Questions and Answers - Family Incomes Package
What is the Family Incomes Package?
This is a package that helps low and middle income families with young children meet their living costs, assists people with the highest housing costs, simplifies the Family Tax Credit system and increases take-home pay for people who are working.
Who will the changes affect?
The Package benefits 1,340,000 households in New Zealand by an average of $26 a week. Around 750,000 superannuitants and 41,000 students will also benefit from the package.
A very small number of people will be disadvantaged by the changes. A Transitional Assistance Payment will be available, from 1 April 2018, for people who have a decrease of more than $3 a week as a result of the changes. More information about this payment will be made available closer to the time.
When will these changes take effect?
The changes will all come into effect on 1 April 2018. If your payments change from 1 April 2018, we'll contact you then to let you know. These changes will be made automatically, you won’t need to do anything.
What does this mean for Working for Families tax credits?
The changes mean that Family Tax Credit rates will be simplified by reducing five different rates to two. There will be one rate for the eldest child, $101.98 a week, and one rate for all younger children, $91.25 a week. The two rates are based on the higher amounts currently paid for children aged 16-18.
The changes also mean that the point at which Family Tax Credit payments and some Working for Families tax credit payments start to reduce will be lower. Currently, for people who have income above $36,500 a year, it affects how much they get for Family Tax Credit. From 1 April 2018, for people who have income above $35,000 a year, their Family Tax Credit payments will reduce by 25 cents for every $1 earned over $35,000.
Does this mean the amount clients get for FAMILY TAX CREDIT will change?
For clients that have dependent children under 16 on 1 April 2018, their payments are likely to increase.
The table below outlines the change to the weekly rates:
|
Age of Children |
Current |
Weekly increase |
From April 2018 |
|
First or only child, 0-15 years |
$92.73 |
+$9.25 |
$101.98 First or only child |
|
First or only child, 16 years or older |
$101.98 |
- | |
|
Second or subsequent child, 0-12 years |
$64.44 |
+$26.80 |
$91.25 Second or subsequent child |
|
Second or subsequent child, 13-15 years |
$73.50 |
+$17.75 | |
|
Second or subsequent child, 16 years or older |
$91.25 |
- |
For clients that get their Family Tax Credit paid with their benefit, MSD will update these payments automatically.
For clients that get their Family Tax Credit direct from Inland Revenue (IR), IR will also update these payments automatically. Clients can contact IR directly if they require more information.
What is happening to Accommodation Supplement?
The maximum amounts paid for Accommodation Supplement across the four different Accommodation Supplement Areas are increasing to better reflect housing costs. Places where housing costs have increased the most will be moved up into different Accommodation Supplement Areas with higher maximum payments.
My Accommodation Supplement isn’t increasing from 1 April 2018. Why?
How much you get for Accommodation Supplement is based on:
- the area you live in
- your accommodation costs for the place you live in
- your income
- your cash assets
- your family circumstances.
If you are already getting the maximum amount for your circumstances, and this is less than the maximum Accommodation Supplement rate for your area, your Accommodation Supplement payment might not increase.
I am getting Accommodation Supplement but it looks like how much I get from 1 April 2018 is going down. Why?
The amount people are expected to pay towards their accommodation, and the income level at which Accommodation Supplement payments start to reduce, is reviewed each year on 1 April.
When there is an increase in benefit payments, and people’s accommodation costs and income haven’t changed, their Accommodation Supplement payment may decrease.
Some people will get less Accommodation Supplement but will be better off overall after the changes. For example, they may get slightly less Accommodation Supplement but will receive more Family Tax Credit and pay less tax.
The maximum Accommodation Supplement amount where I’m living has gone up. But it looks like my payment won’t increase that much. Why?
How much you get for Accommodation Supplement is based on:
- the area you live in
- your accommodation costs for the place you live in
- your income
- your cash assets
- your family circumstances.
This may happen because the maximum amount you are eligible for, based on your circumstances, is less than the new maximum Accommodation Supplement rate for your area.
