There appears to be some confusion regarding the information put out about the taxation treatment of the P.C.A. Allowance.

The Inland Revenue Dept. rules on the taxation of such lump sum payments are quite clear and explicit.

A calculation is made as follows:

Earnings over the 4 weeks preceding the payment are averaged to provide an average weekly rate.

This is multiplied by 52 to get a nominal annual rate.

The amount of the lump sum is added to this nominal annual rate.

If that final figure is between $38,001 and $60,000, the taxation rate is 34.3%

If the final figure is over $60,000, the taxation rate is 40.3%

The taxation rates are 1.3% above the nominal tax rates of 33% and 39% because of the addition of the A.C.C.Earners Levy.

Two examples demonstrate the workings of this calculation:

1.  S.F.F Weekly Pay  $940.00
   Plus 2 O/T at approx.  $300.00
  4 Weeks Earnings  $4360.00
   Nominal Annual Earnings  $56680.00
   Plus PCA Payment  $1354.00
   Total:  $58034.00

Therefore the payment is taxed at 34.3%

2.  S.F.F Weekly Pay  $940.00
   Plus 3 O/T at approx.  $300.00
  4 weeks Earnings  $4660.00
   Nominal Annual Earnings  $60580.00
   Plus PCA Payment  $1354.00
   Total:  $61934.00

Therefore the payment is taxed at 40.3%

If using this calculation, the figure is over $60,000 and therefore the P.C.A. payment is taxed at 40.3%, but in the end you do not earn over $60,000 in the year,any person can put in a Tax Return to claim the refund.

Related Articles

VIEW ALL VIEW ALL

ELECTION OF TAUPO LOCAL SECRETARY

Due to the recent resignation of the Taupo Local Secretary, nominations are hereby called for this position in accordance with the Rules of the New Zealand Professional Firefighters Union.


Election of Northcom Representative - Auckland Local Committee

By the closing date for nominations for the position of Northcom Representative – Auckland Local Committee, the following nomination has been received.


Blood Screening and Health Checks now available for Wellington Local Members

The Wellington Local are pleased to announce members can now book Blood Screening and Health Checks by agreement with 2 providers. The local has been working very hard to find providers to undertake these comprehensive and potentially life-saving checks for our members.