Working For Families Tax Credits

What Are Working For Families Tax Credits?

Working for Families Tax Credits are payments to help make it easier to combine working while raising a family.

Who Is Eligible? 

These payments are for families with dependent children aged 18 or under.  You may qualify for one or more types of payment, depending on your personal situation. 

What Types Of Working for Families Tax Credits Are Available?

There are four types of Working for Families tax credits. Your eligibility is determined based on the nature of your work and the amount of income you receive.

Family Tax Credit

This is an ongoing financial support payment. The amount you are paid depends on your family situation.

In-work tax credit

This payment is made to families who are in paid work.

To receive this benefit, a two-parent family must work a total of 30 hours or more a week between them, and a single parent must work 20 hours or more a week. It’s not available to families receiving an income-tested benefit or student allowance.

One problem people sometimes encounter with this credit is overpayment. Sounds good, until you need to account for it at tax time! Often, the caregiver who receives the
tax credit gets billed for repayment. This can happen when earnings increase or circumstances change, so qualification for the credit is affected.

How much money are you owed?

Find out now

Minimum family tax credit

This payment tops up your family income to a minimum amount after tax each week. To get this payment, at least one parent must be working for a salary or wages.

A two-parent family must work at least 30 hours a week between them, and a single parent must work at least 20 hours a week.

People who don’t qualify for this payment include those on the NZ Superannuation or Veteran’s Pension, those who receive a student allowance and those in self-employment.

Parental Tax Credit

This payment helps you with the costs of a newborn child for the first 10 weeks after the baby arrives.

The amount you receive is calculated based on your family income and the type of income your family received in the first 10 weeks after your baby was born.

How do I apply for Working For Families Tax Credits?

You can apply online:

Complete the Working For Families Tax Credits registration form

You can also apply by post:
Complete the Working for Families Tax Credits registration (FS 1) form and post it in. You can obtain this form online or call the IRD on 0800 227 773 and have one sent out to you.  The IRD will work out the amount you’re entitled to receive. They will advise you after your application has been processed.

Working For Families Tax Table (Income Limits 1 April 2017 – 31 March 2018)

 

Number of
children
Family tax creditIn-Work tax creditParental tax credit
1$57,781$74,537$84,314
2$72,674$89,430$99,208
3$87,568$104,323$114,101
4$102,461$122,683$132,461
5$117,354$141,043$150,821
6$132,248$159,403$169,181

 

Source: New Zealand Inland Revenue 

Am I Entitled To Other Assistance?

There are other benefits and subsidies that apply to children.  These include:

  • Childcare and Out of School Care and Recreation (OSCAR) subsidies.
  • The accommodation supplement. This benefit helps with rent, board or mortgage and other housing costs.
  • Paid parental leave. When people leave or stop working to care for their newborn or a child under the age of six. This is an alternative option to parental tax credit, so a parent or caregiver can’t receive both.

Some of these benefits may affect Working For Families tax credits, so check with the IRD or MyTax if you have any queries.

Why Was Working For Families Implemented?

Working for Families seeks to reduce child poverty which has been higher than in
other developed countries despite low unemployment
. New Zealand’s child poverty rate was the 10th highest among the 26 nations of the OECD in 2001. Working For Families was introduced in 2004, and has remained in force since then.

Is Working For Families Effective?

It depends who you ask.

The Child Poverty Action Group notes “Policies that punish through removal of cash don’t work, while policies that literally reward and incentivise working do improve outcomes for families and kids. When low-income families with children only receive payments if they meet specific work or childcare conditions that do not account for the circumstances and experiences of the family, the economic condition of the family is rarely improved and outcomes for the children (in terms of educational attainment or well being) don’t either”. Essentially, they feel the policy is too convoluted and should cast a wider net.

Helen Clark, ex-Labour leader noted that the National Party, who were previously critical of the scheme, had no plans to change it. “”While National has long been concerned about how far up the income scale Working for Families stretches, a careful analysis of possible changes at the higher income levels showed it was not worth making them,” Mr Key said”.

Whatever the politics, there’s no doubt that those who are eligible do receive real benefit from the extra payments. At the time of writing, there are no plans to stop or significantly wind back the Working For Families scheme.

What you can do now

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