Tax Updates: 21 October 2024

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

The basis for calculating FamilyBoost payments has changed

Inland Revenue (IR) has recently noticed that the way FamilyBoost payments are calculated for those persons who derive income from schedular payments, is not working as intended. This is because present legislation treats schedular payments in the same way as salary and wages, thereby using income information for the quarter (as opposed to income from the previous year) to calculate the FamilyBoost entitlement. Which, in relation to schedular payment income, does not then factor in the expenditure incurred in deriving that schedular payment, and consequently treats the gross level of the payment as income.

To remedy the issue, the Tax Administration (FamilyBoost Tax Credit Income and Schedular Payments) Exemption Notice (SL 2024/207) has been issued, which was notified in the New Zealand Gazette on 1 October 2024.

The Notice, which came into force on 1 October 2024 and will be revoked on 31 March 2025, exempts schedular payments from being treated as reportable income for the purposes of determining tax credit income for the FamilyBoost tax credit under s MH 4 of the Income Tax Act 2007. Note that the exemption applies retrospectively from 1^st July 2024.

Now, in case this sounds like a new term to you and raises questions as to whether you or one of your clients may be entitled to receive a FamilyBoost:

• it is a childcare payment to help eligible households pay for the cost of early childhood education (ECE). You may be able to claim up to 25% of your weekly childcare fees or a maximum of $975 every 3-months;
• you may be able to receive FamilyBoost if:
  • you are the caregiver of a child or children aged 5 and under
  • you have a household income of less than $45,000 a quarter or $180,000 a year
  • you have costs from a licensed early childhood education (ECE) provider
  • you are a tax resident of New Zealand.
• you will need to register for FamilyBoost in myIR before you can make a claim;
• you need to submit a FamilyBoost claim to get your refund. You need to submit a new claim in myIR for every quarter;
• you can add invoices you did not include when you submitted previous FamilyBoost claims, up to the maximum amount you are eligible for; and,
• ECE and Kōhanga Reo providers can give caregivers invoices or quarterly statements to help them claim FamilyBoost.

This article was originally published through the ‘A Week In Review’ newsletter. If you would like to receive Richard’s tax updates every Monday morning, you can subscribe here.