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Income Tax Act 2007

Income - Exempt income

CW 35: Personal service rehabilitation payments

You could also call this:

“Tax-free payments for personal rehabilitation services”

If you receive a personal service rehabilitation payment in a tax year, you don’t have to pay tax on it if certain conditions are met. Here’s what you need to know:

You must receive the payment under the Accident Compensation Act 2001. This can happen either in the same tax year or as a reimbursement in a later year.

You need to pay someone else for providing you with an important part of your social rehabilitation. This could have happened in the current tax year or an earlier one.

The amount you paid for the rehabilitation service must be at least as much as the personal service rehabilitation payment you received, after considering any tax that was kept back.

A reimbursement payment is a special type of personal service rehabilitation payment. It’s for rehabilitation you received in one tax year but got paid for in a later year.

These rules are connected to other parts of the tax law, including sections DF 4, LB 7, and RD 20B.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513252.

Topics:
Money and consumer rights > Taxes
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Part C Income
Exempt income

CW 35Personal service rehabilitation payments

  1. An amount paid to a person for an income year as a personal service rehabilitation payment is exempt income of the person if—

  2. they are paid the amount under the Accident Compensation Act 2001 either—
    1. in the income year; or
      1. as a reimbursement payment in a later income year; and
      2. they pay an amount to another person for providing them in the income year or in an earlier income year a key aspect of social rehabilitation referred to in the definition of personal service rehabilitation payment; and
        1. the amount paid is equal to or more than the amount of personal service rehabilitation payment for the income year or an earlier income year after taking into account any amount of tax withheld.

          1. For the purposes of this section, sections DF 4, LB 7, and RD 20B, reimbursement payment means a personal service rehabilitation payment that—

          2. relates to a key aspect of social rehabilitation that is provided to a person in an income year; and
            1. is paid to them in an income year that is later than the income year in which they were provided the rehabilitation.

              Compare
              Notes
              • Section CW 35: substituted, on , by section 329 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
              • Section CW 35(1) heading: inserted (with effect on 1 April 2018), on , by section 138(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(1)(a): replaced (with effect on 1 April 2018), on , by section 138(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(1)(b): amended (with effect on 1 April 2018), on , by section 138(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(1)(c): amended (with effect on 1 April 2018), on , by section 138(4) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(2) heading: inserted (with effect on 1 April 2018), on , by section 138(5) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(2): inserted (with effect on 1 April 2018), on , by section 138(5) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section CW 35(2): amended, on , by section 22 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
              • Section CW 35(2): amended (with effect on 1 July 2008), on , by section 48 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
              • Section CW 35 list of defined terms reimbursement payment: inserted (with effect on 1 April 2018), on , by section 138(6) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).