Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Tax credits paid in cash - Adjustment of net income for family scheme

MB 2: Adjustment for period that is less or more than 1 year

You could also call this:

“Adjusting your family income for periods shorter or longer than a year”

If your income is calculated for a period that’s not exactly one year, you need to adjust your family scheme income. This is done using a special calculation.

Here’s how you do it:

You take your family scheme income and multiply it by 365. Then you divide the result by the number of days in the period for which your income was calculated. This gives you your adjusted family scheme income.

Your family scheme income is the amount you get when you calculate your income using specific parts of the tax law called subparts MB to MG and MZ.

The ‘days’ in the calculation means the total number of days in the period you earned your income.

This adjustment helps make sure your family scheme income is fair, whether your income period was shorter or longer than a year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518457.

Topics:
Money and consumer rights > Taxes
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MB 1: Adjustments for calculation of family scheme income, or

“How to adjust your income when calculating family tax credits”

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MB 3: When person carries on 1 or more businesses or investment activities, or

“How your business and investment activities are treated for family scheme income”

Part M Tax credits paid in cash
Adjustment of net income for family scheme

MB 2Adjustment for period that is less or more than 1 year

  1. If a person’s income is calculated for a period that is less or more than a year, their family scheme income must be adjusted by an amount calculated using the formula—

    person's family scheme income × 365 ÷ days.

    Where:

    • In the formula,—

    • person’s family scheme income is the person’s income calculated under subparts MB to MG and MZ:
      1. days is the total number of days in the period for which the income has been derived.

        Compare
        Notes
        • Section MB 2(2)(a): amended, on , by section 11 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).