More from the ‘Not so Fair’ vault…

Date: 17 February 2014

The eligibility for student allowance is based on the amount of family income and we are being asked to provide details of parental income for the last financial year.  Naturally, we give a summary of what was included in personal income tax returns filed with the IRD.

Similar to WINZ and other Government benefits, Study Link's definition of income is broader than that for income tax and includes:

- Income retained by a company (usually small, family owned) where parents hold the majority of the shares

- Income retained by a trust where a parent is a settlor

We get this bit, because of the ability to control distribution of income from these types of entities.

Study Link is also asking us to provide details of "drawings" for the year, particularly from closely held companies.  In their income formula, drawings that are used for payment of personal/household expenses are also income.

This is the bit we don't get - our view is that any drawings come from income that has been allocated to shareholders and notified to Study Link separately, therefore to include them would be "double dipping".

We have sought some clarification from Study Link using the following example:                              

                   Year 1                      Year 2                   Total

                   $                              $                           $   

Salary             70,000                     70,000                140,000

Drawings         50,000                     90,000                140,000

Total              120,000                   160,000                280,000

Our view is that the student allowance eligibility should be based on $70,000 per year - a total of $140,000.

Mum and dad have spent $140,000 which is no more than they have been allocated, but potentially they could be assessed on $120,000 in year 1 and $160,000 in year 2 - a total of $280,000, hence our argument about "double dipping".

We are still waiting for a response ………………

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