Working for families
The Inland Revenue Department and government has announced major changes for Working for Families from 1/4/11. If you currently receive working for families assistance, you need to read this information.
Adjustments to your Family Income for Working for Families Tax Credits
There have been changes to the types of income that are included for Working for
Families calculations. In the past it was basically your salary or wage, dividends, interest, rental income, and other normal income that you would pay tax on.
For the year starting 1 April 2011, it now can include:
Attributable Trustee Income:
This is basically income of a Trust, where you are the Settlor and the Trust retains profit. This retained Trust profit is attributable to you for Working for Familes purposes.
Settlor Definition – A settlor is not just the person on the Trust deed and the definition is quite wide. It also includes any person who provides services to the Trust at under market value, or anyone who loans money to the Trust but doesn’t charge a fair interest rate.
Example – Joe Bloggs established a family Trust to own his debt free rental property. The Trust made a $10,000 taxable profit that was retained in the Trust, with the Trust paying 33% tax on this income. As Joe is a settlor, the $10,000 will be added to his income for Working for Families.
This can include company income or profits, where the company is owned by a Trust.
Attributable Fringe Benefits
If you hold (or an associate such as a spouse or Trust) 50% or more in a company where you receive Fringe Benefits, then the value of the Fringe Benefit plus there tax (ie FBT payable) will be added to your income for Working for Families.
PIE Income
Excludes Kiwisaver, superannuation funds and Retirement Saving Schemes
Other PIE income needs to be included for Working for Families income.
Passive Income of Children
Any of the following over $500 to your children, needs to be returned for Working for Families Income
- Resident Passive Income – interest, dividends etc
- Royalties
- Rent
- Beneficariy income (excluding from Testamentry Trust)
- Distributions from PIE
Other Payments
Over $5,000 per tax year that is used for regular family expenses
A couple of more likely examples are
- Regular payments from parents or grandparents that pay for day to day family living
- Insurance payments
Ross
The Inland Revenue Department and government has announced major changes for Working for Families from 1/4/11. If you currently receive working for families assistance, you need to read this information.
Adjustments to your Family Income for Working for Families Tax Credits
There have been changes to the types of income that are included for Working for
Families calculations. In the past it was basically your salary or wage, dividends, interest, rental income, and other normal income that you would pay tax on.
For the year starting 1 April 2011, it now can include:
- Attributable trustee income
- Attributable fringe benefits
- PIE income
- Passive income of children
- Income of non-resident spouse
- Tax exempt salary or wages
- Pensions and Annuities
- Other payments
- Income equalisation scheme deposits (excludes "adverse events" deposits)
Attributable Trustee Income:
This is basically income of a Trust, where you are the Settlor and the Trust retains profit. This retained Trust profit is attributable to you for Working for Familes purposes.
Settlor Definition – A settlor is not just the person on the Trust deed and the definition is quite wide. It also includes any person who provides services to the Trust at under market value, or anyone who loans money to the Trust but doesn’t charge a fair interest rate.
Example – Joe Bloggs established a family Trust to own his debt free rental property. The Trust made a $10,000 taxable profit that was retained in the Trust, with the Trust paying 33% tax on this income. As Joe is a settlor, the $10,000 will be added to his income for Working for Families.
This can include company income or profits, where the company is owned by a Trust.
Attributable Fringe Benefits
If you hold (or an associate such as a spouse or Trust) 50% or more in a company where you receive Fringe Benefits, then the value of the Fringe Benefit plus there tax (ie FBT payable) will be added to your income for Working for Families.
PIE Income
Excludes Kiwisaver, superannuation funds and Retirement Saving Schemes
Other PIE income needs to be included for Working for Families income.
Passive Income of Children
Any of the following over $500 to your children, needs to be returned for Working for Families Income
- Resident Passive Income – interest, dividends etc
- Royalties
- Rent
- Beneficariy income (excluding from Testamentry Trust)
- Distributions from PIE
Other Payments
Over $5,000 per tax year that is used for regular family expenses
A couple of more likely examples are
- Regular payments from parents or grandparents that pay for day to day family living
- Insurance payments
Ross
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