Budget fact sheets 2006 -Working for Families extension

Budget 2006 extends the Government’s Working for Families package to an additional 60,000 families and raises the amount of tax relief for other families.

The extension means new spending of $85 million in 2005/06 and $1.8 billion over the next four years, bringing the total Working for Families package to $1.6 billion per annum from the 2007/08 financial year. This demonstrates the Government’s ongoing commitment to investing in New Zealand families.

The funding covers the 1 April 2006 changes to family assistance that extends key components of Working for Families by:

• Increasing the Family Assistance¹ abatement threshold from $27,500 to $35,000
• Reducing the abatement rate of Family Assistance from 30% to 20%.

It is estimated that 160,000 families will gain an average of around $50 per week from the 1 April 2006 extension of the package. This includes 60,000 families who are newly eligible for Family Assistance. The majority of these new gains will go to families earning between $45,000 and $80,000.

These changes are forecast to increase the average gain from Working for Families to $64 per week in Family Assistance across a total of 348,000 families (around three quarters of all families) from 1 April 2006.

The Working for Families extension also provides greater income support for more working families. All eligible families earning over $27,500 will gain.

New Family Assistance Cut-out Points

	1 April 2006		1 April 2007
	WfF 2004	Extension	WfF 2004	Extension
1 child2	$50,380	$69,320	$52,113	$71,920
2 children	$58,527	$81,540	$61,993	$86,740
3 children	$66,673	$93,760	$71,873	$101,560
4 children	$77,420	$109,880	$84,352	$120,280

1Family Assistance includes: Family Support, the Child Tax Credit (replaced by the In-Work Payment from 1 April 2006), Family Tax Credit and the Parental Tax Credit.
2Assumes all children are less than 12 years of age.