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Cost of Living Payment

You may have heard recently about the cost of living payment being made by the NZ Government, for eligible New Zealanders.

Below is further information and details regarding the payment and the eligibility criteria.

If you haven’t received the payment already, don’t worry, there is plenty of time.  You have until 31 March 2023 to file your tax return to receive the full payment, if you are eligible. 

More information on the eligibility criteria is below.

If you have any further questions, please contact us today.

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What is it?

The Cost of Living Payment is a payment to help with the rising costs of inflation and you do not have to pay it back if you meet the eligibility criteria.

Important note: If you have received an email from the IRD saying you’re eligible for the Cost of Living Payment, this will be paid automatically into your bank account on 1 August. A reminder: The IRD are staggering the payments so you may not receive it at the same time as others, even if you use the same bank.

Payment dates and rate

The total Cost of Living Payment is $350 which will be split into 3 monthly payments starting 1 August.

For most people the 3 main payment dates are:

  • 1 August 2022 – $116.67
  • 1 September 2022 – $116.67
  • 3 October (the first business day of the month) – $116.66.

If you have a credit union account you’ll get your payment the day after each payment date.

The payment will show as ‘CostOfLiving’ in your bank account. In myIR the date displayed is the processing date and may be earlier than the day you get your payment.

In some situations you may get some of the main payments and a lump sum, or just a lump sum. Find out more under ‘Your income tax assessment or return will confirm your income’ below.

Your income tax assessment or return will confirm your income

To be eligible you must have your return filed by the final date, 31 March 2023.

The $70,000 threshold is net income before tax

The income threshold is your individual income, not household income. For salary and wage earners, the $70,000 net income threshold is your gross income before tax, minus any expenses you can claim.

For IR3 filers, the net income threshold is your gross income after expenses, but before any losses from earlier years are included.

If your income is only from a Portfolio investment entity

You are not eligible if your only income for the 2022 year is from a Portfolio investment entity (PIE) for example KiwiSaver.

Even though you received a tax assessment for this income, PIE income is not included in your net income.

Individuals filing or requesting an unnecessary nil tax assessment

If you have no net income and are not required by us to have an income tax assessment, requesting or filing one does not mean you will qualify for the payment. You will still be eligible if you’re:

  • a parent with no net income but required to file a return or get an assessment for Working for Families
  • self-employed and your expenses reduce your net income to zero.

There no minimum income requirement, You could have zero net income and still qualify, as long you do need to have a tax assessment

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Frequently asked questions

When will I see the payment in my bank account?

Due to the large number of payments, we will stagger them throughout each payment day. Some customers will get their payment before others.

Who will get the payment?

The IRD check who is eligible for the Cost of Living Payment before each monthly payment is made. You’ll get the payment if, on the day they check for eligibility, the IRD can confirm you:

  • have assessed net income (net income is your total amount of income, less expenses that you pay tax on) of $70,000 or less in the period 1 April 2021 to 31 March 2022
  • are not entitled to receive the Winter Energy Payment because you get NZ Super or a qualifying benefit from the Ministry of Social Development (MSD)
  • are aged 18 or older
  • are both a New Zealand tax resident and present here
  • are not in prison.

The payment is not intended to go to people who have died.

If you get a Student allowance, you’ll get the payment if you meet the other eligibility criteria.

Do I need to apply for the payment?

You do not need to apply for the payment

The IRD will pay you the Cost of Living Payment automatically if you’re eligible. You do not need to apply.

Make sure we have your correct bank account number for your Income tax account in case you are eligible. You can check your bank account information in myIR. Otherwise you can call the IRD on 0800 473 777. If you’re registered for voice ID, you can do this 24/7 and there is no wait time. Alternatively the IRD have people to help you from 8am to 6pm on weekdays and from 9am to 1pm on Saturdays.

How will I be paid?

