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Income Tax Act 2007
Income Tax Act 2007
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Income Tax Act 2007
Part M Tax credits paid in cash
Subpart MA—General provisions
Contents
MA 1 What this Part does
This Part identifies the tax credits to which a natural person is entitled—
(a)
under the family scheme for a tax year, see subparts MA to MG and MZ (which relate to working for families tax credits):
(b)
under the superannuation savings scheme for a year beginning on 1 July and ending on 30 June, see subpart MK (Tax credits for KiwiSaver schemes and complying superannuation funds):
(bb)
for R&D tax losses for an income year beginning on or after 1 April 2015, see subpart MX (Tax credits for R&D tax losses).
(c)
[Repealed]Section MA 1: substituted, on 1 April 2008, by section 453 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 1: amended, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section MA 1(a): amended, on 1 July 2018, by section 6 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 1(bb): inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 205(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MA 1(c): repealed, on 1 April 2013, by section 6 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
MA 2 Relationship with core provisions
Section BC 8 (Satisfaction of income tax liability) deals with how a tax credit arising under this Part is applied.
Defined in this Act: tax credit
MA 3 Excluded income
A tax credit that a person has under this Part is excluded income of the person.
Defined in this Act: excluded income, tax credit
Compare: 2004 No 35 s KD 8
MA 4 Calculation of amounts of credit producing negative amounts
If a calculation under this Part produces a result that is negative for the amount of a tax credit or the amount of a component of a credit, the amount of the credit or component is zero.
Defined in this Act: amount, tax credit
Compare: 2004 No 35 s KB 3
MA 5 Advice from outside agencies
In determining a person’s entitlement to a tax credit under subparts MB to MG and MZ, the Commissioner may obtain the advice of the chief executive or, as applicable, the General Manager of Veterans’ Affairs New Zealand appointed under section 200(1) of the Veterans’ Support Act 2014.
Defined in this Act: chief executive, Commissioner, tax credit
Compare: 2004 No 35 s KD 9
Section MA 5: amended, on 1 July 2018, by section 7 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 5: amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
MA 6 Avoidance arrangements
Section GB 44 (Arrangements involving tax credits for families) may apply to reduce a tax credit under subparts MB to MG and MZ.
Defined in this Act: tax credit
Section MA 6: amended, on 1 July 2018, by section 8 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 6: amended, on 1 April 2008, by section 454 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MA 7 Meaning of full-time earner and earner for family scheme
Weekly employment: full-time earner
(1)
In subparts MB to MG and MZ, a full-time earner means a person who, for a week,—
(a)
is employed for 20 hours or more and does not have a spouse, civil union partner, or de facto partner during the week; or
(b)
has a spouse, civil union partner, or de facto partner (the partner) during the week, and either the person or the partner or both of them in total are employed for 30 hours or more.
Weekly employment: earner
(1B)
In subparts MB to MG and MZ, an earner means a person who, for a week—
(a)
is employed during the week; or
(b)
has a spouse, civil union partner, or de facto partner (the partner) during the week and the partner or both of them are employed during the week.
Modifications to weekly employment
(2)
For the purposes of subsections (1) and (1B),—
(a)
a person who is employed in a pay period that is longer than 1 week is treated as undertaking the employment activities to a uniform daily extent for the period:
(b)
a person who is employed becomes incapacitated as described in subsection (3) and is unable to undertake employment in a week in which but for the incapacity they would be employed as provided by subsection (1B)(a) and (b) or would be employed for the number of hours set out in subsection (1)(a) and (b) is treated as having been employed or as having been employed for the hours referred to, as the case may be:
(bb)
a person who has a payment period under the Compensation for Live Organ Donors Act 2016 and is employed at the start of the period is treated as being employed during the period for the hours for which the person would have been employed during the period but for the organ donation:
(c)
a person is treated as employed in any week in relation to which the person receives parental leave payments or preterm baby payments under Part 7A of the Parental Leave and Employment Protection Act 1987 for the number of hours that the person would have worked in a week that the person normally worked in their last period of employment before that week:
(d)
a person who receives or will receive weekly compensation from the Accident Compensation Corporation, Veterans’ Affairs New Zealand, or both, as a surviving spouse or partner of a deceased claimant is treated as being employed, during the week to which that compensation relates, for the number of hours that the deceased claimant would have been employed for in a week before dying, but for their incapacity. The number of hours under this paragraph are in addition to the person’s own hours.
Incapacity
(3)
The incapacity referred to in subsection (2)(b) and (d) is an incapacity due to—
(a)
personal injury by accident for which an accident compensation earnings-related payment has been, is being, or will be paid:
(b)
a service-related (as defined in section 7 of the Veterans’ Support Act 2014) injury, illness, condition, or whole-person impairment for which a payment has been, is being, or will be paid, under the Veterans’ Support Act 2014, and the payment is—
(i)
weekly income compensation paid under Part 3, subpart 4 of that Act:
(ii)
weekly compensation paid under Part 4, subpart 5 of that Act:
Defined in this Act: accident compensation earnings-related payment, civil union partner, de facto partner, employment, pay, pay period, spouse
Compare: 2004 No 35 s OB 1 “full-time earner”
Section MA 7 heading: amended, on 1 July 2020, by section 17(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(1) heading: replaced, on 1 July 2020, by section 17(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(1): amended, on 1 July 2018, by section 9 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 7(1B) heading: inserted, on 1 July 2020, by section 17(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(1B): inserted, on 1 July 2020, by section 17(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(2): amended, on 1 July 2020, by section 17(4) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 349(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MA 7(2)(b): replaced, on 1 July 2020, by section 17(5) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MA 7(2)(bb): inserted, on 5 December 2017, by section 30 of the Compensation for Live Organ Donors Act 2016 (2016 No 96).
Section MA 7(2)(c): replaced, on 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section MA 7(2)(d): inserted (with effect on 1 April 2008), on 2 November 2012, by section 120(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MA 7(2)(d): amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section MA 7(3): replaced, on 31 March 2015, by section 13 of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section MA 7 list of defined terms employment: inserted (with effect on 1 April 2008), on 6 October 2009, by section 349(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
MA 8 Some definitions for family scheme
In subparts MB to MG and MZ,—
abating WFF tax credit means a tax credit under section MD 1 (Abating WFF tax credit)
Best Start credit abatement means the component of the Best Start tax credit that is calculated using the formula in section MG 3 (Best Start credit abatement)
Best Start tax credit means a tax credit under section MG 1 (Best Start tax credit entitlement)
chief executive means the chief executive of the department currently responsible for administering the Social Security Act 2018
child tax credit means the component of the WFF tax credit that is calculated using the formula in section MZ 2 (Calculation of child tax credit)
family assistance credit [Repealed]
family credit abatement means the component of the abating WFF tax credit that is calculated using the formula in section MD 13 (Calculation of family credit abatement)
family plus [Repealed]
family scheme [Repealed]
family scheme income means the amount, described in section MB 1 (Adjustments for calculation of family scheme income), based on a person’s net income and adjusted as provided by subpart MB (Adjustment of net income for family scheme), on which an entitlement and a tax credit under the family scheme is based
family support [Repealed]
family tax credit means the component of the abating WFF tax credit calculated using the formula in section MD 3 (Calculation of family tax credit)
in-work payment [Repealed]
in-work tax credit means the component of the abating WFF tax credit calculated using the formula in section MD 10 (Calculation of in-work tax credit)
minimum family tax credit means a tax credit under section ME 1 (Minimum family tax credit)
net family scheme income [Repealed]
New Zealand resident—
(a)
means ordinarily resident; and
(b)
does not include being unlawfully resident in New Zealand; and
(c)
does not include being lawfully resident in New Zealand only because of holding a temporary entry class visa
parental tax credit means the component of the abating WFF tax credit calculated using the formula in section MD 12
social assistance payment means—
(a)
a main benefit; or
(b)
a veteran’s pension; or
(c)
New Zealand superannuation; or
(d)
a basic grant or an independent circumstances grant, made under regulations made under section 645 of the Education and Training Act 2020, or a substituted provision; or
(e)
an accident compensation earnings-related payment, when the compensation relates to a day forming part of a continuous period of eligibility for the compensation and the day falls after the earlier of—
(i)
the day with the same date as the first day of the continuous period of eligibility for compensation and occurring in the third calendar month after that first day; and
(ii)
the last day of the third calendar month after the first day of the continuous period of eligibility for compensation
WFF tax credit means a tax credit under—
(a)
section MD 1 (Abating WFF tax credit):
(b)
section ME 1 (Minimum family tax credit):
(c)
section MG 1 (Best Start tax credit entitlement)
Defined in this Act: abating WFF tax credit, accident compensation earnings-related payment, amount, child tax credit, Commissioner, family tax credit, in-work payment, main benefit, minimum family tax credit, net income, New Zealand, New Zealand superannuation, parental tax credit, relationship period, resident in New Zealand, tax credit, tax year, veteran’s pension, WFF tax credit
Section MA 8: amended, on 1 July 2018, by section 10(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 8 abating WFF tax credit: inserted, on 1 April 2008, by section 455(1)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 Best Start credit abatement: inserted, on 1 July 2018, by section 10(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 8 Best Start tax credit: inserted, on 1 July 2018, by section 10(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 8 chief executive: amended, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section MA 8 child tax credit: amended, on 1 April 2008, by section 455(1)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 family assistance credit: repealed, on 1 April 2008, by section 455(1)(c) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 family credit abatement: amended, on 1 April 2008, by section 455(1)(d) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 family plus: repealed, on 1 April 2008, by section 455(1)(e) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 family scheme: repealed, on 1 July 2018, by section 10(3) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 8 family scheme income: amended, on 1 April 2014 (applying for the 2014–15 and later income years), by section 107(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MA 8 family support: repealed, on 1 April 2008, by section 455(1)(f) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 family tax credit: substituted, on 1 April 2008, by section 455(1)(g) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 in-work payment: repealed, on 1 April 2008, by section 455(1)(h) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 in-work tax credit: inserted, on 1 April 2008, by section 455(1)(h) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 minimum family tax credit: inserted, on 1 April 2008, by section 455(1)(i) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 net family scheme income: repealed, on 1 April 2008, by section 455(1)(j) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 New Zealand resident: substituted, on 29 November 2010, by section 406(1) of the Immigration Act 2009 (2009 No 51).
