How do childcare providers calculate tax on Earthquake Support Subsidy (ESS) payments they receive?

Any disruption caused by the earthquake makes no difference to childcare providers. They may continue to claim their standard costs as usual, based on the number of children they provided care for and their usual hours of work.

Childcare providers using the standard-cost claim basis should include Earthquake Support Subsidy payments in their end-of-year income calculation. If total payments are less than or equal to the allowable standard costs they are treated as exempt income and are non-taxable.

If their payments for an income year exceed the standard-cost allowance, providers should treat the excess payments as taxable income in their end-of-year income tax returns.

Childcare providers who don't use the standard cost claim basis are required to declare all ESS payments as income. They can claim relevant expenditure on an actual costs basis, but they must provide information to support their claims.

Jane Stringer / Relationship Manager/Customer & Product Innovation/Inland Revenue