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A case summary released by IRD discusses the treatment of backdated ACC weekly payments.

In this case, the taxpayer has received an ACC lumpsum backdated payment for an injury in 2014. The payment was received in 2017 following an overturning of ACC’s view on the taxpayers entitlement. She, therefore, received backdated compensation due to the shortfall in compensation that should have been paid to the taxpayer. Although the taxpayer argued for the payment to be assessed on accrual the $150,000 payment was assessed as taxable on a cash basis.

The decision highlights that an individual who is not in trade and receives a backdated ACC payment for weekly compensation will be taxed on a cash basis in the year of receipt.

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New Zealand Tax Accountant.