Section MA 8 parental tax credit: amended, on 1 April 2008, by section 455(1)(k) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 social assistance payment paragraph (a): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MA 8 social assistance payment paragraph (d): amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section MA 8 WFF tax credit: replaced, on 1 July 2018, by section 10(4) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MA 8 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 455(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 list of defined terms entitlement period: repealed, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MA 8 list of defined terms full-time earner: repealed (with effect on 1 April 2008), on 6 October 2009, by section 350 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MA 8 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MA 8 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MA 8 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 455(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 list of defined terms WFF tax credit: inserted, on 1 April 2008, by section 455(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MA 8 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 455(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Subpart MB—Adjustment of net income for family scheme
Contents
MB 1 Adjustments for calculation of family scheme income
Family scheme income: derivation
(1)
The calculation of an entitlement and tax credit under the family scheme is based on a person’s family scheme income. A person’s family scheme income is an amount based on their net income, and is adjusted as provided by this subpart. The following paragraphs apply in relation to assessable income derived by the person in a relationship period in an income year:
(a)
to the extent to which the income is derived from employment during all or part of the income year, it is treated as derived at a uniform daily rate during the period of the employment; and
(b)
to the extent to which the income is derived as a main benefit, it is treated as derived at a uniform daily rate during the period in the income year for which the benefit is paid to the person; and
(c)
despite section 38(1) of the Tax Administration Act 1994,—
(i)
to the extent to which the income is derived otherwise than under paragraph (a) or (b), it is treated as derived at a uniform daily rate during the income year; and
(ii)
any expenditure incurred in deriving the income referred to in subparagraph (i) that is allowed as a deduction is treated as incurred at a uniform daily rate during the income year.
Exempt income included
(2)
For the purposes of subsection (1), an amount derived by the person in the income year is not treated as exempt income if it is—
(a)
an amount referred to in section CW 28(2)(a) or CW 32 (which relate to overseas pensions and maintenance payments):
(b)
an amount of salary or wages that is exempt from income tax under an Act, or under a regulation or Order in Council made under an Act, that is listed in schedule 38 (Acts exempting income from tax: income included in family scheme income).
Deduction
(3)
For the purposes of subsection (1), the person is allowed a deduction for—
(a)
the amount of any payment, made by the person during the income year, of the kind referred to in section CW 32 (Maintenance payments); and
(b)
the amount of any payment made by the person during the income year under section 27K of the Social Security Act 1964, as saved by section 256 of the Child Support Act 1991.
Tax loss of qualifying company[Repealed]
(4)
[Repealed]Income from portfolio investment entities
(5)
For the purposes of subsection (1),—
(a)
an amount of income attributed by a portfolio investment entity to the person for an income year—
(i)
is not included in family scheme income of the person for the income year if the portfolio investment entity is a superannuation fund or retirement savings scheme:
(ii)
is included in family scheme income of the person for the income year if subparagraph (i) does not apply:
(b)
a distribution from a listed PIE that is derived by the person in an income year is included in family scheme income of the person for the income year.
Retirement scheme contributions
(5B)
For the purposes of subsection (1), an amount of retirement scheme contribution that is not excluded income of the person and would be their excluded income in the absence of section CX 50B(2) (Contributions to retirement savings schemes) is not included in family scheme income.
Amounts of depreciation loss on disposal of building
(5C)
For the purposes of subsection (1), in relation to a building from the disposal of which the person derives assessable income, an amount of depreciation loss allowed in the 2002–03 or earlier income year is not included in family scheme income. However, this subsection does not apply to an amount of depreciation loss of a business or investment activity that under section MB 3 is treated as having no net income for the purposes of calculating family scheme income.
Deposits in main income equalisation accounts
(5D)
For the purposes of subsection (1), the person’s family scheme income is increased by the amount of a main income equalisation deposit the person makes for the income year.
Refunds from main income equalisation accounts
(5E)
For the purposes of subsection (1), the person’s family scheme income does not include the amount of a main income equalisation refund the person receives for the income year.
All known income sources[Repealed]
(6)
[Repealed]Transitional adjustments
(7)
The amounts described in section MZ 2 (Calculation of child tax credit) are not included in the person’s family scheme income.
Defined in this Act: amount, assessable income, business, Commissioner, deduction, depreciation loss, excluded income, exempt income, family scheme, family scheme income, income, income from employment, income tax, income year, listed PIE, main benefit, main income equalisation account, main income equalisation deposit, main income equalisation refund, net income, pay, portfolio investment entity, qualifying company, relationship period, retirement savings scheme, retirement scheme contribution, salary or wages, shareholder, superannuation fund, tax credit, tax loss, tax year
Compare: 2004 No 35 s KD 1(1)(a), (b), (e)(vii), (i), (3)
Section MB 1(1) heading: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 108(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 1(1): amended, on 1 April 2014 (applying for the 2014–15 and later income years), by section 108(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 1(1)(b): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MB 1(2): substituted, on 1 April 2011, by section 111(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1(2)(a): amended, on 17 July 2013, by section 75 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 1(4) heading: repealed, on 17 July 2013, pursuant to section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 1(4): repealed, on 17 July 2013, by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 1(5) heading: substituted, on 1 April 2011, by section 111(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1(5): substituted, on 1 April 2011, by section 111(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1(5B) heading: inserted, on 1 April 2008, by section 456(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MB 1(5B): inserted, on 1 April 2008, by section 456(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MB 1(5C) heading: inserted (with effect on 1 April 2008), on 7 December 2009, by section 84(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section MB 1(5C) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(5C): inserted (with effect on 1 April 2008), on 7 December 2009, by section 84(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section MB 1(5C): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(5C): amended (with effect on 1 April 2011), on 30 June 2014, by section 135 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 1(5D) heading: replaced (with effect on 1 April 2011), on 24 February 2016, by section 206(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(5D): replaced (with effect on 1 April 2011), on 24 February 2016, by section 206(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(5E) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 206(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(5E): inserted (with effect on 1 April 2011), on 24 February 2016, by section 206(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1(6) heading: repealed, on 1 April 2011, pursuant to section 111(4) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1(6): repealed, on 1 April 2011, by section 111(4) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms business: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section MB 1 list of defined terms depreciation loss: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section MB 1 list of defined terms income statement: repealed, on 2 November 2012, by section 121 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MB 1 list of defined terms income tax: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MB 1 list of defined terms LAQC: repealed, on 17 July 2013, by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 1 list of defined terms listed PIE: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MB 1 list of defined terms main income equalisation account: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms main income equalisation deposit: inserted (with effect on 1 April 2011), on 24 February 2016, by section 206(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1 list of defined terms main income equalisation refund: inserted (with effect on 1 April 2011), on 24 February 2016, by section 206(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 1 list of defined terms portfolio investment entity: inserted, on 1 April 2010, by section 351(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MB 1 list of defined terms portfolio investor allocated income: repealed, on 1 April 2010, by section 351(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MB 1 list of defined terms retirement savings scheme: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms retirement scheme contribution: inserted, on 1 April 2008, by section 456(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MB 1 list of defined terms salary or wages: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 1 list of defined terms superannuation fund: inserted, on 1 April 2011, by section 111(5) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
MB 2 Adjustment for period that is less or more than 1 year
Calculation of adjustment
(1)
If a person’s income is calculated for a period that is less or more than a year, their family scheme income must be adjusted by an amount calculated using the formula—
person’s family scheme income × 365 ÷ days.
