Pursuant to sections 5 and 124(1)(d) of the Social Security Act 1964, the Minister for Social Development and Employment establishes and approves the following welfare programme for special assistance and amends the Direction in relation to Special Benefit given on 10 February 1999*.
Dated at Wellington this 27th day of August 2010.
HON PAULA BENNETT, Minister for Social Development and Employment.
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P r o g r a m m e
1. Title-This programme is the Tax Transitional Supplement Programme.
2. Commencement-This programme comes into effect on 1 October 2010.
3. Expiry-This programme expires on the close of
31 March 2011.
4. Purpose-The purpose of this programme is:
(a) to postpone the effect of the 1 October 2010
changes to income tax rates and rates of family tax credits on certain benefits;
(b) to provide transitional financial assistance to compensate people who are beneficiaries (including recipients of New Zealand superannuation or veteran’s pension) or low income earners and have an overall reduction in their net incomes as a result of the 1 October 2010 changes to income tax rates
or rates of family scheme tax credits, and related changes.
5. Interpretation-(1) In this programme, unless the context otherwise requires:
Act means the Social Security Act 1964.
applicant:
(a) means a person who intends to apply, or is identified by the chief executive as eligible to apply, for a tax transitional supplement under Part 2; and
(b) includes a person granted a tax transitional supplement under that Part.
beneficiary has the same meaning as in section 61E of the Act.
chargeable income has the meaning given to it by the Direction or, as the case requires, the Social Security (Temporary Additional Support) Regulations 2005.
combined net income has the meaning in clause 13(1)(a).
Direction means the Direction in relation to Special Benefit given on 10 February 1999.
eligible person means a person who, immediately before the specified date:
(a) was receiving an accommodation supplement under the Act; or
(b) was receiving:
(i) an income-tested benefit; and
(ii) weekly compensation in respect of the person
or his or her spouse or partner or his or her dependent child; or
(c) was receiving a special benefit; or
(d) was receiving temporary additional support.
family scheme tax credit means any of the following credits of tax under subparts MA to MF and MZ of the Income Tax Act 2007:
(a) a child tax credit;
(b) a family tax credit;
(c) a parental tax credit;
(d) an in-work tax credit.
family tax credit has the same meaning as in section MA 8 of the Income Tax Act 2007.
income tax deduction rates means the rates specified in Schedule 1 or, as the case requires, Schedule 2 of the Income Tax Act 2007.
income year has the same meaning as in section YA 1 of the Income Tax Act 2007.
low income earner means a person who is a
non-beneficiary (within the meaning of section 61E of the Act) who is receiving, and is not disqualified on the grounds of his or her income, or the income of his or her spouse or partner, from receiving, any of the following:
(a) An accommodation supplement under section 61EA of the Act;
(b) childcare assistance under section 61GA of the Act;
(c) a disability allowance under section 61C of the Act;
(d) a special benefit or temporary additional support;
(e) a basic grant or an independent circumstances grant under the Student Allowances Regulations 1998.
net income, in relation to a person:
(a) means the person’s taxable income after the deduction of income tax; and
(b) includes the amount of any specified payment received by the person that is not included in the person’s taxable income.
special benefit means a special benefit continued by section 23 of the Social Security (Working for Families) Amendment Act 2004.
specified amendment:
(a) means any of the amendments to the Income Tax Act 2007 and the Tax Administration Act 1994 made by the Taxation (Budget Measures) Act 2010; and
(b) includes:
(i) the amendments to Schedule 19 of the Act made by the Social Security (Rates of Benefits and Allowances) Order (No 2) 2010;
(ii) the amendments to Schedules 1 and 2 of the Social Security (Childcare Assistance) Regulations 2004 made by the Social Security (Childcare Assistance) Amendment Regulations (No 2) 2010;
(iii) the substitution of Schedule 2 of the Student Allowances Regulations 1998 by the
Student Allowances Amendment Regulations (No 2) 2010;
(iv) the Temporary GST Assistance Programme.
specified date means 1 October 2010.
