Other payments for Working for Families Tax Credits (WfFTC)
If you and your spouse or partner receive monetary payments from any other person or entity 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 WfFTC (not just the amount the exceeds that the $5,000 threshold).
If the total amount for the tax year is less than or equal to $5,000 you don't need to tell us about it.
When payments are considered to be used to meet day-to-day living expenses
A payment is considered to be used to meet day-to-day living expenses if it:
- replaces lost or reduced income (eg, payments from an insurance policy that covers loss of earnings/employment)
- is used to pay regular bills (eg, car payments, hire purchases, mortgage payments, loans)
- is used to meet the family's usual living expenses (eg, 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 (eg, 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.
When payments aren't considered to be income
The following payments aren't considered to be income for WfFTC purposes:
- 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
- sale of a property when it isn't taxable income.
- a refund of an overpayment (eg, overpaid tax, student loan, or child support payments) and mistaken or misdirected payments
- payments that have specific purposes other than income-related purposes such as:
- 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.
- 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 WfFTC
- 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.
Jill'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.
Jill will need to include the total amount of $5,200 as part of her income for WfFTC purposes because it is more than $5,000.
Rachel's father pays her power bill. The arrangement is that she will give him the bill and he will pay the power company directly. Rachel's father pays a total of $4,160 for the year.
As the total amount for the year is under $5,000 Rachel doesn't need to include this amount as part of income for WfFTC purposes. If the amount was over $5,000 for the year she would need to include the full amount.
Jim and his partner Sonia receive WfFTC.
Jim's parents give him $50 per week to help with general living expenses. Sonia's parents also give her $50 per week for general living expenses.
As the combined total ($5,200) is more than $5,000, Jim and Sonia will need to include $5,200 as part of family income ($2,600 each).