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Income Tax Act 2007

Tax credits paid in cash - Best Start tax credit

MG 3: Best Start credit abatement

You could also call this:

“How the Best Start tax credit may be reduced based on family income”

You can get a Best Start credit, which is a type of tax credit. The amount you get might be reduced based on how much money you and your family earn. This reduction is called abatement.

To work out how much your Best Start credit might be reduced, you use a special calculation. This calculation looks at your family’s income and how many days you’re eligible for the credit.

If you don’t have a partner and your family income is more than $79,000, your credit will be reduced by 21 cents for every dollar over $79,000. If you have a partner, the same rule applies, but it’s based on your combined family income.

The calculation also considers how many days your child is eligible for the credit. It doesn’t count days when your child is less than 1 year old, or months when you get a protected Best Start tax credit (you can find more about this in section MG 4).

The Governor-General can change the income limit of $79,000 by making an official order. You can find out more about this in section MF 7.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS63788.

Topics:
Money and consumer rights > Taxes
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MG 2: Best Start tax credit, or

“Financial support for families with young children”

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MG 4: Person receiving protected Best Start tax credit, or

“Who can get a protected Best Start tax credit”

Part M Tax credits paid in cash
Best Start tax credit

MG 3Best Start credit abatement

  1. For the purposes of section MG 1(3)(b) the person’s Best Start credit abatement for the entitlement period is calculated using the formula—

    full-year abatement × days ÷ 365.

    Where:

    • In the formula,—

    • full-year abatement is,—
      1. if the person has no spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income for the relationship period containing the entitlement period is more than $79,000, 21 cents for each complete dollar of the excess; or
        1. if the person has a spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for the relationship period containing the entitlement period is more than $79,000, 21 cents for each complete dollar of the excess:
        2. days is the number of days in the entitlement period excluding—
          1. the days on which the dependent child is less than 1 year old:
            1. the days of any calendar months in which the person receives protected Best Start tax credit as described in section MG 4.

            2. The amounts in subsection (2)(a) may be changed as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).

            Notes
            • Section MG 3: inserted, on , by section 22 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
            • Section MG 3 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).