If you have a disability, you may be able to get money paid directly into your bank account to pay for the support services and products you need (for example, home help, a wheelchair or transport to the doctor). These payments let you decide what services to buy with the funding you’re given.
This funding is not treated as income, which means:
- you do not pay income tax on it
- you do not need to include it in your end of year assessment
- it does not count as income for the purposes of student loans, Working for Families Tax Credits and child support.
Goods and services tax (GST)
You do not need to pay GST when you use this funding to pay for disability support services. However, if your service provider is GST-registered, they will charge you GST. You cannot claim GST for funding expenses.
Employing a service provider (support worker)
When you hire a service provider, what you need to do depends on whether they are:
- an employee
- a private domestic worker
- a contractor.
If you employ a service provider who is not a private domestic worker, you'll need to register as an employer. You'll need to deduct PAYE, child support, KiwiSaver and student loan repayments from the money you pay your employee or contractor.
Private domestic workers
Your service provider is a private domestic worker if you answer 'yes' to all these questions:
- Is your home only used as a residence (not an office)?
- Do they work for you in your home?
- Is their work totally separate from any business you do?
- Do you pay them directly?
- Do they work for you part-time (no more than 30 hours a week on average)?
- If your service provider is a private domestic worker, they will take care of their own taxes.
If you hire a service provider who is a self-employed contractor, you do not need to register as an employer. The contractor will take care of their own taxes. If the contractor is GST registered they will charge you GST for their work.
If you get individualised funding, you need to keep a record of the date and amount of every individualised funding payment you receive.
If you're an employer, you need to keep a record of the wages you pay, including all your pay sheets and PAYE payment receipts. You must keep these records for at least 7 years.
If your service provider is a contractor, you need to keep full and accurate records of:
- who you paid
- the amount you paid
- the date of each payment.