Definition of items in formula
(2)
In the formula,—
(a)
person’s family scheme income is the person’s income calculated under subparts MB to MG and MZ:
(b)
days is the total number of days in the period for which the income has been derived.
Defined in this Act: amount, family scheme income, income, year
Compare: 2004 No 35 s KD 1(4)–(6)
Section MB 2(2)(a): amended, on 1 July 2018, by section 11 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
MB 3 When person carries on 1 or more businesses or investment activities
When this section applies
(1)
This section applies when a person carries on 1 or more businesses in the income year, or has or carries on 1 or more investment activities in the income year (each separate business or investment activity, a single family scheme activity).
Ignore income and deductions for net loss activity
(2)
The income and deductions for a person’s family scheme activity for an income year are ignored when calculating the person’s family scheme income for the year if, treating the person as having only the income and deductions of that activity, the person would have a net loss for that year.
Modification of what counts as 1 family scheme activity
(3)
For the purposes of applying subsection (2), and despite subsection (1), 2 or more family scheme activities may be treated as a single family scheme activity, if the Commissioner considers that the 2 or more activities are of the kind that are normally carried on in association with each other.
Apportionment of deductions between family scheme activities
(4)
For the purposes of applying subsection (2) as modified by subsection (3), deductions that relate to an asset used in carrying on 2 or more family scheme activities must be appropriately apportioned between the activities on the basis of the use of that asset in those 2 or more activities.
Definition
(5)
In this section, investment activity includes passive holding of an investment asset, other than a variable principal debt instrument.
Defined in this Act: business, deduction, family scheme income, income, income year, investment activity, net loss, variable principal debt instrument
Section MB 3: substituted, on 1 April 2011 (applying for the 2011–12 and later income years), by section 93(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
MB 4 Family scheme income of major shareholders in close companies
When this section applies
(1)
This section applies for the purposes of determining the amount that is included in the family scheme income of a person for an income year when the person is a major shareholder in a close company (the company) on the last day of the company’s income year.
Income amount
(2)
The amount included in the person’s family scheme income is the greater of—
(a)
zero; and
(b)
the amount calculated using the formula in subsection (3), adjusted, if applicable, by subsections (7) and (8) for main income equalisation account amounts.
First formula: family scheme income
(3)
For the purposes of subsection (2), the relevant amount is calculated using the formula—
(person’s interest + attributed interest) × (income − dividends).
Definition of items in formula in subsection (3)
(4)
In the formula in subsection (3),—
(a)
person’s interest is the percentage voting interests for the company held, on the last day of the company’s income year, by the person:
(b)
attributed interest is the amount calculated using the formula in subsection (5):
(c)
income is the net income of the company for the company’s income year:
(d)
dividends is the total dividends paid by the company for the company’s income year.
Second formula: attributed interest
(5)
For the purposes of the item attributed interest in subsection (4)(b), the relevant amount is calculated using the formula—
dependent child interest ÷ relevant major shareholders.
Definition of items in formula in subsection (5)
(6)
In the formula in subsection (5),—
(a)
dependent child interest is the total percentage voting interests for the company held, on the last day of the company’s income year, by—
(i)
the person’s dependent children:
(ii)
dependent children of the person’s spouse, civil union partner, or de facto partner:
(b)
relevant major shareholders is the total number of the following people who are major shareholders of the company on the last day of the company’s income year:
(i)
the person:
(ii)
the person’s spouse, civil union partner, or de facto partner:
(iii)
principal caregivers of the dependent children described in paragraph (a)(i) and (ii), but ignoring principal caregivers already counted under subparagraphs (i) and (ii) of this paragraph.
Main income equalisation deposits
(7)
For the purposes of subsection (2)(b), if the company makes a main income equalisation deposit for the company’s income year, the amount of the deposit is added to the item income in the formula in subsection (3).
Main income equalisation refunds
(8)
For the purposes of subsection (2)(b), if the company receives a main income equalisation refund for the company’s income year, the amount of the refund is subtracted from the item income in the formula in subsection (3).
Defined in this Act: amount, civil union partner, close company, de facto partner, dependent child, dividend, family scheme income, income year, main income equalisation account, main income equalisation deposit, main income equalisation refund, major shareholder, net income, principal caregiver, share, spouse, voting interest
Section MB 4: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 109(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 4(2): replaced (with effect on 1 April 2011), on 24 February 2016, by section 207(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4(7) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4(7): inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4(8) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4(8): inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4 list of defined terms main income equalisation account: inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4 list of defined terms main income equalisation deposit: inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 4 list of defined terms main income equalisation refund: inserted (with effect on 1 April 2011), on 24 February 2016, by section 207(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
MB 5 Treatment of distributions from superannuation schemes
When this section applies
(1)
This section applies when—
(a)
a person receives a distribution from a superannuation scheme in an income year; and
(b)
an employer of the person has made contributions to the superannuation scheme in—
(i)
the income year in which the distribution was received; or
(ii)
the 2 income years immediately before that income year; and
(c)
the person continues to work for the employer for 1 month or more after the date of the distribution.
When this section does not apply
(2)
This section does not apply to a person who receives a distribution from a superannuation scheme—
(a)
as a result of and on or after the person’s retirement from employment with an employer who was a contributor to the scheme:
(b)
if the superannuation scheme is a KiwiSaver scheme or a complying superannuation fund.
Assessable income
(3)
For the purposes of calculating family scheme income, the distribution referred to in subsection (1) is assessable income of the person derived in the tax year or years that corresponds to the income year or years in which the contributions were made. The amount does not include an amount attributable to a contribution by the person as a member of the superannuation scheme.
Defined in this Act: assessable income, complying superannuation fund, corresponding income year, employer, employment, family scheme income, income year, KiwiSaver scheme, superannuation scheme, tax year
Compare: 2004 No 35 s KD 1(1)(h)
Section MB 5(2): replaced (with effect on 1 April 2008), on 2 November 2012, by section 122(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MB 5 list of defined terms complying superannuation fund: inserted (with effect on 1 April 2008), on 2 November 2012, by section 122(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MB 5 list of defined terms KiwiSaver scheme: inserted (with effect on 1 April 2008), on 2 November 2012, by section 122(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
MB 6 Treatment of distributions from retirement savings schemes
When this section applies
(1)
This section applies when—
(a)
a person receives a distribution of a retirement scheme contribution from a retirement savings scheme in an income year; and
(b)
RSCT has been withheld from the contribution; and
(c)
at the time of the distribution, the person is—
(i)
not eligible for New Zealand superannuation; and
(ii)
eligible for a distribution of a retirement scheme contribution from a retirement scheme contributor.
Assessable income
(2)
For the purposes of calculating family scheme income, the distribution is assessable income of the person derived in the income year in which the distribution is made.
