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Social Security Act 2018

Administration - Payment of benefits, tax on benefits, debts and deductions - Tax on benefits

350: MSD may pay tax on main benefit other than by tax deduction from source deduction payment

You could also call this:

“MSD can pay your benefit tax directly to Inland Revenue instead of deducting it from your payments”

The Ministry of Social Development (MSD) can handle taxes on your main benefit in a special way. Instead of taking tax out of your benefit payment, they can pay the tax directly to Inland Revenue.

This applies to any payment that is part of your main benefit. The MSD and Inland Revenue work together to decide when this tax payment happens.

To figure out how much tax to pay, the MSD uses a special calculation. They imagine increasing your benefit payment by an extra amount. Then they work out how much tax would need to be taken from this increased amount to end up with your actual benefit payment. This calculated tax amount is what the MSD pays to Inland Revenue.

This method allows you to receive your full benefit payment without tax being taken out, because the MSD has already paid the tax for you.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6783843.

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349: Interpretation, or

“What important words mean in the law about tax on benefits”

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351: Status of amount for income tax paid by MSD, or

“Money MSD pays for your tax counts as part of your benefit and income”

Part 6 Administration
Payment of benefits, tax on benefits, debts and deductions: Tax on benefits

350MSD may pay tax on main benefit other than by tax deduction from source deduction payment

  1. This section applies to a source deduction payment that is an instalment or a payment of a main benefit.

  2. MSD may, instead of making a tax deduction from the source deduction payment, pay to the Commissioner of Inland Revenue, at a time the Commissioner determines in consultation with MSD, an amount for income tax payable on that payment, that is calculated under subsection (3).

  3. The amount for income tax payable on a source deduction payment is the amount of the tax deduction that would be made, at the rate determined under the appropriate specified provision, if the payment were increased by an amount that, after the tax deduction were made, would result in an amount equal to the source deduction payment.

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Notes
  • Section 350 heading: amended, on , by section 142 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
  • Section 350(1): amended, on , by section 142 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).