My Accommodation Supplement payment will increase, but I am told my Temporary Additional Support payment will go down. Why?
Temporary Additional Support is often paid to help people cover their high accommodation costs if they are already getting the maximum amount of Accommodation Supplement. If you get Temporary Additional Support and your Accommodation Supplement payment goes up, in most cases your Temporary Additional Support payment will go down. This is because more of your accommodation costs will be covered by your increased Accommodation Supplement.
What is an Accommodation Supplement Area?
Urban and rural places throughout New Zealand are allocated into four Accommodation Supplement Areas that reflect local housing costs, with Area One including places with the highest accommodation costs and Area Four including places with the lowest accommodation costs.
Find out what places are changing Accommodation Supplement Area:
What places are changing to new Accommodation Supplement Areas?
The make-up of the four Accommodation Supplement Areas will be updated so people in places where housing costs have increased the most will have a higher maximum rate of Accommodation Supplement.
Find out what places are changing Accommodation Supplement Area:
Why have only some places been moved into new Accommodation Supplement Areas?
Since the last time the Accommodation Supplement Areas were updated, some places in New Zealand have seen higher increases in housing costs than others. Places where housing costs have increased at a much higher rate than other places in the same Accommodation Supplement Area are moving into a new Accommodation Supplement Area.
Why haven’t the Accommodation Benefit rates increased as much as the Accommodation Supplement rates?
In the areas of highest housing cost the Accommodation Benefit rates have increased by the same amount as the Accommodation Supplement rates for single people. For example, the Accommodation Benefit is estimated to increase by $20 in Auckland while the maximum single-person Accommodation Supplement rate for Area One (which includes Auckland) will also increase by $20.
Why have some Accommodation Benefit rates increased more than others?
Some places in New Zealand have seen higher increases in rental costs relative to others.
If I am a sole parent and getting Accommodation Benefit will this payment increase?
Accommodation Benefit for sole parents is calculated in the same way as Accommodation Supplement. This means there may be a change to the amount you get from 1 April 2018 depending on where you live.
Will my student allowance rate change as a result of the tax threshold changes?
For most students, no, there will be no change in your after tax amount of Student Allowance.
What are the changes to the income tax thresholds?
The Family Incomes Package will increase the $14,000 income tax threshold to $22,000 a year and the $48,000 threshold to $52,000 a year.
This will provide a tax reduction of around $10 a week to people earning $22,000 or more a year, rising to $20 a week for anyone earning $52,000 or more a year.
Why isn’t my benefit increasing?
Benefits are set by the Government at a net (after tax) rate. This means the Family Incomes Package doesn’t increase benefit rates. People may benefit from other changes in the package, for example, Accommodation Supplement and Family Tax Credit rates.
Will the tax threshold changes affect my New Zealand Superannuation or Veteran’s Pension?
Yes. If you get New Zealand Superannuation or Veteran's Pension and it's your main source of income, your payment will go up because you won't be paying as much tax. Below are the estimated increases to New Zealand Superannuation or Veteran's Pension.
- $6.60 a week for each member of a married/civil union couple
- $7.90 a week for a single person sharing accommodation
- $8.50 a week for a single person living alone.
Will the income tax threshold changes make a difference to my secondary tax?
The secondary tax thresholds are being aligned to the main tax thresholds. This means if your combined annual income is between $14,000 and $22,000 a year, or $48,000 and $52,000 a year, you may pay less secondary tax.
I am a social housing tenant. Will these changes affect my income-related rent?
As you may be getting more income, it is possible that you will have an increase to your income-related rent. This may be due to:
- the changes to Family Tax Credit
- an increase in income after tax (because of the change to the tax thresholds).
I am on the social housing register. Will these changes affect my priority rating?
While you are on the social housing register, any changes to your circumstances, including your income and any Accommodation Supplement you are eligible for, could change your eligibility or your priority rating for social housing.
