Government Announces Major Adjustments to FamilyBoost Tax Policy

The government has announced significant changes to its flagship family tax policy, FamilyBoost, aimed at increasing the maximum refund amount and raising the income threshold. These adjustments are expected to benefit tens of thousands of households across the country.

Finance Minister Nicola Willis revealed that the maximum rebate will be increased from 25% to 40% of weekly childcare fees. Additionally, the income threshold for eligibility will be raised from $180,000 to $229,000. These changes are part of the government's response to the challenges faced by families in accessing the full benefits of the FamilyBoost scheme.

FamilyBoost was introduced in March 2024 and became operational in July of the same year. However, the uptake of the policy has been lower than anticipated, with many eligible families not receiving the full weekly payment. The government acknowledged that the initial estimates of eligible families were inaccurate, prompting the need for these revisions.

Willis emphasized that the changes will help families cope with the rising costs associated with raising young children. "We know many people are still doing it tough. These changes will help many families to deal with the increased costs that come with having young children," she stated.

One of the key adjustments is the increase in the maximum weekly payment from $75 to $120. This increase is applicable to families who pay weekly fees of $300 or more. However, it is important to note that all families, regardless of their fee levels, can now claim 40% of their total fees. This change is expected to result in larger payments for many families already participating in the scheme.

Willis also announced that the Inland Revenue Department (IRD) will explore a direct fee-refund model. This model would allow early childhood providers to claim fees directly from the IRD, reducing the administrative burden on parents. The IRD will collaborate with early childhood services to develop a streamlined claims system.

As of April, data showed that only 249 families had received the maximum FamilyBoost payment since the policy's inception. This number is significantly lower than the 21,000 families initially estimated to be eligible for the full payment. The government has acknowledged the need for these adjustments to ensure that more families can benefit from the policy.

With these changes, the government aims to make the FamilyBoost scheme more accessible and beneficial for a larger number of households. The adjustments are expected to result in up to 16,000 additional families accessing the payment, benefiting tens of thousands of households overall.

These revisions reflect the government's commitment to addressing the challenges faced by families in accessing childcare support. By increasing the maximum refund and raising the income threshold, the government hopes to provide much-needed financial relief to families across the country.