Income Splitting

Values Stay-Home Parents

This bill amends the Income Tax Act 2007 and the Tax Administration Act 1994 to provide an annual tax credit for couples who have responsibility for a dependent child.

Family First NZ SUPPORTS the Bill

Reasons:
* The Bill sends an important societal message that we value the choice of parents to raise their children full-time. For too long, the message has been that mums and dads should let the ‘professionals’ educate their young kids (day care) and parents should get out and get a real job
* As property and welfare (including Working for Families) is assessed on a family unit – assessment of tax should also be on this basis. It is a fairer system and acknowledges the interdependence of the family unit
* Income splitting will give parents more choice and potentially more ability to have a stay-home parent during the crucial early years of a child/children
* Some will argue that the scheme unfairly benefits the wealthy. But the scheme has a ceiling of $140,000 household income as both individuals would then be deemed to be on the top tax rate. It also should be acknowledged that interest free student loans and the 20 hours free childcare also can benefit wealthy families
* Income Splitting is also a Human Rights issue – the right of (predominantly) women and men who are full-time stay at home parents to be recognised as economic and productive units, contributing to the economy and welfare of the country. It recognises the contribution they make to society. Income splitting allows families to make important work-life balance decisions without being financially penalised to the extent that they are when assessed individually.
* We have created a system which contains perverse disincentives for parents to get or stay married. The presence of marriage penalties in our tax system means that some people are discouraged from entering into or remaining in a relationship in the nature of marriage because of the family income assistance system, thereby putting at risk the stability of the family and the welfare of children. Income splitting will go some way to address this anomaly and will promote marriage and stability in families.

A copy of the Bill is here http://www.legislation.govt.nz/bill/government/2010/0185/latest/DLM3123803.html?search=ts_bill_taxation_resel&p=1&sr=1

READ Family First’s Submission to the Select Committee

A great website for further resources and background http://www.parentsaspartners.co.nz/

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