New Zealand’s Family Assistance Tax Credits: Evolution and Operation

The Family Assistance Tax Credits provide income-tested (and in some cases work-tested) financial assistance for families with financially dependent children who are living at home. This paper describes the evolution and operation of the Family Assistance programmes. This description clarifies how these programmes have evolved and operate and provides a basis for future research. The topics discussed in this paper are as follows: the programmes that preceded the Family Assistance programmes; the changing levels of assistance, abatement regimes and eligibility criteria for each of the Family Assistance programmes; the roles of the Inland Revenue Department and the Ministry of Social Development in administering the Family Assistance programmes; the definitions of income in operation in the social welfare and tax systems, the calculation of the taxation and abatement of social welfare benefits and the calculation of Family Assistance entitlement; the calculation of the impact of the Family Assistance programmes on the financial rewards from work; and the fiscal cost to the government of the social assistance system in general and the Family Assistance programmes in particular.