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Income Tax Act 2007

Tax credits paid in cash - Abating WFF tax credits

MD 12: Calculation of parental tax credit

You could also call this:

“How your parental tax credit is calculated”

You can get a parental tax credit if you meet certain requirements during an entitlement period. The amount you get depends on when your child was born and how long you’re eligible.

To work out your parental tax credit, you use a special formula. The formula is: prescribed amount × days ÷ 70.

The ‘prescribed amount’ is different depending on when your child was born:

  • For children born between 1 October 1999 and 31 March 2015, it’s $1,200.
  • For children born on or after 1 April 2015, it’s $2,200.

‘Days’ means the number of days in the entitlement period that are part of your parental entitlement period and when you meet the requirements in section MD 11.

If your 70-day parental entitlement period goes across two tax years, and you get paid the parental tax credit as one lump sum in the tax year your child is born, there are special rules. In this case, you might get an extra amount of parental tax credit for the next tax year. This extra amount is worked out using section MD 12B.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518546.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
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MD 11: Entitlement to parental tax credit, or

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

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MD 12B: Additional parental tax credit amount included in lump sum if 70-day period crosses 2 tax years, or

“Extra money for parental tax credit when baby is born near tax year end”

Part M Tax credits paid in cash
Abating WFF tax credits

MD 12Calculation of parental tax credit

  1. A person who meets the requirements of section MD 11 in an entitlement period is entitled to a parental tax credit calculated using the formula in subsection (2).

  2. The formula is—

    prescribed amount × days ÷ 70.

    Where:

    • In the formula,—

    • prescribed amount is—
      1. $1,200 for each dependent child born on or after 1 October 1999 and before 1 April 2015; or
        1. $2,200 for each dependent child born on or after 1 April 2015:
        2. days is the number of days in the entitlement period—
          1. that are in the parental entitlement period; and
            1. for which the person meets the requirements of section MD 11.

            2. Repealed

            3. If the 70-day parental entitlement period crosses 2 tax years, and the person is paid the parental tax credit as a lump sum for the tax year of the birth, then—

            4. an additional amount of parental tax credit for the tax year of the birth is calculated under section MD 12B, based on the number of days that are—
              1. in the parental entitlement period; and
                1. in an entitlement period in the tax year following the tax year of the birth; and
                2. the formula in subsection (2) should not be used to calculate an amount of parental tax credit for the days described in paragraph (a), except for the purposes of determining the amount of parental tax credit for the single day described in section MD 12B(3)(a)(ii).

                  Compare
                  Notes
                  • Section MD 12(1): amended (with effect on 1 April 2008), on , by section 171(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12(2) formula: amended, on (applying for dependent children born on or after that date), by section 7(1) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
                  • Section MD 12(3)(a): replaced, on (applying for dependent children born on or after that date), by section 7(2) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
                  • Section MD 12(3)(b): replaced (with effect on 1 April 2008), on , by section 171(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12(4) heading: repealed, on , pursuant to section 122 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                  • Section MD 12(4): repealed, on , by section 122 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                  • Section MD 12(5) heading: inserted (with effect on 1 April 2008), on , by section 171(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12(5) heading: amended (with effect on 1 April 2015 and applying for dependent children born on or after that date), on , by section 171(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12(5): inserted (with effect on 1 April 2008), on , by section 171(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12(5): amended (with effect on 1 April 2015 and applying for dependent children born on or after that date), on , by section 171(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12 list of defined terms civil union partner: repealed, on , by section 116(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section MD 12 list of defined terms de facto partner: repealed, on , by section 116(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section MD 12 list of defined terms entitlement period: inserted (with effect on 1 April 2008), on , by section 171(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section MD 12 list of defined terms income-tested benefit: repealed, on , by section 116(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section MD 12 list of defined terms social assistance payment: repealed, on , by section 116(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section MD 12 list of defined terms spouse: repealed, on , by section 116(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                  • Section MD 12 list of defined terms tax year: inserted (with effect on 1 April 2008), on , by section 171(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).