Heard about others receiving money from the Working for Families scheme but not sure if you can claim too?
Did you know that you can be eligible for financial assistance from the Inland Revenue Department if you have two children and have an annual family income of $74,000 or less before tax? Even if your family income is higher than this, you may still be entitled to support, depending on your circumstances.
what is the working for families tax credits scheme?
Working For Families are payments administered by the Inland Revenue Department which are designed to help make it easier for you to work and raise a family. They’re payments for families with dependent children aged 18 or under.
there are four types of payments:
- Family Tax Credit – payment provides ongoing financial support for families and is based on your particular family situation.
- In-Work Tax Credit – payment for families who are in paid work. To receive this payment, at least one parent must be working for a salary or wage; with a two parent family working at least 30 hours between them, or 20 hours for a single parent. This payment is not available if you are receiving
an income-tested benefit or student allowance. - Minimum Family Tax Credit – payment that tops up your family income to a minimum amount after tax each week. To receive this payment, at least one parent must be work for a salary or wage; with a two parent family working at least 30 hours between them, or 20 hours for a single parent.
- Parental Tax Credit – payment helps with the costs of a new baby for the first eight weeks after birth. This payment is not available if you received paid parental leave.
who can claim?
To be eligible for Working For Families Tax Credits, you must meet the following criteria:
You must:
- Be the person responsible for the day-to-day care of the children
- Not be someone who cares for the children on a temporary basis, like a child minder
- Be 16 years or older
The child or children must:
- Be 18 years or younger
- Not be financially independent
In addition, one of these residency requirements must be met:
- You’re a NZ resident and have been in New Zealand continuously for at least 12 months at any time
- The child or children you’re claiming for are both resident and present in New Zealand.
In addition to the above general requirements, there are specific tax credit requirements as indicated above.
application process
In order to receive Working For Families Tax Credits, you will need to either apply online at www.ird.govt.nz using the FS1 online form, or complete the FS1 form and post it to IRD.
If you receive an income-tested benefit as your main income, Work and Income will generally pay you the family tax credit, so nothing further will be required.
IRD require that children for which Working for Families Tax Credits are claimed have their own IRD number. If an IRD number is not supplied to IRD within eight weeks of the family receiving Working For Families tax credits, payments will stop. If an IRD number of a child is needed, you can complete the IR595 form which is available from the IRD website at www.ird.govt.nz.
You may be entitled to receive Working For Families Tax Credits if you have a shared care arrangement for a child or children.
Payments can be made based on your payment preference for either weekly, fortnightly or annually. If you elect a weekly or fortnightly payment option, you will need to provide an estimated earnings figure for you and your partner/spouse, so IRD can calculate your entitlement.
If you opt for a lump sum annual payment, then your entitlement will be based on your final 31st March earnings when IRD do the calculation; this may require the filing of an IR3 individual income tax return in order to determine the level of income.
Once the registration form has been received, IRD will calculate the amount you’re entitled to and send out a notice of entitlement.
At the end of each financial year (31 March), IRD will do an end of year wrap-up calculation to see if the right amount was paid to you based on your final income and entitlement calculations. If a further top-up payment is required, then this will be made; and if IRD overpaid you, then an assessment of what needs to be paid back will be sent to you.
getting it right
In order to ensure you receive the correct levels of payments given your personal circumstances, you should contact IRD if:
- A child comes into your care, or leaves your care
- The amount and type of your family income changes
- Your partner’s details change
- You receive overtime or a bonus payment
- You change employment, with a change in income levels
what other support is available?
An entitlement to other forms of support may be available, including:
- Housing costs – the accommodation supplement is available to help with rent, board or mortgage, and other essential housing costs.
- Paid Parental Leave – available to eligible parents who take paid parental leave from their job to care for their newborn or newly adopted child. It’s an alternative to the parental tax credit and provides for 14 weeks of payments.
Example
Roger and Lisa have a family income of $68,000 and two children. They will be entitled to weekly Family Tax Credit payments of $27, and as Roger and Lisa meet the requirements (by working more than 30 hours per week combined), they are also entitled to weekly In-Work Tax Credit payments of $60, providing a total financial support package from Inland Revenue of $4,524.
The above material is of an informative nature and should not be taken as tax advice. If you have any questions about your entitlement to claim, then please contact Inland Revenue, your accountant or the writer.
“Working for Families payments are designed to make it easier for you to work and raise a family. You can opt for weekly or fortnightly payments, or a lump sum amount.”
Stephen Simpson is a Director at O’Halloran North Shore Chartered Accountants and Business Advisors, and a father of two young sons.
