Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Excluded income - Exclusions and limitations

CX 31: Contributions to income protection insurance

You could also call this:

“Employer payments for taxable income protection insurance aren't a fringe benefit”

If you are an employer and you pay for income protection insurance for your employee, you are not giving them a fringe benefit. This is only true if the employee would have to pay tax on any money they get from this insurance. A fringe benefit is something extra that employers sometimes give to their workers, like a company car or free meals.

When you pay for this insurance, you’re not giving your employee an extra benefit that they need to pay tax on. This is because the employee would already need to pay tax if they ever received money from this insurance. So, the government doesn’t count this as an additional benefit that needs to be taxed separately.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513398.

Topics:
Money and consumer rights > Taxes
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“Employer-provided clothing with company branding isn't taxed as a benefit”

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“Tax-free services for super funds if they could've claimed a deduction”

Part C Income
Excluded income: Exclusions and limitations

CX 31Contributions to income protection insurance

  1. An employer who satisfies a liability to pay, or contribute to the payment of, a premium for income protection insurance for the benefit of an employee does not provide a fringe benefit to the employee if a payment of the insurance to the employee would be assessable income of the employee.

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