Tax relief for adverse and emergency events

If you receive or pay Working for Families or Child Support, and your family’s situation has changed because of an emergency event, you may need to let us know.

Child support

If your family income or situation has changed this may affect your entitlements or payments. If you have concerns or questions, or you are having trouble making our payments by the due dates, please call us on 0800 221 221.

Estimating your income for child support

Working for families

Working for Families can be claimed weekly, fortnightly or at the end of the year.  As your entitlement is based on your yearly family income, your entitlement may change if your family income has been affected by the emergency event. You can update your estimated family income through myIR. 

There may also be event specific variations so please check the specific event information listed below

Update my family income

Grants and relief payments for individuals and families

In an adverse or emergency event civil defence payments may be made available from Work and Income (Te Hiranga Tangata). Civil defence payments can help cover the costs of:

• Food
• Bedding
• Clothing
• Accommodation
• Loss of income.

Because expenditure incurred on food, bedding, clothing and accommodation are all in the nature of private household expenditure, there are no tax consequences that arise if you receive these payments.

There are also no tax consequences that arise if a payment for loss of income is provided to a person who usually receives income from either employment or a benefit. If you are self-employed you may need to pay tax on the payment. Read 'Grants and relief payments for businesses' below.

KiwiSaver – Savings suspension

A savings suspension is a temporary pause of deductions from your wages for up to 12 months. 

If you have been contributing for more than 12 months you can apply for a savings suspension through myIR. If you have been contributing for less than 12 months you will need to contact us to discuss this further.

Taking a savings break - less than 12 months of contributions

Kiwisaver hardship withdrawal

You can apply for a hardship withdrawal of your KiwiSaver contributions if you have been contributing for longer than 2 months you will need to contact your Scheme Provider 

If you have been contributing for less than 2 months you can apply by downloading the KS5 on the IRD website and attaching this to a web message in myIR.

Getting my Kiwisaver savings for significant financial hardship

Donations and Donee organisations

If you make a monetary donation to an approved charity you may be entitled to a tax credit.

Tax credits for donations

The page also includes a link to check whether the organisation you’re giving to is an approved donee organisation.

Student Loans

There are a number of relief options available to people with student loans, including:

• Self-employed people can apply to have their student loan assessments reduced
• Salary and wage earners can apply for a reduced repayment deduction
• Anyone who is studying full-time and is earning under the annual repayment threshold can apply for a repayment exemption.

These 3 options are available through myIR.

There is more information on our student loan financial relief on our website.

I am having difficulty repaying my student loan  

Tailored tax codes

You may be entitled to a special tax code if you're receiving a salary or wage and have a loss to carry forward.

Tailored tax options

Small Business Cashflow Scheme (loan)

If you have repayments for your Small Business Cashflow loan that you will not be able to meet due to an adverse event please contact us to talk about a variation to your repayment schedule.

Provisional tax

If you think your annual income is going to drop because of an adverse event, you can choose to estimate your provisional tax for the year. This will reduce the provisional tax you have to pay. You may even get some of the provisional tax you’ve paid so far back. 

Estimation option

Income equalisation scheme

If you have a farming, fishing or forestry business you may be able to use the income equalisation scheme. We recommend you discuss the use of the income equalisation scheme with your tax advisor. 

When using the income equalisation scheme there are specific timeframes but you may be able to make a late deposit or an early withdrawal of funds in the scheme outside of the usual timeframes.  If you’ve been affected by an adverse event, find out if you can make a late deposit or an early withdrawal.

Discretionary relief

Donating your trading stock

Normally if you give your businesses trading stock away you still have to pay tax as if you had sold it. But if you've donated trading stock between 17 March 2020 and 31 March 2024, for example, to help people affected by COVID or because of the February 2023 weather events, this might not apply.   

Tax relief for donations of trading stock

Grants and relief payments for businesses

During an adverse or emergency event, a range of grants or subsidies may be made available to businesses affected by that event. How these payments are treated for income tax purposes depends on where the payment originates from.

Grants or subsidies received by businesses from public or local authorities

These are payments made by Government departments or other instruments of Government (public authorities), or regional and territorial authorities (local authorities), to assist businesses.  

For income tax purposes payments received from these sources are treated in the following ways:

• Where the payment is provided to subsidise expenses that would either usually be deductible to that business, or used to acquire assets that are depreciable, the payment is not treated as assessable income, but
• a deduction is not allowed for the expenses when they are incurred by the business (to the extent that they are funded by the payment).  If the payment is used to acquire a depreciable asset, depreciation may be claimed on that asset but the depreciable cost base of the asset must be reduced by the amount of the payment used to acquire it.  The business needs to keep records of any expenses incurred.

