Working for Families and Unsupported Child's Benefit: What You Can and Cannot Claim

Why the Two Do Not Stack

When a child receives Unsupported Child's Benefit or Orphan's Benefit, they are excluded from the definition of a "dependent child" for certain Working for Families (WFF) tax credits under the Income Tax Act 2007 and SSA 2018. The logic is that the child's financial maintenance is already covered by the benefit — so the tax credit system does not double up.

This catches many caregivers by surprise, especially those who expected to claim both.

Which Credits You Lose

For the specific child receiving UCB or OB, you cannot claim:

• Family Tax Credit (FTC) — the main per-child payment in the Working for Families package
• Best Start Tax Credit — the payment for children under three

These exclusions apply only to the child on UCB or OB. They do not affect your entitlement for other children in your household.

Which Credits You Keep

If you have paid work income and meet the eligibility requirements, you can still claim the In-Work Tax Credit (IWTC) for the child on UCB or OB. There is no minimum-hours test. The IWTC is designed to supplement working households, and it is not excluded by the same provision that blocks the FTC and Best Start.

What About Your Other Children

If you are raising other biological or adopted children alongside the child on UCB or OB, those other children remain fully eligible for all standard Working for Families credits — FTC, Best Start, and IWTC. The exclusion applies only to the child whose care is funded through UCB or OB, not to your entire household.

This is an important distinction. A grandmother raising her own youngest child alongside a grandchild on UCB can still claim FTC for her own child while receiving UCB for the grandchild.

The Sole Parent Support Overlap

In limited situations, a sole parent beneficiary who also cares for a child on UCB may want to evaluate whether including the child under Sole Parent Support (and claiming full WFF credits) would produce a higher combined household income than receiving UCB separately. This is a specific scenario that depends on the caregiver's personal income, the number of children, and the child's age bracket.

Work and Income case managers can run the comparison for you. It is worth asking the question if you are already on Sole Parent Support and have taken on a relative's child — the answer is not always obvious.

Making Sense of the Interactions

The interplay between UCB, Working for Families, NZ Superannuation, Accommodation Supplement, and Temporary Additional Support is one of the most confusing parts of the kinship care benefit system. The Unsupported Child's Benefit and Orphan's Benefit guide includes a chapter on benefit interactions that lays out exactly which payments affect which, so you can see the full picture for your household.

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