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MD 12: Calculation of parental tax credit
or “How your parental tax credit is calculated”
You could also call this:

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

You can get extra money for your parental tax credit if your baby is born close to the end of the tax year. This happens when you’re entitled to a parental tax credit, it’s paid as a lump sum in the year your baby is born, and your baby is born less than 70 days before the tax year ends.

To work out how much extra money you get, you need to do a special calculation. First, you figure out how much parental tax credit you’d get for one day. Then, you multiply this by the number of days that are both in your parental entitlement period and in the tax year after your baby is born.

The day you use to calculate your daily amount depends on when your entitlement periods fall. If you have an entitlement period in the birth year, you use the last day of that period. If not, you use the first day of your first entitlement period in the next tax year.

This extra money is added to your parental tax credit to make sure you don’t miss out just because your baby was born near the end of the tax year.

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Next up: MD 13: Calculation of family credit abatement

or “How to reduce your tax credits if you earn over $42,700”
Next

Part M Tax credits paid in cash
Abating WFF tax credits

MD 12BAdditional parental tax credit amount included in lump sum if 70-day period crosses 2 tax years

  1. This section applies when—

  2. a person is entitled under section MD 11 to a parental tax credit for a parental entitlement period; and
    1. the credit is paid in a lump sum for the tax year of the birth; and
      1. the birth occurs less than 70 days before the end of the tax year; and
        1. a day in an entitlement period is in the parental entitlement period.

          1. An additional amount of parental tax credit is calculated for the tax year of the birth using the formula—

            daily parental tax credit amount × extra entitlement days.

            Where:

            • In the formula in subsection (2),—

            • daily parental tax credit amount is the amount of parental tax credit that the person would be entitled to for an entitlement period consisting of—
              1. the last day of the last entitlement period in the part of the parental entitlement period in the tax year of the birth, if there is an entitlement period in that part of the parental entitlement period; or
                1. the first day of the first entitlement period in the part of the parental entitlement period in the tax year after the tax year of the birth, if subparagraph (i) does not apply:
                2. extra entitlement days is the number of days, each of which is—
                  1. in the parental entitlement period; and
                    1. in an entitlement period in the tax year following the tax year of the birth.

                    Notes
                    • Section MD 12B: inserted (with effect on 1 April 2008), on , by section 172(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                    • Section MD 12B heading: amended (with effect on 1 April 2015 and applying for dependent children born on or after that date), on , by section 172(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                    • Section MD 12B(1)(c): amended (with effect on 1 April 2015 and applying for dependent children born on or after that date), on , by section 172(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).