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From 1 April 2024, backdated lump sum payments of recalculated main benefit from the Ministry of Social Development (MSD) will be shown as a new income type in myIR.

Backdated lump sum payments

Backdated payments of recalculated main benefit are payments for 1 or more past tax years. MSD pays them as 1 backdated lump sum.

How backdated lump sum payments will be taxed

In the year MSD pays you the backdated lump sum payment, they will tax it separately from the other income you get in that year.

MSD will work out the tax you owe and the amount of backdated payment you will get after tax. You will not have to pay any more tax on the payment. The backdated payment will not be included in the end-of-year tax assessment.

Other lump sum payments

Other lump sum payments from MSD cover situations that do not involve a recalculated main benefit for past tax years.

How other lump sum payments will be taxed

MSD will calculate tax on other lump sum payments and the payments will be included in the end-of-year tax assessment.

End of year income tax obligations

Only other lump sum payments will be in your annual income tax assessment.

When we work out your tax for you: income tax assessments

Request for more information - income tax assessment

If you earn other taxable income , such as rental or shareholder salary, you will need to file an individual income tax return instead.

Individual income tax return - IR3

Working for Families, child support and student loans

If you get Working for Families payments, pay or receive child support, or have a student loan they may be affected by the backdated and other lump sum payment from MSD.

Working for Families

If you receive weekly or fortnightly payments of the minimum family tax credit, in-work tax credit, or the Best Start tax credit for a child over 1 years old, then you must contact us to adjust your income.

You can do this in myIR, call us, send a message in myIR or send us a letter. 

Adjust your income for Working for Families and student loans

Child support

If you are a liable parent or a receiving carer you may need to estimate your income.

Estimating your income for child support 

If you are a liable parent or a receiving carer and have already estimated your income this year, you need to contact us.

Child support - contact us 

Student Loans

If you live in New Zealand you may need to pay back some of your Student Loan from your MSD backdated or other lump sum payment.

Repaying my student loan when I am self-employed or earn other income

If the MSD backdated or other lump sum payment is more than $8,333 then you may have to make interim payments.

Interim student loan repayments

If you think you should not have to make interim payments, please look at estimating your repayments or contact us.

How to estimate your interim repayment in myIR

Student loans - contact us

It is important that you contact us if you have any questions, especially if you are required to pay back your Student Loan when you normally do not need to.

Last updated: 01 Apr 2024
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