specified payment means any of the following benefits or payments:
(a) An income-tested benefit;
(b) New Zealand superannuation or a veteran’s pension (other than New Zealand superannuation or a veteran’s pension that is an income-tested benefit);
(c) an accommodation supplement under section 61EA of the Act;
(d) childcare assistance under section 61GA of the Act;
(e) a disability allowance under section 69C of the Act;
(f) a special benefit;
(g) temporary additional support;
(h) any special assistance of a continuing nature under any welfare programme established and approved under section 124(1)(d) of the Act including the Temporary GST Assistance Programme;
(i) any family scheme tax credit;
(j) a basic grant, an independent circumstances grant,
or an accommodation benefit under the Student Allowances Regulations 1998.
standard costs has the meaning given to it by the Direction or, as the case requires, the Social Security (Temporary Additional Support) Regulations 2005.
taxable income has the same meaning as it has in section YA 1 of the Income Tax Act 2007.
temporary additional support means temporary additional support under section 61G of the Act.
Temporary GST Assistance Programme means the welfare programme established and approved under section 124(1)(d) of the Act.
tax transitional supplement or supplement means the special assistance under clause 7, clause 12 or clause 13 of this programme.
weekly compensation has the same meaning as it has in section 71A(3) of the Act.
(2) Expressions otherwise defined in section 3(1) of the Act have the same meanings in this programme.
6. Application of Act-(1) Sections 12, 62, 63A, 64, 74, 74A, 76, 77, 80A, 81 and 84 of the Act apply to and in respect of the following as if a tax transitional supplement were a benefit under the Act:
(a) This programme;
(b) every applicant;
(c) every eligible person;
(d) the spouse or partner of a person referred to in paragraph (b) or (c).
(2) Nothing in subclause (1) limits or affects the application of any other provision of the Act.
Part 1
Tax transitional supplement for eligible persons
7. Tax transitional supplement: eligible persons-The chief executive must grant an eligible person a tax transitional supplement if, on the specified date:
(a) the person continued to be entitled to receive the benefit or any of the benefits that qualified him or her to be an eligible person; or
(b) would have been entitled to continue to receive that benefit or those benefits but for the effect of the changes to the rates of income tax or rates of family tax credits on the specified date.
8. Amount of tax transitional supplement for eligible person-The amount of a tax transitional supplement granted to an eligible person is the total of the following amounts:
(a) For a person referred to in paragraph (a) of
the definition of eligible person in clause 5(1), the difference between the amount of accommodation supplement that was payable to the person immediately before the specified date and the amount payable to the person on and after that date to the extent that difference is attributable to (and only to) the increase in the person’s after tax rate of New Zealand superannuation or veteran’s pension because of the change to income tax deduction rates on the specified date;
(b) for a person referred to in paragraph (b) of that definition, the difference between the after-tax amount of weekly compensation that was deductible from the person’s income-tested benefit immediately before the specified date and the amount deductible on that date to the extent that difference is attributable to (and only to) the changes to income tax deduction rates on the specified date;
(c) for a person referred to in paragraph (c) or (d) of that definition, the difference between the amount of special benefit or temporary additional support that was payable to the person immediately before the specified date and the amount payable to the person on and after that date to the extent that difference is attributable to (and only to) the increases to the person’s chargeable income or standard costs arising from either or both of the following:
(i) The increase to the rate of family tax credit payable to the person on the specified date;
(ii) the increase in the person’s after tax income because of the change to income tax deduction rates on the specified date.
9. Commencement of supplement-A tax transitional supplement granted to an eligible person under clause 7 commences on the specified date.
10. Ending and suspension of supplement-(1) If a benefit in respect of which a tax transitional supplement is granted under this Part ends, the portion of the supplement
granted in respect of that benefit ends.
(2) If a benefit in respect of which a tax transitional supplement is granted under this Part is suspended, the portion of the supplement granted in respect of that benefit is suspended.
(3) If an eligible person dies, a tax transitional supplement granted under this Part in respect of a benefit ends:
(a) on the date of the death; or
(b) on a date set by the chief executive (being a date not later than four weeks after the date of the death).
