Last month, fulfilling an election promise, the Government announced a new credit called FamilyBoost for families paying for early childhood education (ECE).  

FamilyBoost replaces the proposed extension to the 20 free ECE hours for under two-year olds announced by the former Government in Budget 2023.  The new Government favoured the credit approach to extending free ECE hours for two main reasons.  Firstly, the feedback from the ECE sector after Budget 2023 was that the extension of free hours to under-twos was basically unfeasible because the younger children are legally required to have a 1:4 teacher to child ratio (compared to 1:8 for over-twos).  Therefore, an influx of under-two children would have required many new teachers at a time when there is already a shortage.  Secondly, the extension of free ECE hours was not specifically targeted towards low to middle income earners, and therefore, was arguably of greater benefit to higher income households.

Full details of FamilyBoost, including full details on how to apply, will be provided on Budget Day (30 May 2024).  But the following details have already been announced:

  • The FamilyBoost scheme will be administered by Inland Revenue.  Families will register for the scheme through Inland Revenue’s “myIR” online platform.  Registration will open in September 2024.
  • Credits will be paid in quarterly lump sums reflecting the invoices uploaded by parents and caregivers through myIR for the prior 3 months.
  • The scheme starts for ECE payments from 1 July, but the first credits will be paid to families in October for the ECE costs for the three months ending 30 September.
  • The credit is for 25% of ECE costs but is capped at $75 per week per household.
  • The FamilyBoost credits do not replace the existing 20-hours free or MSD Childcare Subsidies.  However, because the credit is based on out-of-pocket costs, the credit is based on amounts actually paid by a family after any subsidies or free-hours.
  • The FamilyBoost scheme is available for families earning up to $180,000 but the credit will start abating for family income over $140,000.
  • Shared custody does not impact eligibility for FamilyBoost because the credit is based on costs paid by that household and income for a given household.  Therefore, both parents who share custody can make a claim for their out-of-pocket costs if their family income is less than the $180,000 threshold.
  • The income thresholds will be based on the most recent data IRD holds and payments are full and final (save for fraud-like behaviour presumably).  Thankfully, this avoids the messy scenario that exists with Working for Families credits where there is an estimation and then year-end wash-up.

If necessary, we will provide further details as part of our coverage of Budget 2024.