refunds from the adverse event income equalisation scheme and thinning operations income equalisation scheme are not excluded as income, so they will be counted in your Working for Families entitlement and your student loan repayments.
Refunds received from your individual account
For Working for Families purposes, complete box 22A of the Adjust your income (IR215) form for any refunds you received from your own individual main income equalisation scheme.
For student loan purposes, complete box 22B of the IR215 for any refunds received by you from your own individual main income equalisation scheme.
Refunds received by a company or trust account
If a company or trust that you're associated with gets a refund from their main income equalisation account, then this refund will need to be removed from the company’s:
- net income
- trustee income
- companies income
so your Working for Families and student loans can be correctly calculated. (Student loans only if the deposit was made after 1 April 2014).
These adjustments are included in the calculations for attributable trustee income and major shareholder in a close company income.
Example - refund from an individual account
Kevin receives Working for Families payments and has a student loan. He made a deposit of $50,000 into the main income equalisation scheme account on 1 October 2012. On 1 June 2014 he gets a refund of the deposit of $51,200 including interest to purchase replacement livestock.
Kevin's taxable income for the 2015 year is $151,200 made up of self-employed income ($100,000) and the refund of the deposit from the main income equalisation account ($51,200).
He can reduce his income by $50,000 (the deposit less interest) for the calculation of Working for Families, but not for student loans, as the deposit was made before 1 April 2014.
He uses the following income to calculate:
- Working for Families Tax Credits: $101,200 ($151,200 - $50,000)
- student loans: $151,200.
Note: If Kevin had made a deposit on 1 October 2014 and received a refund on 1 June 2015, the refund (less interest, if any) can be left out of the income used to calculate his student loan repayment obligation for the year ending 31 March 2016.
Example - refund from a company account
Jasmine receives Working for Families payments for her 2 children and she also has a student loan. She is a major shareholder in a company which owns a farm.
Jasmine’s company has a net income of $88,000 and also received a refund of $50,000 plus interest of $2,000 from the company’s main income equalisation scheme account on 15 August 2015.
At the end of tax year the company’s taxable income will be $150,000 ($88,000 + $2,000 +$50,000).
However when Jasmine goes to calculate her attributed company income for box 24 of the IR215 she will leave out the amount originally deposited into the main income equalisation scheme of $50,000. Instead she will use a net income of $90,000 ($88,000 + $2,000).