Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Tax credits paid in cash - Adjustment of net income for family scheme

MB 5: Treatment of distributions from superannuation schemes

You could also call this:

“How tax applies to money you get from your work's super scheme while still employed”

This law talks about how money you get from a superannuation scheme is treated for tax purposes. If you get money from a superannuation scheme in a year, and your employer has put money into that scheme in the same year or the two years before, and you keep working for that employer for at least a month after you get the money, this law applies to you.

However, this law doesn’t apply if you get the money because you’re retiring from your job with the employer who put money into the scheme. It also doesn’t apply if the money comes from a KiwiSaver scheme or a complying superannuation fund.

When figuring out your family scheme income, the money you get from the superannuation scheme is counted as income you earned in the year or years when your employer put money into the scheme. But any money you put into the scheme yourself isn’t counted as part of this income.

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 It might be out of date or be missing some parts.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

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518472.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
Previous

MB 4: Family scheme income of major shareholders in close companies, or

“How income from owning a large part of a small company affects your family tax credits”

Next

MB 6: Treatment of distributions from retirement savings schemes, or

“How retirement savings payments affect your eligibility for government support”

Part M Tax credits paid in cash
Adjustment of net income for family scheme

MB 5Treatment of distributions from superannuation schemes

  1. This section applies when—

  2. a person receives a distribution from a superannuation scheme in an income year; and
    1. an employer of the person has made contributions to the superannuation scheme in—
      1. the income year in which the distribution was received; or
        1. the 2 income years immediately before that income year; and
        2. the person continues to work for the employer for 1 month or more after the date of the distribution.

          1. This section does not apply to a person who receives a distribution from a superannuation scheme—

          2. as a result of and on or after the person's retirement from employment with an employer who was a contributor to the scheme:
            1. if the superannuation scheme is a KiwiSaver scheme or a complying superannuation fund.

              1. For the purposes of calculating family scheme income, the distribution referred to in subsection (1) is assessable income of the person derived in the tax year or years that corresponds to the income year or years in which the contributions were made. The amount does not include an amount attributable to a contribution by the person as a member of the superannuation scheme.

              Compare
              Notes
              • Section MB 5(2): replaced (with effect on 1 April 2008), on , by section 122(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
              • Section MB 5 list of defined terms complying superannuation fund: inserted (with effect on 1 April 2008), on , by section 122(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
              • Section MB 5 list of defined terms KiwiSaver scheme: inserted (with effect on 1 April 2008), on , by section 122(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).