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Inland Revenue

Tax Policy

PUBLISHED 12 September 2005

Family tax credit increase

The guaranteed net income level of the family tax credit will rise from $15,080 to $17,680 from 1 April 2006 and will be reviewed and adjusted annually thereafter. The increase, part of the roll-out of changes announced in 2004, was approved by Order in Council today. For more information see the government's media statement (updated 15 September 2005) and Order in Council (PDF 75KB).

Hon Dr Michael Cullen
Minister of Revenue

Hon Steve Maharey
Minister for Social Development and Employment


Family tax credit increase for low-income working families

Low-income working families will be eligible for an increase in their family tax credit from 1 April next year, Revenue Minister Michael Cullen and Social Development and Employment Minister Steve Maharey announced today.

"The family tax credit tops up the after-tax income of working families making them better off financially than if they received a benefit," Dr Cullen said.

"At present, the guaranteed net income level is $15,080. That will rise to $17,680 from 1 April 2006, as part of the phased-in implementation of Working for Families changes announced in Budget 2004. The threshold will be reviewed and increased annually from 2006.

"The change means more money in the hand for low-income working families. For example, a family whose after-tax income is $12,000 and who currently receives $3,080 a year in top-up income from the family tax credit will receive an extra $2,600 a year, or an additional $50 a week, from April next year."

"About 80 per cent of families who have their income topped up by the family tax credit are headed by solo parents who work at least 20 hours a week," Steve Maharey said. "The remainder are two-parent families who work at least 30 hours a week between them. The number of families receiving the top-up is expected to increase from nearly 2,000 to over 4,000 as a result of this change.

"The family tax credit actively supports families moving off a benefit and into paid work and ensures that people who do paid work are better off as a result of their effort."

Steve Maharey said that Labour would continue to focus on the needs of all families, regardless of their employment situation.

The change to the Family Tax Credit was approved by Order in Council today.

The text of the Order in Council can be viewed at:

Patricia Herbert, press secretary, Dr Cullen, 04 471 9412 or 021 270 9013
Daniel Lambert, press secretary, Steve Maharey, 04 471 1954 or 021 270 9115