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MD 10: Calculation of in-work tax credit
or “How to work out your in-work tax credit amount”
You could also call this:

“How to qualify for a parental tax credit for babies born before July 2018”

You can get a parental tax credit if you have a baby born before 1 July 2018. This credit is for the first 70 days after your baby is born. To get this credit, you need to meet certain rules:

You must qualify for family scheme entitlements. You and your partner can’t get any social assistance payments or have a main benefit on hold during the 70 days. You also can’t get parental leave payments during this time.

You can still get the credit if your baby sadly dies during the 70 days, as long as you meet the other rules.

If someone else who qualifies looks after your baby for some of the 70 days, your credit will be reduced for that time.

If you have twins or adopt more than one child within four weeks, special rules apply.

You can get the credit in two ways:

  1. As a lump sum in your tax assessment for the year your baby is born.
  2. In payments over 70 days, if you apply for it and don’t get any social assistance or have a main benefit on hold during that time.

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Next up: MD 12: Calculation of parental tax credit

or “How your parental tax credit is calculated”
Next

Part M Tax credits paid in cash
Abating WFF tax credits

MD 11Entitlement to parental tax credit

  1. This section applies when—

  2. a person qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) in relation to a dependent child; and
    1. the dependent child is born before 1 July 2018, and, if the expected due date for the dependent child is on or after 1 July 2018, the person has elected in writing to apply this section; and
      1. a person or their spouse, civil union partner, or de facto partner does not receive or have, for 1 or more days during the first 70 days after the date of the dependent child’s birth (the parental entitlement period), a social assistance payment or a suspended entitlement to a main benefit; and
        1. a person or their spouse, civil union partner, or de facto partner does not receive, at any time in the parental entitlement period, a parental leave payment under Part 7A of the Parental Leave and Employment Protection Act 1987.

          1. The person is entitled to a parental tax credit for the parental entitlement period.

          2. The person continues to be entitled to the parental tax credit if—

          3. the dependent child dies during the parental entitlement period; and
            1. the person and their spouse, civil union partner, or de facto partner otherwise meet the requirements of subsection (1).

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

              2. Section 2B of the Parental Leave and Employment Protection Act 1987 applies for the purposes of subsection (1)(b) if a person—

              3. gives birth to 2 or more children as a result of 1 pregnancy; or
                1. becomes the primary carer (as defined in the Parental Leave and Employment Protection Act 1987) in respect of 2 or more children within a 4-week period.

                  1. The parental tax credit is paid to the person either—

                  2. in a lump sum payment, as a tax credit in an end-of-year assessment for the tax year of the birth; or
                    1. in instalment payments, in the 70 days after the date on which an application is made if—
                      1. the person applies to receive the parental tax credit by instalment under section MF 1 (Application for payment of tax credit by instalment); and
                        1. at any time during the period of 70 days, the person and their spouse, civil union partner, or de facto partner do not receive a social assistance payment and do not have a suspended entitlement to a main benefit.

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                        Notes
                        • Section MD 11(1)(ab): inserted, on , by section 17 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
                        • Section MD 11(1)(b): replaced (with effect on 1 April 2015), on , by section 236 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                        • Section MD 11(1)(b): replaced (with effect on 1 April 2008), on , by section 235 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                        • Section MD 11(1)(b): amended, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section MD 11(1)(c): replaced (with effect on 1 April 2016), on , by section 237 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                        • Section MD 11(1)(c): inserted (with effect on 1 April 2008), on , by section 235 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                        • Section MD 11(5)(b): replaced, on , by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
                        • Section MD 11(6)(a): replaced, on , by section 170(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                        • Section MD 11(6)(b): amended, on , by section 170(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                        • Section MD 11(6)(b): amended, on (applying for dependent children born on or after that date), by section 6(2) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
                        • Section MD 11(6)(b)(ii): amended, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section MD 11(6)(b)(ii): amended, on (applying for dependent children born on or after that date), by section 6(3) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
                        • Section MD 11 list of defined terms apply: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                        • Section MD 11 list of defined terms income-tested benefit: repealed, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section MD 11 list of defined terms main benefit: inserted, on , by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section MD 11 list of defined terms tax year: inserted, on , by section 170(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).