Estimates of take-up of the Best Start tax credit

Estimates of take-up of the Best Start tax credit
01 Dec 2022
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Purpose

The purpose of this study is to estimate eligibility and take-up rates for the Best Start tax credit payment. This was a new Working for Families (WFF) tax credit introduced in July 2018 as part of the Families Package.Children born or due to be born from 1 July 2018 could qualify for the payment.

The study addresses the following questions:

  • What proportion of families are eligible to receive Best Start?
  • What proportion of families who are eligible for Best Start actually receive it?
  • How do eligibility and take-up rates differ for families with different characteristics?

Methodology

Steps and data sources

Our estimation approach is based on linked administrative data held in the Stats NZ Integrated Data Infrastructure (IDI) (Milne et al., 2019) and proceeds as follows.

  1. We take the population of babies born in NZ between 1 July 2018 and 30 September 2019 from birth registration data in the IDI. The unit of analysis is the child. Each birth is considered as the basis for a separate potentially eligible family. The same parent may be identified in multiple births during the study period.
  2. We identify all potential parents or caregivers of the child. This includes any person recorded as a parent in the birth certificate, the birth mother identified from maternity data, a parent identified in the Inland Revenue (IR) tax credit data, and any caregiver identified in benefit data. In some cases, only one parent is identified via the birth certificate. In other cases, several parents and caregivers may be identified in different data sources. This could result from adoptions, whāngai arrangements, surrogacy, or changes in parental relationship status. It could also occur where parental records are incorrectly matched between different IDI data sources.
  3. We exclude children who do not match to the IDI spine. We also exclude children who died within the first three months of life, or who were overseas for more than three months of their first year of life.
  4. To be eligible for Best Start a caregiver must be a NZ resident and have been in NZ continuously for at least 12 months at any time while a NZ resident, or the child being claimed for must be a NZ resident and present in NZ. We apply rules that proxy these requirements using a combination of birth registration data, Census data, visa approvals data from the Ministry of Business, Innovation and Employment (MBIE), and data from the NZ Customs Service.

We estimate a family to be eligible if:

  • the child or at least one of the child’s parents is observed to have been in NZ for 12 months at some time or where there is no evidence of travel to or from NZ, and
  • at least one parent was either:
    • recorded as having travelled on an NZ or Australian passport, or
    • recorded as having been granted an NZ residence visa, or
    • born in NZ, Australia, Cook Islands, Niue or Tokelau according to Census or NZ birth records

5. If any parent is observed to have received a WFF tax credit (including Best Start) during a tax year, then they are also assumed to have been eligible for Best Start. This is on the basis that IR and MSD have better information available to them to assess entitlements than we have with the data available in the IDI.

6.  A family is treated as having taken up the Best Start payment in respect of the child if any parent or caregiver identified in Step 2 is recorded as having received a Best Start payment for that child in the MSD benefit data or is recorded as having received a Best Start payment for any child in the IR tax credit data in the tax years ending March 2019, 2020, or 2021.


Key measures

Two key measures are then estimated for the cohort of births as follows:

Eligibility rate: Number with families estimated to be eligible for Best Start x 100
Number of births registered in NZ

Take-up rate: Number with families estimated to have received Best Start x 100
Number with families estimated to be eligible for Best Start


Those estimated to be eligible are those who, based on the calculations and assumptions set out above, have a family that appears to meet residence requirements. We do not present confidence intervals for the estimated eligibility and take-up rates as our estimates are based on full enumerations of the population of registered births and Best Start payment recipients in NZ and are not subject to sampling error. We have no way of quantifying other potential sources of error in our estimation, however the estimated rates are subject to certain limitations as discussed below in the ‘Strengths and limitations’ section below.

    Key Results

    • an estimated 96.5 percent of these children had a family that was eligible for Best Start
    • families of approximately 2,600 children born during the study period were estimated to be ineligible on residence grounds – this represents 3.5 percent of an estimated 72,800 children who were born during the period and who stayed in the country for most of their first year of life
    • Best Start was taken up for an estimated 96.9 percent of the children in eligible families
    • the estimated take-up rate was 99 percent for children in eligible families who were supported by a main benefit, 97 percent for children in eligible families who received paid parental leave (and no benefit), and 94 percent for children in other eligible families
    • there was only a small difference in estimated take-up rates across different deprivation areas (NZDep quintiles), ranging from 96 percent to 97 percent
    • take-up was slightly lower than average for children with a parent or caregiver who had migrated from China or had refugee status, and for children of Middle Eastern, Latin American or African (MELAA) ethnicity.
    Page last modified: 11 Oct 2023