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New Zealand law explained for everyone

Income Tax Act 2007

Tax credits paid in cash - Minimum family tax credit

ME 3: Meaning of net family scheme income

You could also call this:

“How to calculate your family's income for tax credits”

Net family scheme income is a calculation used to figure out how much money your family has for tax purposes. It’s based on a specific time period in your relationship.

To work out your net family scheme income, you use this formula:

adjusted income - adjusted liability + amount received - amount paid

Here’s what each part means:

Adjusted income is the money you earn during the weeks you work full-time in a tax year. It’s adjusted to show what you’d earn in a full year.

Adjusted liability is the income tax you’d pay on your adjusted income.

Amount received is extra money you get that’s counted as income for this calculation.

Amount paid is money you can take off your income for this calculation.

This calculation helps determine if you’re eligible for certain tax credits.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1686886.

Topics:
Money and consumer rights > Taxes
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Part M Tax credits paid in cash
Minimum family tax credit

ME 3Meaning of net family scheme income

  1. This section applies for the purposes of this subpart.

  2. Net family scheme income, for a person and a relationship period, means the amount calculated using the formula—

    adjusted income − adjusted liability + amount received − amount paid.

    Where:

    • In the formula,—

    • adjusted income is—
      1. the amount of the person's family scheme income for the tax year in which the relationship period falls that is attributable to the number of weeks in which the person is a full-time earner, adjusted to an annualised amount that is found by multiplying the amount by the fraction that is 52 divided by the number of weeks in the relationship period for which the person is a full-time earner; and
        1. calculated without reference to the amounts referred to in section MB 1(2) and (3):
          1. adjusted liability is the amount that would be the person's income tax liability—
            1. treating the amount of adjusted income under paragraph (a) as if it were the person's net income:
              2. amount received is the amount referred to in section MB 1(2) for the tax year:
                1. amount paid is the amount of the deduction referred to in section MB 1(3) for the tax year.

                  Compare
                  • 2004 No 35 s OB 1 net specified income
                  Notes
                  • Section ME 3: added, on , by section 482 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                  • Section ME 3(2) formula: substituted (with effect on 1 April 2008), on , by section 363(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                  • Section ME 3(3)(a)(i): substituted (with effect on 1 April 2008), on , by section 363(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                  • Section ME 3(3)(a)(i): amended (with effect on 1 April 2013 and applying for the 2013–14 and later tax years), on , by section 79(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                  • Section ME 3(3)(b): repealed (with effect on 1 April 2008), on , by section 363(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                  • Section ME 3(3)(c)(i): amended (with effect from 1 April 2008), on , by section 34(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                  • Section ME 3(3)(c)(ii): repealed (with effect from 1 April 2008), on , by section 34(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
                  • Section ME 3 list of defined terms family scheme income: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later tax years), on , by section 79(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).