Questions and Answers - Family Incomes Package

What is the Families Package?

The Families Package is designed to provide targeted social assistance to improve incomes for low and middle income families with children, and to reduce child poverty. It is part of the Government’s focus on ensuring children get the best start in life, and that our welfare system doesn’t leave families without support.

The Families Package replaces the previous Government’s Family Incomes Package, announced as part of Budget 2017.

What is in the Families Package?

The changes include:

• a Winter Energy Payment to help older New Zealanders and many low income families heat their homes over winter
• a Best Start tax credit to help families with costs in their child’s early years
• changes to Accommodation Supplement and Accommodation Benefit to help people with the highest housing costs
• increases to Working for Families tax credits
• reinstating the Independent Earner Tax Credit

 Who will benefit from the changes?

There is information on the Treasury website about the expected impact of the Families Package on low income families: www.treasury.govt.nz.

When will these changes take effect?

1 April 2018: Changes to Accommodation Supplement and Accommodation Benefit will come into effect.

1 July 2018: The Winter Energy Payment, Best Start tax credit and changes to Working for Families tax credits will all come into effect.

These changes will be made automatically, you won’t need to do anything. If your payments change from either of these dates, we'll let you know.

Anyone who isn’t a Work and Income client may need to apply for Best Start tax credit through Inland Revenue.

Winter Energy Payment

What does it mean if I want to ‘opt-out’ of receiving the Winter Energy Payment?

If you don’t want to get the Winter Energy Payment, you can choose to opt-out indefinitely. Once you have done this you won’t get a Winter Energy Payment until you contact Work and Income to ask to get it again.

More information on how to opt-out will be available closer to the time.

Why are only people on a benefit or receiving NZ Super or a Veteran’s Pension getting the Winter Energy Payment?

As well as around 275,000 people getting a main benefit, 750,000 people getting NZ Super or Veteran’s Pension will also be eligible for the Winter Energy Payment.

The Government has decided to target these groups because older people are more susceptible to ill health in winter, and beneficiaries are more likely to be on the lowest incomes and in a lower standard of housing.

Why do couples receive a higher rate of Winter Energy Payment than singles given it costs the same to heat a room?

The Winter Energy Payment is not just a rate for couples, but also a rate for those with dependent children. Water heating makes up a large proportion of a household’s power costs and the costs of water heating are higher for couples and people with dependent children.

Where two single people are sharing a house, they will each receive the single rate of Winter Energy Payment. 

My partner and I live at different addresses. Can we both get the Winter Energy Payment at the single rate?

No,you will get the couple rate for Winter Energy Payment even if you live in different houses.

I am on NZ Super, can I keep getting the Winter Energy Payment if my partner goes overseas?

As you are still in New Zealand, you will be able to continue to get the Winter Energy Payment at the couple rate as long as you qualify for NZ Super.

Best Start tax credit

My child will be under three years old on 1 July 2018, can I get the Best Start tax credit?

The Best Start tax credit is only available for families with children born (or due) on or after 1 July 2018. Children born before 1 July 2018 aren’t eligible to get Best Start tax credit.

However, your Family Tax Credit amounts are likely to increase from 1 July 2018.

If I am on a benefit, will I get the full amount of Best Start tax credit until my children turn three years old?

Yes, unless your circumstances change and you move off the benefit, you will receive $60 a week for each child, born (or due) on or after 1 July 2018 until their third birthday.

Working for Families Tax Credits

What does this mean for Working for Families tax credits?

The changes mean that Family Tax Credit rates will be simplified by reducing five different rates to two.

• $101.98 a week for the eldest or only child
• $91.25 a week for all subsequent children.

Currently, if your family's income is above $36,350 a year, it affects how much you get for some Working for Families Tax Credits.

From 1 July 2018, this will change to $42,700 a year, with some Working for Families tax credits reducing by 25 cents for every $1 earned over $42,700.

Does this mean the amount I get for Family Tax Credit will change?

This table outlines the changes:

If you get your Family Tax Credit paid with your benefit, MSD will update these payments automatically.

If you get your Family Tax Credit from Inland Revenue (IR), IR will also update these payments automatically. Visit the Inland Revenue website for more information.

Are there any changes to Minimum Family Tax Credit?

Minimum Family Tax Credit helps ensure families are better off in work, by topping up their after-tax income to a set amount. From 1 April 2018, the Minimum Family Tax Credit will move from $23,816 to $26,156 a year (from $458 to $503 a week).

Do people who get Orphan’s Benefit/Unsupported Child Benefit or Foster Care Allowance also get more money?

