If you and your spouse or partner receive monetary payments from any other person or entity and it is:
- for your family's day-to-day living expenses, and
- the total amount is more than $5,000 for the tax year
this is treated as income for Working for Families (not just the amount that is over the $5,000 threshold).
If the total amount for the tax year is less than or equal to $5,000, you do not need to tell us about it.
Payments you need to tell us about
A payment is considered to be used to meet day-to-day living expenses if it:
- replaces lost or reduced income (such as payments from an insurance policy that covers loss of earnings/employment)
- is used to pay regular bills (such as car payments, hire purchases, mortgage payments, loans)
- is used to meet the family's usual living expenses (such as monthly phone bill or power bill)
- is paid directly by another person on behalf of the principal caregiver or their family members for regular expenses (such as paying the power, phone, gas bills directly).
Payments can include soft loans. A soft loan is a loan made available to a person on favourable terms such as no or little interest payable and no set repayment date.
Payments you do not need to tell us about
If you get a payment that has a specific, non-income related purpose, then it is not considered income for Working for Families. For example:
- medical treatment and funeral grants
- payments from an estate
- educational scholarships
- lump sum ACC compensation payments
- non-taxable payments from Work and Income such as accommodation supplements
- charitable distributions, compensation-based payments to victims of crime.
You also do not need to tell us about:
- non-monetary benefits, such as free or discounted accommodation
- one-off capital payments, such as a payment from the ownership of an investment activity or business (other than payments made by a trustee) or sale of a property when it is not taxable income
- a refund of an overpayment (like overpaid tax, student loan, or child support payments) and mistaken or misdirected payments
- any student loan payments, such as the living costs component
- a loan under ordinary commercial terms and conditions
- periodic payments received from the repayment of loan principal or when the recipient of the sale of an asset is paid in instalments
- payments that are already included in your income for Working for Families
- payments that are exempt income under the tax Acts
- payments that are received as a result of being adversely affected by an event declared to be an emergency event by the Commissioner of Inland Revenue
- war pensions and allowances
- winnings from gambling or a New Zealand lottery
- payment of a foster care allowance paid under the Children, Young Persons, and Their Families Act 1989
- payments made on your behalf by a local or public authority, and debt forgiveness by a public authority.
Example 1
Olivia's parents give her $100 a week which she puts towards the mortgage payments. The total amount she received over the year is $5,200.
Olivia will need to include the total amount of $5,200 as part of her income for Working for Families purposes because it is more than $5,000.
Example 2
MJ's father pays her power bill. The arrangement is that she will give him the bill and he will pay the power company directly.
MJ's father pays a total of $4,160 for the year.
As the total amount for the year is under $5,000, MJ does not need to include this amount as part of income for Working for Families purposes.
If the amount was over $5,000 for the year, she would need to include the full amount.
Example 3
Conor and his partner Lulu receive Working for Families.
Conor's parents give him $50 per week to help with general living expenses. Lulu's parents also give her $50 per week for general living expenses.
As the combined total ($5,200) is more than $5,000, Conor and Lulu will need to include $5,200 as part of family income ($2,600 each).