Defined in this Act: assessable income, family scheme income, income year, New Zealand superannuation, retirement savings scheme, retirement scheme contribution, retirement scheme contributor, RSCT
Compare: 2004 No 35 s KD 1(1)(hb)
Section MB 6: added, on 1 April 2008, by section 457 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MB 7 Family scheme income of settlor of trust
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when the person is the settlor of a trust (the person’s trust) at a time in the income year, other than solely as a result of providing personal services for less than market value in the administration of the trust or the maintenance of trust property.
Exception for some trusts
(2)
This section does not apply if—
(a)
the trustee of the person’s trust is registered as a charitable entity under the Charities Act 2005:
(b)
the person’s trust is solely for the benefit of a local authority:
(c)
interest and dividends derived by the trustee of the person’s trust would be exempt income of the trustee under section CW 45 (Funeral trusts):
(d)
the person’s trust is a superannuation fund:
(e)
the person and the members of the person’s family are not permitted to benefit from the person’s trust except under an order of a court.
Income amount
(2B)
The amount included in the person’s family scheme income is the amount calculated using the formulas in subsections (3) and (5), adjusted, if applicable, by subsections (7) and (8) for main income equalisation account amounts.
First formula: family scheme income
(3)
For the purposes of subsection (2B), the relevant amount is calculated using the formula—
(trustee income + companies income) ÷ settlor number.
Definition of items in formula in subsection (3)
(4)
In the formula in subsection (3),—
(a)
trustee income is the net income of the trustee of the person’s trust for the income year reduced, to not less than zero, by the amount of the trustee’s income that vests or is paid by the trustee as beneficiary income for the income year:
(b)
companies income is the greater of zero and the amount given by totalling the amounts calculated by applying the formula in subsection (5) to each company in which the trustee of the person’s trust and associated persons hold, on the last day of the income year, voting interests of 50% or more:
(c)
settlor number is the number of settlors of the person’s trust who are alive at any time in the income year, including the person, for which this section applies.
Second formula: companies income
(5)
For the purposes of the item companies income in subsection (4)(b), an amount to be totalled is, for each relevant company, calculated using the formula—
trustee’s interest × (income − dividends).
Definition of items in formula in subsection (5)
(6)
In the formula in subsection (5),—
(a)
trustee’s interest is the percentage voting interests for the relevant company held, on the last day of the company’s income year, by the trustee:
(b)
income is the net income of the relevant company for the company’s income year:
(c)
dividends is the total dividends paid by the relevant company for the company’s income year.
Main income equalisation deposits
(7)
For the purposes of subsection (2B), if the trustee or a company described in subsection (4)(b) makes a main income equalisation deposit for an income year, the amount of the deposit is added to—
(a)
the item trustee income in the formula in subsection (3), if the trustee makes the deposit:
(b)
the item income in the formula in subsection (5), if the company makes the deposit.
Main income equalisation refunds
(8)
For the purposes of subsection (2B), if the trustee or a company described in subsection (4)(b) receives a main income equalisation refund for an income year, the amount of the refund is subtracted from—
(a)
the item trustee income in the formula in subsection (3), if the trustee receives the refund:
(b)
the item income in the formula in subsection (5), if the company receives the refund.
Defined in this Act: amount, beneficiary income, company, dividend, exempt income, family scheme income, income, income year, interest, local authority, main income equalisation account, main income equalisation deposit, main income equalisation refund, net income, settlor, superannuation fund, trustee, trustee income, voting interest
Section MB 7: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 7(2B) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(2B): inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(3) heading: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(3): replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(3): amended (with effect on 1 April 2011), on 24 February 2016, by section 208(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(4) heading: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(4): replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(5) heading: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(5): inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(6) heading: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(6): inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 110(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7(7) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(7): inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(8) heading: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7(8): inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7 list of defined terms main income equalisation account: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7 list of defined terms main income equalisation deposit: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7 list of defined terms main income equalisation refund: inserted (with effect on 1 April 2011), on 24 February 2016, by section 208(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 7 list of defined terms market value: repealed, on 1 April 2014, by section 110(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7 list of defined terms market value circumstance: repealed, on 1 April 2014, by section 110(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 7 list of defined terms market value interest: repealed, on 1 April 2014, by section 110(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
MB 7B Family scheme income from employment benefits: employees not controlling shareholders
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person to whom section MB 8 does not apply for an income year when the person has an employer who makes available—
(a)
a motor vehicle for the person’s private use when, under the terms of the person’s employment, the person would be entitled to a greater amount of employment income should the person choose, or have chosen, not to receive the benefit of the motor vehicle:
(b)
a short-term charge facility as defined in section CX 25(3) (Benefits provided by charitable organisations).
What is included in family scheme income
(2)
The person’s family scheme income for the income year includes an amount equal to the total for the person and the income year of amounts, each of which is—
(a)
the amount by which the employment income of the person would be greater in the absence of a benefit referred to in subsection (1)(a):
(b)
the value, including fringe benefit tax, of a benefit provided to the person under a short-term charge facility referred to in subsection (1)(b), if the total value of such benefits, not including fringe benefit tax, provided in the income year is more than the lesser for the income year of—
(i)
5% of the employee’s salary or wages:
(ii)
$1,200.
Calculating fringe benefit tax on benefit
(3)
In calculating under subsection (2)(b) the amount of fringe benefit tax on a benefit, the person may use—
(a)
the rate of fringe benefit tax used by the person’s employer in calculating the fringe benefit tax payable on the benefit:
(b)
the maximum basic rate of fringe benefit tax specified in schedule 1, part C, table 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Defined in this Act: amount, employee, employer, employment, employment income, family scheme income, fringe benefit, fringe benefit tax, income year, motor vehicle, private use, salary or wages, short-term charge facility
Section MB 7B: inserted, on 1 April 2014, by section 76 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 7B(2)(b): amended (with effect on 1 April 2014), on 30 June 2014, by section 136(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 7B(2)(b): amended (with effect on 1 April 2014), on 30 June 2014, by section 136(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 7B(3) heading: inserted (with effect on 1 April 2014), on 30 March 2017, by section 165 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MB 7B(3): inserted (with effect on 1 April 2014), on 30 March 2017, by section 165 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
MB 8 Family scheme income from fringe benefits: controlling shareholders
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when—
(a)
the person is an employee of a company in which the person and associated person hold, on the last day of the income year, voting interests of 50% or more; and
(b)
the company provides a fringe benefit that must be attributed to the person under section RD 47 (Attribution of certain fringe benefits).
What is included in family scheme income
(2)
The person’s family scheme income for the income year includes an amount equal to the total of the following amounts:
(a)
the taxable value of the fringe benefits that the company must attribute to the person under sections RD 47 to RD 49 for the income year; and
(b)
the company’s FBT liability in relation to the person under section RD 50 (Employer’s liability for attributed benefits) for the income year.
Defined in this Act: associated person, company, employee, family scheme income, FBT, fringe benefit, income year, voting interest
Section MB 8: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 8 heading: replaced, on 1 April 2014, by section 77 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section MB 8(1)(a): replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 111(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 8 list of defined terms market value circumstance: repealed, on 1 April 2014, by section 111(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MB 8 list of defined terms market value interest: repealed, on 1 April 2014, by section 111(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
MB 9 Family scheme income from deposits in main income equalisation accounts
[Repealed]Section MB 9: repealed (with effect on 1 April 2011), on 24 February 2016, by section 209 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
MB 10 Family scheme income from certain pensions and annuities
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when the person derives in the income year a pension or annuity that is exempt income of the person under section CW 4 (Annuities under life insurance policies) or is a pension from a superannuation fund.
Half of pension or annuity included in family scheme income
(2)
The family scheme income of the person for the income year—
(a)
includes half of the amount of pension or annuity derived in the income year; and
(b)
does not include the other half of the amount of pension or annuity derived in the income year.
Defined in this Act: amount, excluded income, exempt income, family scheme income, income year
Section MB 10: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
MB 11 Family scheme income from amounts derived by dependent children
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when the person is a principal caregiver of a dependent child and the dependent child derives in the income year an amount that is—
(a)
resident passive income:
(b)
a royalty:
(c)
rent:
(d)
beneficiary income that is not an amount referred to in section HC 35(4)(b)(i), (ii), or (v) (Beneficiary income of minors):
(e)
attributed income from a portfolio investment entity that is not a superannuation fund or retirement savings scheme:
(f)
a distribution from a listed PIE.