From 1 July 2018, the rates for Orphan’s Benefit, Unsupported Child Benefit and Foster Care Allowance will increase by $20.31 a week, in line with the increase to the Family Tax Credit rate for children aged 0-15 years.

Accommodation Supplement

What is happening to Accommodation Supplement?

The maximum amounts paid for Accommodation Supplement across the four different Accommodation Supplement Areas are increasing to better reflect housing costs. Places where housing costs have increased the most will be moved up into different Accommodation Supplement Areas with higher maximum payments.

My Accommodation Supplement isn’t increasing from 1 April 2018. Why?

How much you get for Accommodation Supplement is based on:

• the area you live in
• your accommodation costs for the place you live in
• your income
• your cash assets
• your family circumstances.

If you are already getting the maximum amount for your circumstances, and this is less than the maximum Accommodation Supplement rate for your area, your Accommodation Supplement payment might not increase.

I am getting Accommodation Supplement but it looks like how much I get from 1 April 2018 is going down. Why?

The amount people are expected to pay towards their accommodation, and the income level at which Accommodation Supplement payments start to reduce, is reviewed each year on 1 April.

When there is an increase in benefit payments, and people’s accommodation costs and income haven’t changed, their Accommodation Supplement payment may decrease.

The maximum Accommodation Supplement amount where I’m living has gone up. But it looks like my payment won’t increase that much. Why?

How much you get for Accommodation Supplement is based on:

• the area you live in
• your accommodation costs for the place you live in
• your income
• your cash assets
• your family circumstances.

This may happen because the maximum amount you are eligible for, based on your circumstances, is less than the new maximum Accommodation Supplement rate for your area.

My Accommodation Supplement payment will increase, but I am told my Temporary Additional Support payment will go down. Why?

Temporary Additional Support is often paid to help people cover their high accommodation costs if they are already getting the maximum amount of Accommodation Supplement. If you get Temporary Additional Support and your Accommodation Supplement payment goes up, in most cases your Temporary Additional Support payment will go down. This is because more of your accommodation costs will be covered by your increased Accommodation Supplement.

What is an Accommodation Supplement Area?

Urban and rural places throughout New Zealand are allocated into four Accommodation Supplement Areas that reflect local housing costs, with Area One including places with the highest accommodation costs and Area Four including places with the lowest accommodation costs.

Find out what places are changing Accommodation Supplement Area:

• North Island maps
• South Island maps

 What places are changing to new Accommodation Supplement Areas?

The make-up of the four Accommodation Supplement Areas will be updated so people in places where housing costs have increased the most will have a higher maximum rate of Accommodation Supplement.

Find out what places are changing Accommodation Supplement Area:

• North Island maps
• South Island maps

Why have only some places been moved into new Accommodation Supplement Areas?

Since the last time the Accommodation Supplement Areas were updated, some places in New Zealand have seen higher increases in housing costs than others. Places where housing costs have increased at a much higher rate than other places in the same Accommodation Supplement Area are moving into a new Accommodation Supplement Area.

Why have my Childcare Assistance Payments gone down?

Accommodation Supplement is counted as income for this payment. If your Accommodation Supplement increases on 1 April 2018, this may mean that your Childcare Assistance goes down.

If this happens we’ll contact you about a transitional assistance payment to cover the difference. This payment will be available for up to 12 months, unless you have a change in circumstances before then which means you have a higher net income.

What is the Transitional assistance payment?

A very small number of people may find they get less money overall because of their particular circumstances. For example, if you get less Childcare Assistance because your Accommodation Supplement has increased.

The transitional assistance payment will be available for up to 12 months unless you have a change in circumstances which means you have a higher net income.

Why haven’t the Accommodation Benefit rates increased as much as the Accommodation Supplement rates?

In the areas of highest housing cost the Accommodation Benefit rates have increased by the same amount as the Accommodation Supplement rates for single people. For example, the Accommodation Benefit is estimated to increase by $20 in Auckland while the maximum single-person Accommodation Supplement rate for Area One (which includes Auckland) will also increase by $20.

Why have some Accommodation Benefit rates increased more than others?

Some places in New Zealand have seen higher increases in rental costs relative to others.

If I am a sole parent and getting Accommodation Benefit will this payment increase?

Accommodation Benefit for sole parents is calculated in the same way as Accommodation Supplement. This means there may be a change to the amount you get from 1 April 2018 depending on where you live.

I am on the social housing register. Will these changes affect my priority rating?

While you are on the social housing register, any changes to your circumstances, including any Accommodation Supplement you are eligible for, could change your eligibility or your priority rating for social housing.