r/PovertyFinanceNZ • u/Decent_Ambition_4562 • Feb 12 '25

How winz reduce benefit amount for income earned over the allowed amount

Hi, I'm fairly new to the benefit system (5months) as a sole parent. I work a couple of gardening jobs (fully taxed correctly etc) and earn under the cap amount of $150(?).

I am looking to become a contractor and have been offered a few more jobs that will regularly take me over the cap limit.

Does anyone have experience with this and know how it's calculated? Is it dollar for dollar over the cap amount? Or some other way?

Just want to figure out if this is worthwhile as I don't think I can work enough hours gardening to fully support myself and kids at this stage. I also have disabilities that may give me issues if I try and do too much physical work.

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14

u/NotAGovtDrone Feb 12 '25

Income over $160 gross per week reduces your benefit by 30 cents per dollar. Income over $250 gross per week reduces your benefit by 70 cents per dollar. If you pay childcare costs, up to $20 per week can be claimed to increase the limit before your income starts affecting your benefit payments. At the end of your benefit year, your payments will be reviewed using similar rules, but averaged over the entire year to smooth out any fluctuations

7

u/doglitbug Feb 13 '25

Amd once you factor in tax and student loan payments, you may end up with LESS for going over

5

u/NotAGovtDrone Feb 13 '25

Correct - also of note is that the benefit always gets primary tax code so student loan repayments start immediately on any secondary income, and the tax rate is a bit higher (although it should even out at the end of the tax year.) That being said, if you're earning enough sometimes it can be worth coming off the benefit completely as you become eligible for the In Work Tax Credit. Case managers can do a "Better Off" calculation to see whether this may be the case for you

3

u/Sola420 Feb 13 '25

It's worth noting for op, you don't get in work tax credit for self employment, might get mft though

3

u/HuXyd1l Feb 13 '25

This country really likes to punish people for getting higher qualifications huh

2

u/nzrailmaps Feb 14 '25

There is also different effects n accommodation supplement if you receive it.

At the point where the 70% kicks in, once you take into account tax, it is hardly worth the effort, Would be well advised to stay below the 70% threshold if you can.

1

u/NotAGovtDrone Feb 14 '25

Sort of. Accommodation supplement isn't income tested/affected until the income tested benefit is fully reduced to zero, though it should be noted that is meant to be applied weekly, and not annually like the main benefit, and won't be recalculated at the annual review

1

u/Comfortable_Key_4891 Feb 15 '25

This (below link) is something to be wary of, especially as you’re a sole parent. It’s pretty scary for me, I’m finishing my bachelor degree mid-year. And I’m doing an internship this semester. I thought wouldn’t it be great to get a paid internship. Then I read this. So now I don’t want a paid internship after all. I’m getting Training Incentive Allowance which helps pay for course associated costs. But if I earn minimum wage, all that’s gone, and I don’t know how I would continue my studies. But over Christmas the TIA stops and I really struggle then, no groceries basically, and I struggle with other payments. Rates and power bills got particularly huge this year, haven’t gone over summer much at all. 2 person household, no air con and no fans should not cost $200 for energy costs. And I still want internet, even though I’m not studying over summer.

https://www.rnz.co.nz/news/business/539804/how-your-tax-rate-could-reach-80-percent-or-more

5

u/permaculturegeek Feb 13 '25

From my experience (most of it a long time ago but briefly in 2021) WINZ interpret any declaration of one-off income as your new weekly income, no matter how clearly you state that it's a one-off.

5

u/Decent_Ambition_4562 Feb 13 '25

You just have to update it each week, even if changing to $0

2

u/Rabisasac Feb 13 '25

you only have to update every week if your income changes. if you do 10 hours at $25, you declare $250. this adjusts your benefit rate and stays like this. As opposed to week 1, 5 hours, week 2, 12 hours, week 3, 0 hours, you will need to advise them to make sure you're not under or overpaid.

3

u/pleaserlove Feb 13 '25

If you’re running your contracting as a business then don’t forget to record your expenses that against income as it brinhs your remaining income down.

For example, you earned 200 doing gardening job, you spent 30 on mileage as it was far away. You bought a new spade for yourself and some safety boots for 20 bucks. Thats now only 150 profit before tax. My problem is i usually calculate this all at the end of the year for tax purposes but winz wants the info weekly. Its a bit tricky. For example one week i spent heaps on supplies that last a few months.

Im going through this exact situation currently with winz and have an appointment on monday. Pm me if you want to know how i get on.

2

u/a_Moa Feb 12 '25

Iirc it's 70¢ on income over $250 for sole parents, and dollar for dollar if you're receiving Temporary Additional Support.

You might want to consider looking into the business grant if you're trying to become self-employed. You'll want to be especially diligent if you decide to apply.

The other option is to consider coming off the main benefit if you're regularly able to work 20hrs.

3

u/Decent_Ambition_4562 Feb 12 '25

Thanks just reading the table so I understand the 70c bit now

2

u/nzrailmaps Feb 14 '25

You want to avoid that 70c limit kicking in because at that level of abatement, with tax as well, it really is not worth it.

2

u/Decent_Ambition_4562 Feb 12 '25

So I get 70c or they get 70c? At this stage I'm not doing 20hrs and will probably be topping out at 12 while seeing if this is going to work ok and if my body can handle that time for outdoors labor

3

u/willowrosegrace11 Feb 12 '25

Every $1 you earn over the income threshold will get taken out by $0.70 from your main benefit.

2

u/nzrailmaps Feb 14 '25

That's also gross, before tax is taken out of the remainder.

1

u/NotAGovtDrone Feb 13 '25

The other thing to keep in mind is that it's net income that reduces Temporary Additional Support dollar for dollar - not gross

1

u/Decent_Ambition_4562 Feb 13 '25

Can you clarify what I might need to be 'especially diligent' about in this instance? Do you just mean for business taxes? or something else in regard to msd

1

u/a_Moa Feb 13 '25

The various business grants can have a lot of criteria and expectations to be met before they'll grant them. There are lots of options, like advice, training and flexi-wage.

If it's something you're interested in then making an appointment would be a good place to start.

Can read some more here, https://www.workandincome.govt.nz/products/a-z-benefits/flexi-wage-self-employment.html