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Income Tax Act 2007

Tax credits paid in cash - Abating WFF tax credits

MD 3: Calculation of family tax credit

You could also call this:

“How much family tax credit you can get based on your children and care time”

If you qualify for entitlements under the family scheme, you can get a family tax credit. The amount you get is based on a formula.

The formula takes into account how many dependent children you care for and how long you care for them. For the oldest child you care for, you can get $7,524. For each other child, you can get $6,130. These amounts are for a full year.

The formula also considers how many days in the year you’re entitled to the credit. If you only care for a child part-time, the amount you get will be less.

The Governor-General can change these amounts by making an Order in Council.

If another person who qualifies for the scheme also cares for your child, your family tax credit will be reduced based on how much time the child spends with that person.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518515.

Topics:
Money and consumer rights > Taxes
Family and relationships > Children and parenting
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MD 4: Entitlement to in-work tax credit, or

“Who can receive an in-work tax credit for a child and how”

Part M Tax credits paid in cash
Abating WFF tax credits

MD 3Calculation of family tax credit

  1. A person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) is entitled to an amount of family tax credit calculated using the formula in subsection (2).

  2. The formula is—

    prescribed amount × days ÷ 365.

    Where:

    • The items in the formula are defined in subsections (4) and (5).

    • Prescribed amount is the sum of the following amounts:

    • for the eldest dependent child for whom the person is a principal caregiver during the entitlement period, $7,524; and
      1. for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, $6,130.

        1. Days is the number of days in the entitlement period.

        2. In subsection (4)(a) and (b), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).

        3. A family tax credit must be reduced in proportion to the time in the entitlement period that a dependent child spends in the exclusive care of another person who qualifies under section MC 2.

        Compare
        Notes
        • Section MD 3 heading: amended, on , by section 468(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section MD 3(1): amended, on , by section 468(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section MD 3(4)(a): replaced (with effect on 1 July 2018), on , by section 234(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
        • Section MD 3(4)(a): amended, on , by clause 4(1) (and see clause 4(3) for application) of the Income Tax (Tax Credit) Order 2023 (SL 2023/288).
        • Section MD 3(4)(b): replaced (with effect on 1 July 2018), on , by section 234(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
        • Section MD 3(4)(b): amended, on , by clause 4(2) (and see clause 4(3) for application) of the Income Tax (Tax Credit) Order 2023 (SL 2023/288).
        • Section MD 3(6): amended (with effect on 1 July 2018), on , by section 234(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
        • Section MD 3(7): amended, on , by section 468(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section MC 3 list of defined terms family support: repealed, on , by section 468(5)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section MC 3 list of defined terms family tax credit: inserted, on , by section 468(5)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).