FamilyBoost Childcare Payment – An Inland Revenue Tax Rebate
How FamilyBoost Works
Households can be reimbursed for up to 40% of ECE costs, capped at $1,560 per quarter, after the 20 Hours Free ECE and MSD/ Winz Childcare Subsidy have been applied.
- The maximum eligible household income threshold is $57,286 per quarter.
- For household income above $35,000 per quarter, an abatement rate of 7% applies.
- Parents must make a claim each quarter:
- January–March
- April–June
- July–September
- October–December
Refunds are final once invoices are submitted. Families will not incur debt, and Inland Revenue will not “square up” at the end of the tax year based on updated income information. Read more: How to claim your FamilyBoost payment
Compliant invoices (or statements)
ECE services may issue either a tax invoice or a statement, but the document must meet Inland Revenue’s requirements. It must clearly show the subtotal amount of fees charged to the parent, which is the figure used to claim FamilyBoost.
Inland Revenue may carry out random integrity checks to ensure invoices are compliant and not falsified.
Rules for Early Childhood Services
FamilyBoost must not be misused by services to pressure parents or improve fee collection. For example, the Early Childhood Council (ECC) business lobby group has promoted enrolment agreements to its members requiring parents to pay invoices before submitting them to Inland Revenue. The legality of this practice is highly questionable.
ECE services should follow good financial management practices—tracking debtors and following up late payments—without using FamilyBoost as leverage.
The three main rules are:
- Parents may submit invoices to Inland Revenue before paying them. Services cannot legally prevent this or withhold invoices to improve fee collection.
- Services must provide families with a compliant invoice or statement showing fees payable for attended hours.
- Services cannot charge higher fees because of FamilyBoost.
Benefits of FamilyBoost
The government’s aim is to increase family incomes for those with children in ECE. Families who pay higher fees and use more than 20 hours of care per week are likely to benefit most.
Inland Revenue’s regulatory impact statement notes:
“Parents receive a payment to alleviate the cost of ECE relative to income in the short term.”
Long-term impacts are harder to measure due to limited fee data, as services are not required to publish or supply full fee information to the Ministry of Education. However, FamilyBoost provides Inland Revenue with valuable data on fees and family incomes, helping the government assess subsidy impacts and service behaviour around fee setting.
Dr Sarah Alexander, the Office of ECE’s chief advisor highlights another benefit:
“FamilyBoost might allow some people to use childcare when at the moment the numbers financially don’t stack up for them.”
Background
FamilyBoost is based on the donations tax credit model and is similar to the childcare tax rebate scheme that National promised to extend should it win the 2005 general election prior to Labour’s introduction of 20-Hours Free ECE. Under that earlier scheme, refunds were annual, claimed alongside tax returns.
Dr Sarah Alexander believes the quarterly payments under FamilyBoost will be more noticeable and useful for parents than the former annual rebate.
