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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 to work out your family tax credit"

Illustration for Income Tax Act 2007

You qualify for a family tax credit if you meet the rules in section MC 2. The amount of family tax credit you get is calculated using a formula. The formula is the prescribed amount times the number of days, divided by 365. You get a prescribed amount for each dependent child. The prescribed amount for the eldest child is $7,121. For each other child, it is $5,802. The number of days is the number of days in the entitlement period. If a child spends time with another person who qualifies, your family tax credit is reduced. The reduction is based on the time the child spends with the other 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.

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Part MTax 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, $7,121; and
      1. for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, $5,802.

        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 2022 (SL 2022/296).
        • 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 2022 (SL 2022/296).
        • 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).