The Government is tweaking its flagship family tax policy by increasing the maximum refund amount and lifting the income threshold. Video / Mark Mitchell
The Government is tweaking its flagship family tax policy by increasing the maximum refund amount and lifting the income threshold.
It comes after issues with FamilyBoost were highlighted earlier this year, including low uptake and IRD admitting the number of families it estimated were eligible for the full weeklypayment was wrong.
Finance Minister Nicola Willis announced the maximum rebate would increase from 25% to 40% of weekly fees. The income threshold would be raised from $180,000 to $229,000.
“We know many people are still doing it tough. These changes will help many families to deal with the increased costs that come with having young children.”
FamilyBoost was introduced as Government policy in March 2024 and started in July that year. Families had to keep copies of their early childcare invoices to submit for a payment, which raised questions about how many eligible families would end up receiving the payment.
Finance Minister Nicola Willis talking with children and parents after her FamilyBoost announcement at Curious Minds Early Learning in Johnsonville. Photo / Mark Mitchell
Willis said today that IRD would investigate a direct fee-refund model.
“They will be working with early childhood services for the next little while to see whether we can have a claims system that allows fees to be directly claimed by early childhood providers so parents don’t need to do the work with IRD,” she said.
Willis said around 60,000 families have successfully claimed the FamilyBoost tax credit which is less than the number of families estimated to be eligible.
“The changes we are making will make around 22,000 more households eligible for the scheme. Based on the current take-up rate, officials estimate this may result in up to 16,000 more families accessing the payment.
The changes would benefit “tens of thousands” of households, she said.
Finance Minister Nicola Willis at Curious Minds Early Learning in Johnsonville. Photo / Mark Mitchell
“FamilyBoost rebates are calculated according to the weekly fees parents pay, so the maximum payment is also increasing, from $75 a week to $120 a week.
“The maximum refund is only available to those who pay weekly fees of $300 or more, however it’s important to note that parents at all fee levels can now claim 40% of their total fees, so these changes will result in bigger payments for many families who already take part in the scheme.”
In April, it was revealed that the Government had overestimated the number of families that would be eligible for the full FamilyBoost payment, despite IRD officials’ “best efforts”.
Data at the time (as of April 9) showed some 249 families had received the maximum amount available under the FamilyBoost scheme since it came into effect last year.
This was 1.2% of the 21,000 families the Government said were eligible for the full FamilyBoost payment of $975 a quarter or $3900 a year – a figure IRD then admitted was wrong.
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.