Amount included in family scheme income
(2)
If the total of amounts derived by the dependent child in the income year and referred to in subsection (1) is more than $500, the family scheme income of the person for the income year includes an amount calculated using the formula—
(child’s amounts − $500) ÷ principal caregivers.
Definitions of items in formula
(3)
In the formula,—
(a)
child’s amounts is the total of amounts—
(i)
derived by the dependent child in the income year; and
(ii)
referred to in subsection (1):
(b)
principal caregivers is the number of people who are each a principal caregiver of the child.
Defined in this Act: beneficiary income, dependent child, excluded income, family scheme income, income year, listed PIE, portfolio investment entity, principal caregiver, resident passive income, retirement savings scheme, royalty, superannuation fund
Section MB 11: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 11(1): amended (with effect on 1 April 2011), on 29 August 2011, by section 107(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MB 11(2) heading: substituted (with effect on 1 April 2011), on 29 August 2011, pursuant to section 107(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MB 11(2): substituted (with effect on 1 April 2011), on 29 August 2011, by section 107(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MB 11(3) heading: added (with effect on 1 April 2011), on 29 August 2011, by section 107(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MB 11(3): added (with effect on 1 April 2011), on 29 August 2011, by section 107(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MB 11 list of defined terms principal caregiver: inserted (with effect on 1 April 2011), on 29 August 2011, by section 107(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
MB 12 Family scheme income from non-residents’ foreign-sourced income
The family scheme income of a person for an income year includes the non-residents’ foreign-sourced income for the income year of the person’s spouse, civil union partner, or de facto partner.
Defined in this Act: civil union partner, de facto partner, family scheme income, income year, non-residents’ foreign-sourced income, spouse
Section MB 12: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
MB 12B Family scheme income from trusts, not being beneficiary income, and where recipient not settlor
When this section applies
(1)
This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when—
(a)
the person receives a payment from a trust in the income year; and
(b)
the payment is not beneficiary income of the person; and
(c)
the person is not the settlor of the trust.
Amounts included in family scheme income
(2)
The amount of the payment is included in the family scheme income of the person for the income year.
Exclusion
(3)
Despite subsection (2), the Commissioner may determine the circumstances in which a payment from a trust should be excluded for the purposes of calculating family scheme income. If a person receives a payment from a trust in circumstances in which the Commissioner has determined that a payment should be excluded for the purposes of calculating family scheme income, the amount of the payment is not included in the family scheme income of the person for the income year.
Defined in this Act: amount, beneficiary income, Commissioner, family scheme income, income year, pay, settlor
Section MB 12B: inserted, on 26 June 2019, by section 69 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
MB 13 Family scheme income from other payments
(1)
The family scheme income of a person for an income year includes the value of payments—
(a)
paid or provided to the person from any source; and
(b)
used by the person to—
(i)
replace lost or diminished income of the person or the person’s family:
(ii)
meet usual living expenses of the person or the person’s family; and
(c)
not excluded from family scheme income under subsection (2).
Payments and benefits excluded from family scheme income
(2)
A payment to a person is not included under subsection (1) in the family scheme income of the person if it is—
(a)
a loan under ordinary commercial terms and conditions:
(b)
from an amount that is—
(i)
proceeds of the disposal of property; and
(ii)
not assessable income of the person disposing of the property:
(bb)
a repayment of a loan or of a mistaken or misdirected payment:
(bc)
a refund of a payment, including a refund of overpaid tax, student loan payments, or child support payments:
(bd)
a payment, other than a payment by a trustee, from the person’s ownership of an investment activity or business, and the payment—
(i)
is received on capital account; and
(ii)
is not a loan:
(be)
a payment from a deceased’s estate:
(bf)
money won from gambling or from a New Zealand lottery, as those terms are used in the Gambling Act 2003:
(c)
a payment on behalf of the person by a local authority or public authority:
(d)
a forgiveness of debt by a public authority:
(e)
a charitable distribution from a charitable entity registered under the Charities Act 2005:
(f)
an educational scholarship or educational bursary:
(g)
a student loan under the Student Loan Scheme Act 2011:
(h)
a grant for the payment of expenses relating to medical treatment or a funeral:
(i)
a payment under an insurance contract, other than a payment for a loss of income:
(j)
compensation for a loss other than a loss of income:
(jb)
a loan made under the small business cashflow scheme:
(jc)
a payment made under the COVID-19 resurgence support payments scheme, or another COVID-19 support payments scheme, as defined in section 3(1) of the Tax Administration Act 1994:
(k)
lump sum compensation under the Accident Compensation Act 2001:
(kb)
a payment of a foster care allowance under section 363 of the Oranga Tamariki Act 1989:
(kc)
a payment under section 386AAG or 386B of the Oranga Tamariki Act 1989:
(l)
a monetary benefit under the Social Security Act 2018 that is exempt income:
(m)
a pension or allowance under the Veterans’ Support Act 2014 that is exempt income:
(n)
a payment that is exempt income under section CW 33(1)(c), (cb), (e), or (f) (Allowances and benefits):
(o)
an amount that is declared not to be income for the purposes of the Social Security Act 2018 by regulations made under section 422 of that Act:
(p)
included in the family scheme income of the person under another section:
(q)
expressly excluded from the family scheme income of the person under another section:
(r)
a payment—
(i)
to relieve the adverse effects of an event declared to be an emergency event by the Commissioner in a determination under section 91AAS of the Tax Administration Act 1994; and
(ii)
in the period set by the Commissioner in the determination as relating to the event.
Exception for total value of payments less than threshold
(3)
If, in the absence of this subsection, the total value of payments that would be included under subsection (1) in the family scheme income for the year of the person and the person’s spouse, civil union partner, or de facto partner is less than or equal to $5,000, then the payments paid or provided to the person are not included in the person’s family scheme income for the income year.
Defined in this Act: assessable income, dispose, exempt income, family scheme income, income, income year, insurance contract, land, loan, local authority, pay, public authority, small business cashflow scheme, trustee
Section MB 13: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MB 13(2)(bb): inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 137(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 13(2)(bc): inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 137(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 13(2)(bd): inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 137(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 13(2)(be): inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 137(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 13(2)(bf): inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 137(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section MB 13(2)(f): replaced (with effect on 1 April 2011 and applying for the 2011–12 and later income years), on 24 February 2016, by section 210(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MB 13(2)(g): amended, on 1 April 2012, by section 223 of the Student Loan Scheme Act 2011 (2011 No 62).
Section MB 13(2)(jb): inserted (with effect on 30 April 2020), on 16 May 2020, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act 2020 (2020 No 13).
Section MB 13(2)(jc): inserted, on 18 February 2021, by section 9 of the Taxation (COVID-19 Resurgence Support Payments and Other Matters) Act 2021 (2021 No 1).
Section MB 13(2)(jc): amended, on 25 November 2021, by section 9 of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MB 13(2)(kb): inserted (with effect on 1 April 2011), on 2 November 2012, by section 123 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MB 13(2)(kb): amended, on 14 July 2017, by section 149 of the Children, Young Persons, and Their Families (Oranga Tamariki) Legislation Act 2017 (2017 No 31).
Section MB 13(2)(kc): inserted, on 1 July 2019, by section 70 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section MB 13(2)(l): amended, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section MB 13(2)(m): amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section MB 13(2)(n): amended, on 25 May 2022, by section 9 of the Taxation (Cost of Living Payments) Act 2022 (2022 No 25).
Section MB 13(2)(o): replaced, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section MB 13(2)(q): amended (with effect on 1 April 2011), on 24 May 2011, by section 7 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
Section MB 13(2)(r): added (with effect on 1 April 2011), on 24 May 2011, by section 7 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
Section MB 13 list of defined terms small business cashflow scheme: inserted (with effect on 30 April 2020), on 16 May 2020, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act 2020 (2020 No 13).
