Guidance material for Working for Families consultation
On this Page:
Review of Working for Families
You’ll find more information about the Welfare Expert Advisory Group’s recommendations in their report: Whakamana Tangata – Restoring Dignity to Social Security in New Zealand: Welfare Expert Advisory Group Report | Welfare Expert Advisory Group - Kia Piki Ake
It is important that Working for Families tax credits (see below) support low-income families to have enough money to live, help to reduce child poverty, and support low-income families to take up work.
Scope of the Review
Through the review the Government wants to focus on:
- supporting low-income working families, while maintaining support for beneficiary families,
- options that focus support to families with the lowest incomes, rather than providing more general support,
- making sure families are better off when working more hours and helping with the costs for people in work.
The Government is committed to better support for New Zealanders and must also balance that with careful economic management. The Government spent around $2,858.3 million on Working for Families tax credits in 2019/2020. We want to hear how we can better use that investment in Working for Families as a starting point for options for change.
About Working for Families Tax Credits
Working for Families tax credits are paid to low and middle-income families to help them raise their family and stay in work. Around 58 percent of families with children in New Zealand get Working for Families each year. Working for Families is mostly paid by Inland Revenue, while MSD pays it to some families who also get a main benefit.
Working for Families is made up of four tax credits. Families may get one or more kind of credit.
Family Tax Credit
Family Tax Credit is the main payment to support families with the costs of children. Families getting a main benefit and low to middle-income working families can both get it.
- It pays $127.73 a week for the eldest child and $104.08 a week for every other child in a family.
- Family Tax Credit payments depend on your income and begin to reduce once a family’s income is higher than $42,700 a year. For every dollar of income above this amount, Family Tax Credit payments reduce by 27 cents.
Family Tax Credit is paid to 280,100 low and middle-income families.
In-Work Tax Credit
This is paid to families who are working to help them with raising a family and to help make sure families are better off working than if they were not working.
- It pays $72.50 a week for families with 1 to 3 children (with an extra $15 a week for each fourth and following child).
- In-Work Tax Credit payments depend on your income and begin to reduce once a family’s Family Tax Credit payments have reduced to zero. In-Work Tax Credit payments also reduce at the same rate of 27 cents for every dollar of income.
In-Work Tax Credit is paid to 188,500 families in work.
Minimum Family Tax Credit
The Minimum Family Tax Credit is an additional top-up for low-income working families with children, and makes sure their income is at least $632 a week after tax. This is paid to families who are working and do not get a main benefit. As it is a top-up to a certain level of income, when a family’s income increases by a dollar the Minimum Family Tax Credit reduces by a dollar.
Minimum Family Tax Credit is paid to 3,900 low-income working families.
Best Start Tax Credit
The Best Start Tax Credit pays $65.15 a week to all families for the first year of each child’s life. You cannot get Best Start and Paid Parental Leave for the same child at the same time.
Generally, a family’s Best Start payments for a child starts once any Paid Parental Leave finishes. For families with children aged 1 and 2 years Best Start depends on your income, with payments starting to reduce once a family’s income is higher than $79,000 a year. For every dollar of income above this amount, Best Start payments reduce by 21 cents.
Inland Revenue pays Best Start Tax Credit to 74,000 families and MSD pays Best Start to some families receiving a main benefit.
Read further information about Working for Families tax credits on the IRD website
