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Income Tax Act 2007

Tax credits paid in cash - Abating WFF tax credits

MD 10: Calculation of in-work tax credit

You could also call this:

“How to work out your in-work tax credit amount”

If you meet the requirements in section MD 4, you can get an in-work tax credit. To work out how much you can get, you need to use a special formula.

The formula looks at how many children you have and how many weeks you’ve been working. It starts with a base amount of $5,070. If you have more than three children, you get an extra $780 for each child over three.

You then multiply this by the number of weeks you’ve been working, and divide it by 52 (the number of weeks in a year).

When counting the weeks you’ve been working, it includes weeks where you or your partner had income from work activities. It also includes some other situations, like if you’re getting certain types of earnings.

The government can change the amounts used in this formula by making an official order.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518534.

Topics:
Money and consumer rights > Taxes
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Part M Tax credits paid in cash
Abating WFF tax credits

MD 10Calculation of in-work tax credit

  1. A person who meets the requirements of section MD 4 is entitled to an in-work tax credit calculated using the formula in subsection (2).

  2. The formula is—

    (amount A + amount B × (children − 3)) × weekly periods ÷ 52.

    Where:

    • In the formula,—

    • amount A is $5,070:
      1. amount B is $780:
        1. children is the greater of—
          1. 3; and
            1. the number of children for whom the person is allowed the in-work tax credit:
            2. weekly periods—
              1. for 2 or more entitlement periods forming 1 continuous period, is the number of whole periods of 1 week in the continuous period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is an earner described in section MD 9(1)(b), and includes whole periods of 1 week to which the alternative requirement in section MD 9(6) applies:
                1. for an entitlement period to which subparagraph (i) does not apply, is the number of whole periods of 1 week in the entitlement period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is an earner described in section MD 9(1)(b), and includes whole periods of 1 week to which the alternative requirement in section MD 9(6) applies.

                2. In subsection (3)(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).

                Compare
                Notes
                • Section MD 10 heading: amended, on , by section 475(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section MD 10(1): amended, on , by section 475(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section MD 10(3)(a): amended, on , by section 27 of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                • Section MD 10(3)(c)(ii): amended, on , by section 475(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section MD 10(3)(d)(i): amended, on , by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
                • Section MD 10(3)(d)(i): amended, on , by section 20(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
                • Section MD 10(3)(d)(i): amended (with effect on 1 April 2011), on , by section 127(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section MD 10(3)(d)(ii): amended, on , by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
                • Section MD 10(3)(d)(ii): amended, on , by section 20(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
                • Section MD 10(3)(d)(ii): amended (with effect on 1 April 2008), on , by section 127(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section MD 10(3)(d)(ii): amended (with effect on 1 April 2011), on , by section 127(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section MD 10(3)(d)(ii): amended (with effect on 1 April 2008), on , by section 361(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section MD 10 list of defined terms earner: inserted, on , by section 20(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
                • Section MD 10 list of defined terms in-work payment: repealed, on , by section 475(4)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                • Section MD 10 list of defined terms in-work tax credit: inserted, on , by section 475(4)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).