Cost of living payments

The first round of the Government’s cost of living payments (administered by Inland Revenue (IR)) is paid on August 1st (August 2nd for Credit union customers according to IR’s 29th July Tax Intermediaries Update). The first payment among three of $116.67 will be automatically paid to those eligible to receive it.

To accompany the first round of payments, IR has also released a 14-page special report titled ‘Taxation (Cost of Living Payments) Act 2022’. Note that when I last checked, the report was not showing in the Tax Policy section of IR’s website as indicated, however, if you just type the words “cost of living” in the search box, then you should be able to locate it.

As the report clearly points out, the payment is aimed at low to middle-income New Zealanders to help them with the increased cost of living. It is a temporary payment of $350 in total, spread over August, September and October.

You are eligible to receive the payment if you:

  • had net income during the period 1 April 2021 to 31 March 2022 of $70,000 or less;
  • are not eligible to receive a qualifying benefit for the Winter Energy Payment (WEP) (sole parent support, supported living payment, jobseeker support, jobseeker support student hardship, emergency benefit, emergency maintenance allowance, youth payment, young parent payment, New Zealand superannuation, or veteran’s pension) during the payment period for each of the three monthly instalments;
  • are aged 18 or over;
  • are both a New Zealand tax resident and present in New Zealand; and,
  • not in prison.

It should be noted that eligibility for the payment is determined upon a person’s 2022 finalised tax assessment, so if this process has not been completed by August 1st (or even October 3rd for that matter), perhaps because the person is an IR3 filer and has an extension of time for filing their 2022 income tax return as a consequence of the use of a tax agent, then the payment will be made post the finalising of the assessment. However, the final payment approval date for eligibility will be 31 March 2023, so if a 2022 income tax return with a tax agent’s extension of time is filed late, then the person will not be eligible to receive the cost of living payment.

A person may also not be entitled to receive the first payment, but then due to a change of circumstances (they turn 18 on 25th August for example), they will become entitled to receive one (or both) of the latter two payments.

The Cost of Living payment is tax exempt, so will not be included in a person’s income tax assessment. The payment will also not be included as income for Working for Families tax credits, child support, student loan repayments, student allowances or other welfare support. You can also not use the payment to pay off any debt or overdue money owed to IR, which includes not being able to request the payments be transferred to pay an existing debt with IR, or other social policy obligation. The payments must be paid directly to the individual.

Contributing Advisors