28 March, 2006

Three in four families with children will be eligible for Family Tax relief from Saturday

Almost three in every four New Zealand families with dependent children will be entitled to Family Assistance tax credits from this Saturday (1 April), Social Development and Employment Minister David Benson-Pope said today.

"The Working for Families package is delivering targeted tax credits to Kiwi families to help them raise their children," said Mr Benson-Pope. "Around 85,000 more families will benefit from 1 April this year as a result of this family tax relief package – this means that 350,000 families will be receiving family tax relief in 2006."

Highlighting changes that will come into effect on 1 April, Mr Benson-Pope was visiting a Wellington call centre handling Working For Families inquiries. He met with call centre worker Nigel Ritchie.

Mr Ritchie is married with two children (3.5 years and 9 months) and earns $37,500. From 1 April 2006 his Family Assistance under the Working For Families package will increase to $334 per fortnight, an increase of more than $200 a fortnight. When the Childcare and Accomodation Supplement components of the Working For Families package are added in, Mr Ritchie's familiy will receive around $270 per week – making them $110 a week better off from 1 April, 2006.

"Ninety per cent of the almost $1.6 billion package is being delivered to families through the tax system," said Mr Benson-Pope. "Families will access their tax credits from Inland Revenue, which will calculate and pay their entitlements."

"This is the most effective way to target and support our New Zealand families and children."

Mr Benson-Pope says supporting families and children via tax credits is a widespread approach in the OECD. Australian families are eligible for the Family Tax Benefit up to a combined family income of around AUS$90,000, depending on age and number of children. The United Kingdom provides assistance to help with the costs of children, to beneficiaries and working families through a ‘Child Tax Credit’, for which around 85 percent of families are eligible.

"Contrast this with across the board tax cuts, which deliver the highest gains to people with the highest incomes, regardless of whether they have children or not," said Mr Benson-Pope.

ENDS

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