The IRD will pay the amount to your bank account

The IRD will pay the Cost of Living Payment into the bank account they hold for you, for your Income tax account. Make sure they have the correct details in your myIR, and update it if it’s not right.

The IRD can only make the payment to a New Zealand bank account. This can be any bank account you choose to have the payment made to.

If you’re eligible for the Cost of Living Payment but the IRD cannot pay it to you because they do not have your bank account number – you have until 31 March 2024 to update your details/provide a bank account.

How much will I be paid?

You may be eligible to get 1, 2 or all 3 payments

The IRD check to see if you’re eligible to get the Cost of Living Payment before each monthly payment is made. Some people may not be eligible for all 3 payments.

Payments will not be paid for a part of the month. If you’re eligible when the IRD check, you’ll get the full payment for that month.

The IRD will check eligibility until 31 March 2023

The final date to be eligible for the Cost of Living Payment is 31 March 2023.

If an IR3 is filed or income assessment created on or:

  • before 31 March 2023, the IRD will still check if you’re eligible for the payment (even if it is processed or completed after this date)
  • after 1 April 2023, the IRD will not check if you’re eligible for the payment (even if your tax agent has applied for and been granted a deferment to file later).
Is this payment taxed?

The payment is not taxed

You will not pay tax on the Cost of Living Payment. It does not count as income for:

  • child support
  • Working for Families
  • student loans
  • benefits and payments from Work and Income.

The IRD cannot use the payment to pay off any debt you may have with them. Or transfer it to another IR account.

Who will not be not eligible?

If you do not receive a tax assessment for the 2022 year, you will not be eligible for the payment.

Payment made to people who are not eligible

It is possible that the information that the IRD have to determine eligibility could be incorrect. The correct information may show that a person is not eligible. For example, a person may be recorded as 27 when they are actually 17 years old.

However, the IRD will only apply resources to identify such cases, and to recover payments, when there has been fraudulent or wilfully misleading information provided. The IRD will be use their usual debt recovery options, such as deductions from a person’s salary and wages, or their bank account.

If you’re insolvent or bankrupt

You’ll get the Cost of Living Payment paid to you if you’re insolvent or bankrupt and qualify for it. The IRD will not send it to the Official Assignee.

Your income tax assessment or return will confirm your income.  The IRD will confirm your eligibility for the payment based on your income for the 2022 tax year.

Depending on your situation, you will have:

  • received your automatically issued income tax assessment
  • provided more information or confirmed the details on your assessment, and this has been confirmed by the IRD
  • filed your Individual income tax return – IR3.

If your income assessment is completed after any of the 3 main Cost of Living Payments have been paid and you are eligible for it, you’ll get either:

  • any payments that have not been made yet and a lump sum of any payments you were eligible for but missed
  • a lump sum based on the number of payments you are entitled to if all payment dates have passed.

Your return may be filed after the payments have been made because for example, you have a tax agent with an extension of time to file your return.

Keeping your cash flow strong

Opting out of the Cost of Living payment

If you do not want any of the future payments, you must opt out. Once the IRD have confirmed you are eligible, you can opt out of future payments by logging into myIR and under ‘I want to…’ select ‘Opt out of cost of living payment’.

After you have chosen not to get the payment, you cannot change your mind. If you do not want the payment, you can return it.

You can also opt out by calling the IRD on 0800 473 777.

Returning the payment 

If you choose to return the Cost of Living payment, you can do this through your bank by selecting ‘Making a payment to Inland Revenue’. If your bank does not provide this option, then please use the reference COL and on the next line add your IRD number when you fill out the payment information.

You can also return the payment in myIR by making a direct debit to your Cost of Living account. If you wish to use direct debit, please log into myIR and follow the instructions.

The information above is provided by the Inland Revenue Department of New Zealand.

For this article link to access further resources, please click on the following link – https://www.ird.govt.nz/cost-of-living-payment

If you have any other questions, please contact your local SBA branch or enquire with the form below.

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