Health entitlement cards: correcting reference to Working for Families tax credits

Clause 118

Submission

(Matter raised by officials)

The Health Entitlement Cards Regulations (the Regulations) contain references to the different components of the Working for Families tax credits. When the tax credits were renamed in 2004, not all references in the Regulations were updated.

The Regulations refer to credits of tax under Part M of the Income Tax Act being included in a person’s income when assessing entitlement to the Community Services Card. Since then, Part M has been amended to also include the KiwiSaver member tax credit but the Regulations were not updated to exclude this tax credit.

Comment

A person’s entitlement to the Community Services Card is based on their income plus any Working for Families tax credits they receive. The Regulations refer to these tax credits by name. The out-dated reference to the former names for some components of the Working for Families tax credits means a literal reading of the Regulations can lead to an incorrect calculation of income. This is because the name “family tax credit” now applies to what used to be known as the family support tax credit and no longer to the minimum family tax credit. The incorrect name reference could also impact on the authority of Inland Revenue to transfer information on the payment of the minimum family tax credit to the Ministry of Social Development for the purpose of calculating entitlement to the Community Services Card.

It was never intended that the Community Services Card definition of income include KiwiSaver member tax credits. Rather it was intended to only cover the Working for Families tax credits in subparts MA to MF and MZ.

Officials from Inland Revenue, the Ministry of Health and the Ministry of Social Development recommend the Regulations be amended to refer to the correct names of the components of the Working for Families tax credits, and to the correct cross-references in the Income Tax Act 2007 for the Working for Families tax credits.

Recommendation

That the submission be accepted.