Where the payment is made as a top-up of the income of the business, made in respect of expenditure that is not ordinarily deductible to the business, or is used to acquire non-depreciable assets, then their receipt is treated in the same way as grants or subsidies received by businesses from all other sources, as set out below.

Further information regarding grants or subsidies received by businesses from public or local authorities can be found in our booklet Grants and subsidies (IR249).

Tax on grants and subsidies

Grants or subsidies received by businesses from all other sources

If a business receives a grant or subsidy from a source other than a public or local authority, it will need to pay income tax on it if:

• the payment is to reimburse the business for a loss of income
• the payment is received as a subsidy for expenses that would usually be deductible to that business. The expense may be claimed as a deduction when it is incurred by the business.
• the business does not use all of the payment received and any remaining amount goes into the businesses general fund. This remaining amount will be taxable no matter what the payment was originally received for.

A business is not liable for income tax on a payment that it receives if:

• the payment is received to help pay for capital assets or expenses that do not produce income, or
• the payment helps pay for or reinstate a capital asset that will be used to produce income.

When the payment is used to get or reinstate an asset that is depreciable, the cost price of that asset (on which a depreciation claim is based) must be reduced by the amount of the payment received.  

There is more information regarding grants or subsidies received by businesses from all other sources in our booklet on Grants and subsidies (IR249).

Tax on grants and subsidies

Grants, subsidies and GST

Government grants and other payments made by public authorities or on behalf of the Crown, are liable for GST when received by a GST-registered person (or a person who is required to register for GST) in relation to their taxable activity.  The payments must be included as income in the GST return.

There is more information on grants, subsidies and GST on our booklet on Grants and subsidies (IR249).

Tax on grants and subsidies

Cash donations or koha

The receipt of cash donations or koha will not have any tax consequences where it is provided to assist in alleviating the effects of an adverse or emergency event.  

Grants, subsidies and other relief payments are complex matters so please discuss with your tax advisor.

Insurance payout

If you're registered for GST (or required to be registered) and receive a payout relating to your taxable activity then you will usually need to account for GST on the payout.

If the payment is for lost trading stock (livestock, sales goods) or consumables (hay, raw materials) or for loss of income or profits, it is also taxable income.

If the payment is for depreciable capital assets (barns, sheds, manufacturing plant, kilns) the insurance amount is required to be accounted for in calculating the amount of recovery of past depreciation claims.

If you received insurance for property that is pooled for depreciation purposes, decrease the book value of the pool by the amount of the insurance payout.

Usually, the insurance is income in the year the insured event takes place, if the extent of the damage can be ascertained at that time. 

This is complex matter so please discuss with your tax advisor.

Irreparably damaged or destroyed assets

An asset, other than a building, that is irreparably damaged is treated as a disposal or sale of the asset and triggers a gain or loss for tax purposes.  Therefore, if the sale or insurance receipts received are less than your remaining book value for the asset you can claim this as a deduction. Read our Depreciation (IR260) guide for further information.

Depreciation guide - IR260

This rule does not apply to farming, horticultural and forestry improvements such as tracks, yards, bores or wells etc which are amortisable under section DO 4 and Schedule 20 of the Income Tax Act 2007 – you can't claim the remaining unamortised portion.

This is a complex matter so please discuss with your tax advisor.

Clean-up costs

It may be difficult to determine whether clean-up costs are capital or revenue.

This is a complex matter so please discuss with your tax advisor.

Building demolition

Building demolition costs are not deductible, unless it was a temporary building' – one that has a finite life and will be demolished or removed:

• from a construction site where it was erected, either before or when construction has finished.
• when plant or machinery is removed or replaced, and the building was erected to house such plant or machinery

This is a complex matter so please discuss with your tax advisor.

Lost business records

If you have lost business records due to an adverse event, you can:

• Contact your suppliers and ask for copies of invoices or statements issued.
• Ask your employees to supply a copy of their copy of the employment agreement.
• Get replacement versions for documents such as tax code declarations (IR330), Kiwisaver enrolment information (KS2 and IR346K) or vehicle logbooks.
• Where copies or replacement versions are not available please record details as best you can of the relevant transactions including dates, names and contact details, a description of the goods or services and amounts paid/payable.

Where a reasonable attempt has been made to reconstruct business records within a reasonable timeframe Inland Revenue will not penalise you for incomplete or missing records.

Money borrowed to keep business going

As long as the borrowed money is used for business purposes, the interest is tax deductible.