Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
CW 33: Allowances and benefits
or “Tax-free payments and benefits”
You could also call this:

“Which compensation payments are not taxed as income”

You don’t have to pay income tax on certain types of compensation payments. These include:

  • Payments you get if you can’t work due to an injury or illness.
  • Money you receive under the Workers Compensation Act 1956.
  • Payments made to you under the Criminal Injuries Compensation Act 1963.
  • Money given to ex-prisoners of war who were held in German concentration camps during World War 2.
  • Payments made by Germany or Austria to people who were persecuted by the Nazis.
  • Most payments made under schedule 1 of the Crown Forest Assets Act 1989.
  • Compensation or payments made to people who lease Māori reserved land under the Maori Reserved Land Amendment Act 1997.

When the law talks about “payments relating to incapacity for work”, it means money you get because you or someone else can’t work. This could be:

  • Payments from a friendly society, but not the ones mentioned in section CF 1(2) about accident compensation.
  • Money from a sickness, accident, or death benefit fund you were part of when you got sick or injured.
  • Payments from personal sickness or accident insurance, but not ones based on how much money you’ve lost from not working.
  • Payments for injuries made under subpart 4 of Part 4 of the Veterans’ Support Act 2014.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: CW 35: Personal service rehabilitation payments

or “Tax-free payments for personal rehabilitation services”
Next

Part C Income
Exempt income

CW 34Compensation payments

  1. An amount of income from the following payments is exempt income:

  2. a payment relating to incapacity for work:
    1. a payment under the Workers Compensation Act 1956:
      1. a payment under the Criminal Injuries Compensation Act 1963:
        1. a distribution from funds approved by the Minister in charge of War Pensions to ex-prisoners of war held in German concentration camps in World War 2:
          1. a payment under the laws of a State of the Federal Republic of Germany or the Republic of Austria to the victims of National Socialist persecution:
            1. payments under schedule 1 of the Crown Forest Assets Act 1989 (except clause 3(b)):
              1. payments of compensation, solatium payments, or payments to lessors for the purchase of leases under the Maori Reserved Land Amendment Act 1997 (but not interest paid under section 23 of the Act).

                1. In this section,—

                  accident insurance contract is defined in section 13 of the Accident Insurance Act 1998

                    payment relating to incapacity for work means a payment of 1 of the following kinds made to a person because they are, or another person is, incapacitated for work:

                    1. a payment by a friendly society, but not a payment referred to in paragraph (d) or (e) of the definition of accident compensation payment in section CF 1(2) (Benefits, pensions, compensation, and government grants):
                      1. a payment from a sickness, accident, or death benefit fund to which the person was a contributor when the period of incapacity began, but not a payment referred to in paragraph (d) or (e) of the definition of accident compensation payment in section CF 1(2):
                        1. a payment under a policy of personal sickness or accident insurance, or an accident insurance contract, but neither a payment referred to in paragraph (d) or (e) or (f) of the definition of accident compensation payment in section CF 1(2) nor a payment calculated according to loss of earnings or profits:
                          1. an impairment payment made under subpart 4 of Part 4 of the Veterans' Support Act 2014.

                          Compare
                          Notes
                          • Section CW 34(2) payment relating to incapacity for work paragraph (d): inserted, on , by section 278 of the Veterans' Support Act 2014 (2014 No 56).