Government tops up $75 a week flagship tax promise, now reaches ‘thousands’ more

Finance Minister Nicola Willis has made changes to the scheme. Photo / Mark Mitchell

The Government has widened eligibility for the FamilyBoost tax credit, currently worth up to $75 a week, meaning “thousands” more people will be able to claim it, Finance Minister Nicola Willis has confirmed.

The changes begin tomorrow, July 1.

Willis, speaking to Newstalk ZB’s Heather du Plessis-Allan Drive, also said the amount of that tax credit will increase, meaning some who currently get the credit will get more.

“The changes we’ve made, we’ve been advised, will result in thousands more getting FamilyBoost payments and thousands of people getting hundreds of dollars,” Willis said.

The changes come after it was revealed in April that just 249 families were getting the full $75 a week since the scheme was introduced in 2024. IRD had estimated 21,000 would be eligible.

The failure of the first iteration of the scheme was embarrassing as it was at the centre of National’s 2023 tax plan. Willis said she would announce changes to fix the scheme by the end of June — she hit her deadline with mere hours to spare.

Labour’s finance spokeswoman Barbara Edmonds, just before Willis confirmed the changes on the radio, said she had missed her June 30 deadline.

“Nicola Willis has failed to fix FamilyBoost by the end of June as she promised,” Edmonds said.

The FamilyBoost credit was at the centre of National’s claim to deliver $250 a fortnight in tax relief to some households.

IRD confirmed to the Herald this year that its systems mean they are currently unable to tell whether anyone has actually received that amount of tax relief.

“First, Nicola Willis admitted that she can’t identify even a single family that has received the full $250 per fortnight tax cut that she promised during the campaign,” Edmonds said.

“Recognising what a disaster it’s been, Nicola Willis promised she would announce fixes to FamilyBoost by the end of June, but even that was just another empty promise. June has come and gone and struggling families are still waiting for relief.”

The FamilyBoost tax credit currently allows families to claim back 25% of early childhood education costs up to $75 a week, before the changes made on Monday.

Families make the claims each quarter. Eligibility caps out at a household income of $180,000.

Willis said the changes were “twofold”.

“To increase the amount of rebate, which will have the effect that people on lower and middle incomes with lower fees will be able to get a bigger rebate,” Willis said.

A higher rate of rebate could mean families being able to claim a bigger portion of their fees back. A criticism of the scheme is that people with lower ECE fees are not claiming the credit because the rebate is too small to be worth collating receipts and making a claim.

The second change made by Cabinet was to “reduce the... abatement rate”.

Willis said that at the moment, families who earned more than $140,000 a year had a “dramatic” drop off in the amount of rebate they received because each dollar they earned over that threshold saw the tax credit clawed back.

“We’re going to adjust that a bit so they can claim a bit more,” Willis said.

She said a detailed announcement was coming “imminently”.

Willis said the changes would apply to childcare costs beginning July 1.

“We made changes to the settings that will allow people from 1 October when they make their claims to claim a bit more and that will apply to fees incurred from 1 July.

“If you are already eligible for FamilyBoost, the amount of your rebate could be increasing and if you are just on the cusp of eligibility, you may now be eligible,” she said.

Willis said IRD was now far more cautious about calculating the number of people who were eligible for the credit and did not give a figure for the number of people now eligible for the credit.