Section MB 13 list of defined terms trustee: inserted, on 1 April 2015, by section 137(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
MB 14 Remission income of discharged bankrupt excluded
[Repealed]
Section MB 14: inserted (with effect on 1 April 2014 and applying for discharges from bankruptcy after 1 April 2014), on 30 March 2017, by section 166(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MB 14: repealed, on 30 March 2017, by section 167 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Subpart MC—Entitlements under family scheme
Contents
MC 1 What this subpart does
Rules about entitlements under family scheme
(1)
This subpart provides the rules for determining whether a person and their spouse, civil union partner, or de facto partner are entitled to WFF tax credits as entitlements and tax credits under the family scheme.
WFF tax credits
(2)
The WFF tax credit is the amount of a person’s entitlement and tax credit made up of—
(a)
the family tax credit calculated under section MD 3 (Calculation of family tax credit):
(b)
the in-work tax credit, see sections MD 4 to MD 10 (which relate to the entitlement to and calculation of the in-work tax credit), or the child tax credit continued under section MZ 1 (Entitlement to child tax credit):
(c)
the parental tax credit, see sections MD 11 and MD 12 (which relate to the entitlement to and calculation of the parental tax credit):
(d)
the minimum family tax credit, see section ME 1 (Minimum family tax credit):
(e)
the Best Start tax credit, see section MG 1 (Best Start tax credit entitlement).
Classification of credits
(3)
For the purposes of the calculation of an amount of a WFF tax credit, entitlements and tax credits under the family scheme are divided into—
(a)
abating WFF tax credits, made up of the family tax credit, in-work tax credit or child tax credit, and the parental tax credit:
(b)
the minimum family tax credit:
(c)
the Best Start tax credit.
Classification of credits[Repealed]
(4)
[Repealed]Defined in this Act: abating WFF tax credit, amount, Best Start tax credit, child tax credit, civil union partner, Commissioner, de facto partner, family scheme, family tax credit, in-work tax credit, minimum family tax credit, parental tax credit, spouse, tax credit, WFF tax credit
Compare: 2004 No 35 s KD 1A
Section MC 1(1): amended, on 1 April 2008, by section 458(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(2) heading: substituted, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(2): substituted, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(2)(d): amended, on 1 July 2018, by section 12(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 1(2)(e): inserted, on 1 July 2018, by section 12(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 1(3) heading: substituted, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(3): substituted, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(3)(b): amended, on 1 July 2018, by section 12(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 1(3)(c): inserted, on 1 July 2018, by section 12(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 1(4) heading: repealed, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1(4): repealed, on 1 April 2008, by section 458(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 458(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms Best Start tax credit: inserted, on 1 July 2018, by section 12(3) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 1 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 458(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms family plus: repealed, on 1 April 2008, by section 458(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms family support: repealed, on 1 April 2008, by section 458(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms in-work payment,: repealed, on 1 April 2008, by section 458(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 458(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 458(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 list of defined terms WFF tax credit: inserted, on 1 April 2008, by section 458(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 1 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 353 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
MC 2 Who qualifies for entitlements under family scheme?
A person qualifies for an entitlement under the family scheme if, for an entitlement period, they meet—
(a)
the qualifying criteria set out in sections MC 3 to MC 7; and
(b)
the continuing requirements set out in section MC 8.
Defined in this Act: entitlement period, family scheme
MC 3 First requirement: person’s age
The first requirement is that the person referred to in section MC 2 is 16 or older.
Compare: 2004 No 35 ss KD 2AA(4), KD 3(1), OB 1 “qualifying person”
(a)(i)
MC 4 Second requirement: principal care
The second requirement is that the person referred to in section MC 2 is the principal caregiver for 1 or more dependent children.
Defined in this Act: dependent child, principal caregiver
Compare: 2004 No 35 ss KD 2AA(4), KD 3(1), OB 1 “qualifying person”
(a)(ii)
MC 5 Third requirement: residence or entitlement to emergency benefit
Third requirement
(1)
The third requirement is that—
(a)
the person referred to in section MC 2 or the child referred to in section MC 4 meets the residence requirements of subsections (2) and (3), as applicable:
(b)
the person referred to in section MC 2 is entitled to receive an emergency benefit under section 63 or 64 of the Social Security Act 2018.
When person meets residence requirements
(2)
The person meets the residence requirements of subsection (1)(a) if the person—
(a)
has been—
(i)
both a New Zealand resident and present in New Zealand for a continuous period of 12 months at any time; and
(ii)
resident in New Zealand under section YD 1 (Residence of natural persons) on the days for which a tax credit arises under section MD 1 (Abating WFF tax credit), ME 1 (Minimum family tax credit entitlement), or MG 1 (Best Start tax credit entitlement); and
(b)
is not a transitional resident and is not the spouse, civil union partner, or de facto partner of a transitional resident.
When child meets residence requirements
(3)
The child meets the residence requirements of subsection (1)(a) if the child is both a New Zealand resident and present in New Zealand for the entitlement period.
Defined in this Act: child, civil union partner, de facto partner, entitlement period, New Zealand, New Zealand resident, spouse, tax credit, transitional resident
Compare: 2004 No 35 ss KD 3(1), OB 1 “qualifying person”
(a)(iii)
Section MC 5 heading: replaced, on 1 April 2020, by section 18(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MC 5(1): replaced, on 1 April 2020, by section 18(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MC 5(2): amended, on 1 April 2020, by section 18(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MC 5(2)(a): replaced (with effect on 1 April 2008), on 2 November 2012, by section 124 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MC 5(2)(a)(ii): amended, on 1 July 2018, by section 13 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 5(2)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 211(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MC 5(3): amended, on 1 April 2020, by section 18(4) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MC 5(3): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 108(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MC 5 list of defined terms resident: repealed (with effect on 1 April 2008), on 29 August 2011, by section 108(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
MC 6 When person does not qualify
Despite sections MC 3 to MC 5, a person does not qualify for—
(a)
an abating WFF tax credit or a Best Start tax credit if, during the relationship period, they receive a parent’s allowance continued by clause 3 of Schedule 1 of the Veterans’ Support Act 2014 or a children’s pension under section 72 or 75 of that Act:
(b)
an in-work tax credit, parental tax credit, or minimum family tax credit if, during the relationship period, they receive—
(i)
a main benefit; or
(ii)
[Repealed](iii)
a parent’s allowance or a children’s pension:
(c)
a Best Start tax credit for a dependent child in relation to a period, if they receive—
(i)
a parental leave payment or preterm baby payment, under Part 7A of the Parental Leave and Employment Protection Act 1987, for the dependent child in relation to the period:
(ii)
a parental tax credit, in relation to the dependent child:
(iii)
a parent’s allowance or a children’s pension, in relation to the dependent child.
Defined in this Act: abating WFF tax credit, Best Start tax credit, dependent child, in-work tax credit, main benefit, minimum family tax credit, parental tax credit, relationship period
Compare: 2004 No 35 s KD 3(1), “qualifying person”
Section MC 6(a): amended, on 1 July 2018, by section 14(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 6(a): amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section MC 6(b): amended, on 1 April 2008, by section 460(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6(b)(i): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MC 6(b)(ii): repealed (with effect on 1 April 2008), on 6 October 2009, by section 355(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 6(b)(iii): amended, on 1 July 2018, by section 14(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 6(b)(iii): amended, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section MC 6(c): replaced (with effect on 1 July 2018), on 18 March 2019, by section 233(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MC 6 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 460(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms Best Start tax credit: inserted, on 1 July 2018, by section 14(3) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 6 list of defined terms dependent child: inserted (with effect on 1 July 2018), on 18 March 2019, by section 233(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MC 6 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 460(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms family tax credit: repealed, on 1 April 2008, by section 460(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MC 6 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 460(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MC 6 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 460(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms parental tax credit: inserted, on 1 April 2008, by section 460(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 6 list of defined terms veteran’s pension: repealed, on 27 February 2014, by section 113 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MC 6 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 355(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
MC 7 When spouse or partner entitled under family scheme
When this section applies
(1)
This section applies when a person has a spouse, civil union partner, or de facto partner throughout an entitlement period, and during the period—
(a)
the person meets the criteria in sections MC 3 to MC 5 in relation to 1 or more dependent children; and
(b)
the spouse or partner meets the criteria in sections MC 3 to MC 5 in relation to 1 or more dependent children; and
(c)
the dependent child, or at least 1 of the dependent children, referred to in paragraph (b) is not a dependent child referred to in paragraph (a).
