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DF 3: Identifying expenditure for purposes of sections DF 1 and DF 2
or “How to understand the purpose and repayment of grant-related suspensory loans”
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“Rules for taxing and claiming deductions on social rehabilitation payments”

This law is about money you get for social rehabilitation and how it affects your taxes. If you receive a personal service rehabilitation payment under the Accident Compensation Act 2001, you can claim a deduction on your taxes.

The payment can be for the current year or as a reimbursement for a past year. The amount you receive is considered part of your income that can be taxed.

You can claim a deduction for the amount you paid for key aspects of your social rehabilitation. This deduction is calculated using a special formula: the amount you paid divided by (1 minus the tax rate).

The ‘amount paid’ in the formula is what you spent on important parts of your social rehabilitation. It must be less than or equal to the rehabilitation payment you received, after tax is taken out.

The ‘tax rate’ in the formula is the rate that applies to your personal service rehabilitation payment according to section RD 10B.

This deduction is allowed in addition to other general tax deductions. It overrides some limitations on deductions, but other general limitations still apply.

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Part D Deductions
Government grants, funding, and compensation

DF 4Payments for social rehabilitation

  1. This section applies when—

  2. a person is paid a personal service rehabilitation payment under the Accident Compensation Act 2001 either—
    1. for an income year; or
      1. as a reimbursement payment, in a later income year; and
      2. the amount is assessable income of the person.

        1. The person is allowed a deduction for an amount calculated using the formula—

          amount paid ÷ (1 − tax rate).

          Where:

          • In the formula,—

          • amount paid is the amount paid by the person—
            1. for a key aspect of social rehabilitation provided to them for the income year or for an earlier income year; and
              1. to the extent to which the amount is less than the amount of personal service rehabilitation payment paid to them, after taking into account any amount of tax withheld:
              2. tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular payments).

                1. This section supplements the general permission and overrides the capital limitation and private limitation for the amount described in subsection (2). The other general limitations still apply.

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                Notes
                • Section DF 4: substituted, on , by section 343 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section DF 4(1): replaced (with effect on 1 April 2018), on , by section 153(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                • Section DF 4(3) heading: amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section DF 4(3)(a): replaced (with effect on 1 April 2018), on , by section 153(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                • Section DF 4(3)(b): replaced, on , by section 78 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                • Section DF 4 list of defined terms reimbursement payment: inserted (with effect on 1 April 2018), on , by section 153(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).