Hon Anne Tolley

Minister for Social Development

Hon Michael Woodhouse

Minister of Revenue

10 November 2016
Tax laws clarified for foster carers

Changes to tax laws will clarify that payments to foster carers for the care of children and young people cannot be treated as income and are not subject to income tax, say Social Development Minister Anne Tolley and Revenue Minister Michael Woodhouse.

Foster carers receive a care allowance from the government to help meet the needs of a child or young person such as board, personal items, pocket money, and additional reasonable costs.

As part of the overhaul of care and protection, the new Ministry for Vulnerable Children, Oranga Tamariki, will provide intensive targeted support for caregivers including some increased financial assistance and better access to support services such as direct purchasing of trauma counselling when the child needs it.

The Social Development Minister will report back to Cabinet on the structure of this additional support, as well as the assistance for caregivers affected by the raising of the age of care to 21.

“Foster carers open their lives and homes to provide love and stability to vulnerable children and we must do more to give them the support and resources they need to meet the needs of children in their care,” says Mrs Tolley.

“We will be trying to attract a larger and more diverse pool of caregivers in the months and years ahead, and clarifying the tax law for their payments removes a potential barrier to them coming forward.”

Mr Woodhouse says that while the payment isn’t treated as income in practice at the moment, it is not set down in law.

“It’s important that our tax system is clear and easy to understand. Introducing legislation will ensure foster parents receive the support they need, while removing any confusion and potential for inconsistencies around tax,” says Mr Woodhouse.

Legislation clarifying tax laws for caregivers is scheduled to be introduced into Parliament by the end of the year as part of a wider Bill which includes the creation of an information sharing framework to keep children safe from harm and allows young people to remain in care or return to care up until the age of 21, with transition support and advice available up to 25.

The relevant Cabinet paper can be viewed at:

www.msd.govt.nz/about-msd-and-our-work/work-programmes/investing-in-children/new-childrens-agency-established.html

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