Single person
(2)
In the circumstances described in subsection (1),—
(a)
this section applies as if—
(i)
the person or their spouse or partner meets the qualifying criteria in relation to all those children; and
(ii)
the other person does not meet the qualifying criteria in relation to any of the children; and
(b)
for all WFF tax credits other than the in-work tax credit, the Commissioner must determine which of the persons referred to in paragraph (a) meets the qualifying criteria.
Defined in this Act: civil union partner, Commissioner, de facto partner, dependent child, entitlement period, spouse
Compare: 2004 No 35 s KD 3A(2)–(4)
Section MC 7(2)(b): amended, on 1 April 2008, by section 461 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MC 8 Continuing requirements
Requirements for entitlement period
(1)
To receive entitlements and tax credits under the family scheme, a person who meets the qualifying criteria set out in sections MC 3 to MC 7 must also meet the following requirements throughout the entitlement period:
(a)
the person meets the qualifying criteria on each day of the period; and
(b)
another person does not on any day start or stop being a spouse, civil union partner, or de facto partner of the person; and
(c)
the person does not start or stop being the principal caregiver of a dependent child other than on the first or, as applicable, the last day; and
(d)
a child for whom the person is the principal caregiver does not stop being a dependent child other than on the first or, as applicable, the last day; and
(e)
the composition of a WFF tax credit does not change, other than on the first, or as applicable, the last day; and
(f)
the person does not start or stop being a person receiving protected family tax credit, other than on the first, or as applicable, the last day.
Relationship with section MD 6(2)
(2)
Section MD 6(2) (Second requirement: principal care) overrides this section in relation to the in-work tax credit.
Defined in this Act: child, civil union partner, de facto partner, dependent child, entitlement period, family scheme, in-work tax credit, principal caregiver, protected family tax credit, spouse, tax credit, WFF tax credit
Compare: 2004 No 35 s OB 1 “eligible period”
Section MC 8(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 356(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 8(e): amended, on 1 April 2008, by section 462(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 8(f): amended, on 1 April 2008, by section 462(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 8(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 356(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 8(2): added (with effect on 1 April 2008), on 6 October 2009, by section 356(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 8 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 462(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 8 list of defined terms in-work tax credit: inserted (with effect on 1 April 2008), on 6 October 2009, by section 356(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 8 list of defined terms protected family support: repealed, on 1 April 2008, by section 462(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 8 list of defined terms protected family tax credit: inserted, on 1 April 2008, by section 462(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 8 list of defined terms WFF tax credit: inserted, on 1 April 2008, by section 462(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MC 9 Credits for person aged 18
For person aged 18
(1)
A person is entitled to a tax credit under sections MD 1 (Abating WFF tax credit) and ME 1 (Minimum family tax credit) for a person aged 18 who—
(a)
is not financially independent; and
(b)
is attending school or a tertiary educational establishment.
Determining period
(2)
The Commissioner must determine the period for which a person is entitled to an abating WFF tax credit or a minimum family tax credit for a person who is 18 years of age.
When period expires
(3)
The period determined by the Commissioner ends on or before the first day fixed by the Commissioner for payments of instalments of tax credits under section 80KI of the Tax Administration Act 1994 in the calendar year following that in which the person turns 18 years of age.
Defined in this Act: abating WFF tax credit, Commissioner, family tax credit, financially independent, minimum family tax credit, pay, tax credit, year
Compare: 2004 No 35 ss KD 2AA(7)–(10), KD 3A(5)–(9)
Section MC 9(1): amended, on 1 April 2008, by section 463(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 9(2): amended, on 1 April 2008, by section 463(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 9 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 463(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 9 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 463(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 9 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 463(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MC 10 Principal caregiver
General meaning
(1)
A principal caregiver, for a dependent child,—
(a)
means the person, whether or not a parent of the child, who the Commissioner considers has the primary responsibility for the day-to-day care for the child, other than on a temporary basis:
(b)
does not include—
(i)
a body of persons, incorporated or otherwise:
(ii)
the spouse, civil union partner, or de facto partner of a person eligible to be a transitional resident who has not made an election under section HR 8(4) (Transitional residents):
(iii)
a person who is the proprietor of, or employed in, a residence established under the Oranga Tamariki Act 1989, or a residential disability care institution as defined in section 58(4) of the Health and Disability Services (Safety) Act 2001, or another institution in which a child is cared for.
Meaning for abating WFF tax credit, family tax credit, Best Start tax credit, child tax credit
(2)
For the purposes of sections MD 3, MG 1, and MZ 1 (which relate to certain tax credits for families), a person is a principal caregiver of a dependent child if the person—
(a)
lives apart from another person who qualifies under section MC 2 in relation to the dependent child; and
(b)
has the dependent child in their exclusive care for periods totalling at least one-third of—
(i)
a 4-month period:
(ii)
the tax year:
(iii)
the entitlement period, in the case of the parental tax credit.
Meaning for in-work tax credit
(3)
For the purposes of section MD 6 (Second requirement: principal care), a person is a principal caregiver of a dependent child for an entitlement period if the person—
(a)
lives apart from another person who qualifies under section MC 2 in relation to the dependent child; and
(b)
has the dependent child in their exclusive care for periods, whether or not they coincide with the entitlement period, totalling at least one-third of a 4-month period or the tax year.
Entitlement to in-work tax credit
(4)
If subsection (3) applies, section MD 10(3) (Calculation of in-work tax credit) is to be read as applying to the periods during which the principal caregiver has exclusive care of the dependent child.
Meaning for parental tax credit
(5)
For the purposes of section MD 11 (Entitlement to parental tax credit), a person is a principal caregiver of a dependent child if the person—
(a)
lives apart from another person who qualifies under section MC 2 in relation to the dependent child; and
(b)
has the dependent child in their exclusive care for periods totalling at least one-third of the parental entitlement period.
Principal caregiver to notify Commissioner of change
(6)
A person who is a principal caregiver under this section must notify the Commissioner immediately of a change in the arrangements for the care of the child that has, or will have, the effect of ending the person’s status as a principal caregiver.
Defined in this Act: abating WFF tax credit, child tax credit, civil union partner, Commissioner, de facto partner, dependent child, entitlement period, family tax credit, in-work tax credit, notify, parental entitlement period, parental tax credit, principal caregiver, spouse, tax year, transitional resident
Compare: 2004 No 35 ss KD 2AA(2)–(3), OB 1 “principal caregiver”
Section MC 10(1)(b)(iii): amended, on 14 July 2017, by section 149 of the Children, Young Persons, and Their Families (Oranga Tamariki) Legislation Act 2017 (2017 No 31).
Section MC 10(2) heading: amended, on 1 July 2018, by section 15(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 10(2) heading: amended, on 1 April 2008, by section 464(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10(2): amended, on 1 July 2018, by section 15(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MC 10(3) heading: amended, on 1 April 2008, by section 464(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10(4) heading: amended, on 1 April 2008, by section 464(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10(4): amended (with effect on 1 April 2008), on 6 October 2009, by section 357(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MC 10(4): amended, on 1 April 2008, by section 464(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 464(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 464(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms family support: repealed, on 1 April 2008, by section 464(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms family tax credit: inserted, on 1 April 2008, by section 464(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms in-work payment: repealed, on 1 April 2008, by section 464(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 10 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 464(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MC 11 Relationship periods and entitlement periods
Meaning
(1)
In subparts MB to MG and MZ,—
(a)
a relationship period means an unbroken period in a tax year, whether the period consists of some or all of the days in the tax year:
(b)
an entitlement period, for a person, means a period that forms all or part of a relationship period during which the person meets the continuing requirements set out in section MC 8.
When day included in more than 1 period
(2)
If a day is part of more than 1 entitlement period or 1 relationship period, the day is treated as part only of the particular period that the Commissioner determines is fair in the circumstances.