(4) A tax transitional supplement granted under this Part ends if any of the following applies:
(a) That benefit is reviewed under section 81 of the Act because of a change in the person’s circumstances or otherwise;
(b) in the case of temporary additional support, the
13-week period for which that benefit was granted ends, whether or not that benefit is re-granted.
(5) If it has not ended earlier, a tax transitional supplement granted under this Part ends on the close of 31 March 2011.
11. Payment of tax transitional supplement-A tax transitional supplement granted under this Part must be paid to or on account of the eligible person to offset the loss of benefit entitlement arising from changes to income tax rates or rates of family tax credits on the specified date.
Part 2
Tax transitional supplement: Loss of income
12. Tax transitional supplement: Single persons-(1) This clause applies to any person who is single and who, immediately before the specified date, was receiving or entitled to receive one or more specified payments if:
(a) on or after the specified date, the person’s net income is reduced from that applying immediately before the specified date as a consequence of one or more of the specified amendments that come into effect on the specified date; and
(b) the chief executive is satisfied that the reason why that reduction occurred is not:
(i) a change in the circumstances of the person (being a change in circumstances that took place before, on, or after the specified date); or
(ii) the ineligibility of that person to receive any specified payment or rate of specified payment (other than an ineligibility that arises from a specified amendment); or
(iii) any failure or omission of the person that has led to the suspension or cancellation or reduction of a specified payment.
(2) For the purpose of subclause (1)(a), a reduction of a person’s net income includes any reduction due to:
(a) a loss of eligibility for a specified payment, or a
re-grant of a specified payment at a lesser rate, if:
(i) the specified payment was granted before the specified date and the period for which it was granted expires after the specified date; and
(ii) the loss of eligibility or re-grant at a lesser rate is solely a consequence of a specified amendment that came into effect on the specified date;
(b) a reduction in the rate of a specified payment on its review after the specified date if the only change in the person’s circumstances is an increase in the person’s chargeable income or income arising from a specified amendment that came into effect on the specified date.
(3) If this clause applies to an applicant who is a beneficiary or a low income earner, the chief executive may grant that applicant a tax transitional supplement for any period
that the chief executive specifies in accordance with subclause (4).
(4) A tax transitional supplement:
(a) must be granted for a period of no longer than six months; but
(b) must not be granted for a period ending after
31 March 2011.
(5) Nothing in subclause (4) prevents the chief executive granting, before the close of 31 March 2011, a further tax transitional supplement to an applicant to whom this clause applies.
(6) In this clause, entitled to receive, in relation to
a specified payment and the specified date, includes a specified payment to which a person is entitled and has made application for before the specified date even though the application is not granted or the payment made until after that date.
13. Tax transitional supplement: Persons married or in civil unions or de facto relationships-(1) This clause applies to any person who is married, in a civil union, or in
a de facto relationship and who, immediately before the specified date, was receiving or entitled to receive one or more specified payments if:
(a) on or after the specified date, the net incomes of the person and his or her spouse or partner (their combined net income) is reduced from that applying immediately before the specified date as a consequence of one or more of the specified amendments that come into effect on the specified date; and
(b) the chief executive is satisfied that the reason why that reduction occurred is not:
(i) a change in the circumstances of the person or his or spouse or partner (being a change in circumstances that took place before, on or after the specified date); or
(ii) the ineligibility of the person or his or her spouse or partner to receive any specified payment or rate of specified payment (other than an ineligibility that arises from a specified amendment); or
(iii) any failure or omission of the person or his or her spouse or partner that has led to the suspension or cancellation or reduction of a specified payment.
(2) For the purpose of subclause (1)(a), a reduction of a person’s combined net income includes any reduction due to:
(a) a loss of eligibility for a specified payment, or a
re-grant of a specified payment at a lesser rate, if:
(i) the specified payment was granted before the specified date and the period for which it was granted expires after the specified date; and
(ii) the loss of eligibility or re-grant at a lesser
rate is solely a consequence of a specified amendment that came into effect on the specified date;
(b) a reduction in the rate of a specified payment on its review after the specified date if the only change in the circumstances of the person or his or her spouse or partner is an increase in the chargeable income or income of the person, his or her spouse or partner,
or both, arising from a specified amendment that came into effect on the specified date.
