11. Hon TARIANA TURIA (Co-Leader—Māori Party) Link to this
to the Minister for ACC
What feedback has she received from clients and caregivers on the decision to withhold tax on attendant care, home help, and childcare payments made by the Accident Compensation Corporation, which will come into effect on 1 July 2008?
Hon MARYAN STREET (Minister for ACC) Link to this
I have had some concerns raised with me. However, the previous tax situation was inequitable and uncertain, and this administrative change should ensure that all carers are being treated equally while at the same time making it easier for them to fulfil their tax obligations.
Hon Tariana Turia Link to this
Were all caregivers and clients involved in attendant care relationships personally advised that their status has changed to that of being self-employed, and will the Accident Compensation Corporation (ACC) increase the payments to cover all the additional costs imposed, such as GST, fringe benefit tax, PAYE, accountants’ fees, and administration, or is this another attempt by the Government to increase the tax take?
Hon MARYAN STREET Link to this
The truth of the matter is that informal carers have always been obliged, as is everyone, to pay tax on their income. The administrative change that has happened has ensured that this will occur via ACC. It is an administrative change brought about by the Inland Revenue Department legislation. However, at the same time, this Government has seen fit, quite separately, to increase the rates of pay to carers.
Su’a William SioWhat support is the Labour-led Government providing to the sector to ensure caregivers such as those cited in the primary question are paid adequately?
Hon MARYAN STREET Link to this
As I informed the House a moment ago, Budget 2008 will allocate an additional $46.5 million over 4 years to fund non-agency providers of home-based care. This, in fact, moves the hourly rates from $11.28 to $13.82 for level 1 care, and from $13.54 to 16.59 for level 2 care.
Hon Tariana Turia Link to this
What action will the ACC take to ensure that accident compensation clients and caregivers will not be faced with retrospective tax deductions on ACC attendant care payments made prior to the tax changes being introduced, which now treat all ACC attendant care payments as income rather than compensation?
Hon MARYAN STREET Link to this
It is not the ACC’s job to gather taxation or to pursue any tax that has not been paid previously. The administrative process in place now is to require the ACC to withhold tax at source and thereafter remit it to the Inland Revenue Department. That is the only change.
Hon Tariana Turia Link to this
What response will the Minister make to a client who has written to the Māori Party, advising us that she receives ACC payments to enable her to care for her son whose disability was caused by an adverse medical event, that she receives these payments not as income earned from being employed to do a job, and that the potential threat of being required to register for GST in order to meet provisional tax obligations and other requirements may, in fact, jeopardise her ability to take care of her son?
Hon MARYAN STREET Link to this
I would be very happy to respond to that particular case if the member referred it to me. The truth, again, of the matter is that informal carers are paid; they are paid via the person who is the injured person. They are paid to provide that service, and there are ordinary taxation rules that apply accordingly.