(3) If this clause applies to an applicant who is a beneficiary or a low income earner, the chief executive may grant that applicant a tax transitional supplement for any period
that the chief executive specifies in accordance with subclause (4).
(4) A tax transitional supplement:
(a) must be granted for a period of no longer than six months; but
(b) must not be granted for a period ending after
31 March 2011.
(5) Nothing in subclause (4) prevents the chief executive granting, before the close of 31 March 2011, a further tax transitional supplement to an applicant to whom this clause applies.
(6) In this clause, entitled to receive, in relation to a specified payment and the specified date, includes
a specified payment to which a person is entitled and has made application for before the specified date even though the application is not granted or the payment made until after that date.
14. Entitlement of person to tax transitional supplement where new or increased specified payment available but not sought-If the chief executive is satisfied in respect of an applicant that the applicant’s net income, or as the case may be, combined net income has reduced because the applicant or his or her spouse or partner has not applied for, or supplied any information required to determine entitlement to, a specified payment or a rate of a specified payment that became available as a consequence of a specified amendment that came into effect on the specified date, the chief executive may:
(a) refuse to grant a tax transitional supplement; or
(b) grant a tax transitional supplement under clause 12 or 13 at a reduced rate; or
(c) reduce the rate of a tax transitional supplement already granted; or
(d) terminate any tax transitional supplement already granted.
15. Rate of tax transitional supplement-(1) The amount of a tax transitional supplement payable to an applicant under clause 12 is the weekly amount of the reduction of the applicant’s net income.
(2) The amount of a tax transitional supplement payable to an applicant under clause 13 is the weekly amount of the reduction of the combined net income of the applicant and his or her spouse or partner.
(3) If, as a result of a change of circumstances of the applicant or his or her spouse or partner, the rate of one or more of the specified payments payable to the applicant decreases, the amount of the supplement must not be increased by reason of that change.
(4) If, as a result of a change of circumstances of the applicant or his or her spouse or partner the rate of one or more of the specified payments payable to the applicant increases, the amount of the supplement must be reduced by $1.00 for each $1.00 increase in the sum of the rates of the person’s specified payments.
16. Commencement and ending of supplements-(1) A tax transitional supplement granted under this Part commences on the date on which the applicant became entitled to receive it.
(2) In the event that an applicant dies, a supplement ends:
(a) on the date of the death; or
(b) on a date set by the chief executive (being a date not later than four weeks after the date of the death).
(3) If it has not ended earlier, a tax transitional supplement under this Part ends on 31 March 2011.
Amendments to Direction
17. Amendments to Direction-(1) Paragraph (f)(i) of the definition of chargeable income in clause 2.1 of the Direction is amended by omitting "Care Supplement Programme" and substituting "Tax Transitional Supplement Programme, the Temporary GST Assistance Programme".
(2) Clauses 16 and 17 of the Schedule of the Direction
are amended by omitting "Income Tax Act 2004" and substituting in each case "Income Tax Act 2007".
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Explanatory Note
This note is not part of this programme, but is intended to indicate its general effect.
This programme comes into effect on 1 October 2010. Part 1 provides transitional financial assistance, until 31 March 2011 or earlier review of the benefit concerned, to effectively postpone the effect of the 1 October 2010 changes to income tax rates and rates of family tax credits on certain benefits. The assistance is paid to compensate for the loss of benefit.
Part 2 provides transitional financial assistance to compensate people who are beneficiaries (including recipients of New Zealand superannuation or veteran’s pension) or low income earners and have an overall reduction in their net incomes as a result of the 1 October 2010 changes to income tax rates or rates of family scheme tax credits, and related changes. The assistance is paid until 31 March 2011 at the latest.
*New Zealand Gazette, 16 December 1999, No. 193, page 4599