Defined in this Act: Commissioner, entitlement period, relationship period, tax year
Compare: 2004 No 35 ss KD 2AA(1), (11), OB 1 “eligible period”
, “specified period”
Section MC 11(1): amended, on 1 July 2018, by section 16 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Subpart MD—Abating WFF tax credits
Subpart MD heading: substituted, on 1 April 2008, by section 465 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Contents
Calculating amount of credit
MD 1 Abating WFF tax credit
Tax credit
(1)
A person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) is entitled to a tax credit (the abating WFF tax credit) equal to an amount calculated using the formula in subsection (2).
Formula
(2)
The formula is—
family tax credit + (in-work tax credit or child tax credit)
+ parental tax credit − credit abatement.
Definition of items in formula
(3)
In the formula,—
(a)
family tax credit is the family tax credit for the entitlement period calculated using the formula in section MD 3:
(b)
in-work tax credit or child tax credit is 1 of the following, as applicable:
(i)
the in-work tax credit for the entitlement period calculated using the formula in section MD 10, if the person is entitled to the in-work tax credit for the entitlement period:
(ii)
the amount of child tax credit for the entitlement period calculated using the formula in section MZ 2 (Calculation of child tax credit), if the person is not entitled to the in-work tax credit for the entitlement period, and is entitled to the child tax credit for the entitlement period under section MZ 1 (Entitlement to child tax credit):
(c)
parental tax credit is the total amount, for the entitlement period, of parental tax credit calculated using—
(i)
the formula in section MD 12; and
(ii)
the formula in section MD 12B(2), if section MD 12B applies, and if the entitlement period includes the day described in section MD 12B(3)(a)(i) or (ii):
(d)
credit abatement is the total amount, for the entitlement period, of—
(i)
a family credit abatement calculated using the formula in section MD 13(2), and modified, if the item parental tax credit in paragraph (c) is greater than zero, by section MD 2(3) and (4); and
(ii)
an amount of parental tax credit abatement calculated using the formula in section MD 16(2), if section MD 16 applies, and if the entitlement period includes the day described in section MD 16(3)(a)(i) or (ii).
Extra instalment
(4)
This section is overridden by section 80KW of the Tax Administration Act 1994.
Defined in this Act: abating WFF tax credit, amount, child tax credit, entitlement period, family credit abatement, family tax credit, in-work tax credit, parental tax credit, tax credit
Compare: 2004 No 35 s KD 2(1), (2)
Section MD 1 heading: substituted, on 1 April 2008, by section 466(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(1): amended, on 1 April 2008, by section 466(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(2) formula: amended, on 1 April 2008, by section 466(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(2) formula: amended, on 1 April 2008, by section 466(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(2) formula: amended, on 1 April 2008, by section 466(3)(c) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(3)(a): amended, on 1 April 2008, by section 466(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(3)(b): amended, on 1 April 2008, by section 466(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(3)(b)(i): amended, on 1 April 2008, by section 466(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(3)(b)(ii): amended, on 1 April 2008, by section 466(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1(3)(c): replaced (with effect on 1 April 2008), on 30 March 2017, by section 168(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 1(3)(d): replaced (with effect on 1 April 2015 and applying for dependent children born on or after that date), on 30 March 2017, by section 168(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 1 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 466(7)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1 list of defined terms family support: repealed, on 1 April 2008, by section 466(7)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1 list of defined terms family tax credit: inserted, on 1 April 2008, by section 466(7)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1 list of defined terms in-work payment: repealed, on 1 April 2008, by section 466(7)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 1 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 466(7)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 2 Calculating net contributions to credits
When this section applies
(1)
This section applies when the Commissioner calculates the amounts making up the family tax credit, the in-work tax credit, the child tax credit, and the parental tax credit that relate to a period under this subpart.
Calculating net contributions
(2)
The Commissioner must—
(a)
treat the family tax credit, the in-work tax credit, the child tax credit, and the parental tax credit as tax credits corresponding to the period; and
(b)
treat as a debit the amount of family credit abatement corresponding to the period; and
(c)
apply the amount of the family credit abatement corresponding to the period,—
(i)
first, to reduce the amount of the family tax credit corresponding to the period; and
(ii)
second, to reduce the amount of the in-work tax credit or, as applicable, the child tax credit corresponding to the period; and
(iii)
third, to reduce the amount of the parental tax credit corresponding to the period.
Calculation for parental tax credit
(3)
For the purposes of subsection (2)(c)(iii) and sections MD 1(3)(d)(i) and MD 16(3)(a), the amount of family credit abatement for an entitlement period applied to reduce the amount of parental tax credit for that entitlement period is calculated using the formula—
(entitlement period abatement amount − amount used) × 365 ÷ 70.
Definition of items in formula
(4)
In the formula,—
(a)
entitlement period abatement amount is the family credit abatement for the entitlement period within the parental entitlement period calculated using the formula in section MD 13(2):
(b)
amount used is the amount of the entitlement period abatement amount that the Commissioner must apply under subsection (2)(c)(i) and (ii) in calculating a net contribution for the entitlement period.
Defined in this Act: amount, child tax credit, Commissioner, family credit abatement, family tax credit, in-work tax credit, parental entitlement period, parental tax credit, tax credit
Compare: 2004 No 35 s KD 2A
Section MD 2(1): amended, on 1 April 2008, by section 467(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2(2)(a): amended, on 1 April 2008, by section 467(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2(2)(c)(i): amended, on 1 April 2008, by section 467(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2(2)(c)(ii): amended, on 1 April 2008, by section 467(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2(3) heading: replaced, on 1 April 2015 (applying for dependent children born on or after that date), by section 5(1) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Section MD 2(3): replaced (with effect on 1 April 2015 and applying for dependent children born on or after that date), on 30 March 2017, by section 169(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 2(4) heading: inserted, on 1 April 2015 (applying for dependent children born on or after that date), by section 5(1) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Section MD 2(4): replaced (with effect on 1 April 2015 and applying for dependent children born on or after that date), on 30 March 2017, by section 169(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 2 list of defined terms family support: repealed, on 1 April 2008, by section 467(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2 list of defined terms family tax credit: inserted, on 1 April 2008, by section 467(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2 list of defined terms in-work payment: repealed, on 1 April 2008, by section 467(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 467(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 2 list of defined terms parental entitlement period: inserted, on 1 April 2015 (applying for dependent children born on or after that date), by section 5(2) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Family tax credit
Heading: substituted, on 1 April 2008, by section 468(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 3 Calculation of family tax credit
Entitlement
(1)
A person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) is entitled to an amount of family tax credit calculated using the formula in subsection (2).
Formula
(2)
The formula is—
prescribed amount × days ÷ 365.
Definition of items in formula
(3)
The items in the formula are defined in subsections (4) and (5).
Prescribed amount
(4)
Prescribed amount is the sum of the following amounts:
(a)
for the eldest dependent child for whom the person is a principal caregiver during the entitlement period, $7,121; and
(b)
for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, $5,802.
Days
(5)
Days is the number of days in the entitlement period.
Order in Council increasing amount
(6)
In subsection (4)(a) and (b), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
When another person cares for dependent child
(7)
A family tax credit must be reduced in proportion to the time in the entitlement period that a dependent child spends in the exclusive care of another person who qualifies under section MC 2.
Defined in this Act: amount, child, dependent child, entitlement period, family tax credit, principal caregiver
Compare: 2004 No 35 ss KD 2(3), KD 2AA(3)
Section MD 3 heading: amended, on 1 April 2008, by section 468(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 3(1): amended, on 1 April 2008, by section 468(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 3(4)(a): replaced (with effect on 1 July 2018), on 18 March 2019, by section 234(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MD 3(4)(a): amended, on 1 April 2023, by clause 4(1) (and see clause 4(3) for application) of the Income Tax (Tax Credit) Order 2022 (SL 2022/296).
Section MD 3(4)(b): replaced (with effect on 1 July 2018), on 18 March 2019, by section 234(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MD 3(4)(b): amended, on 1 April 2023, by clause 4(2) (and see clause 4(3) for application) of the Income Tax (Tax Credit) Order 2022 (SL 2022/296).
Section MD 3(6): amended (with effect on 1 July 2018), on 18 March 2019, by section 234(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MD 3(7): amended, on 1 April 2008, by section 468(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 3 list of defined terms family support: repealed, on 1 April 2008, by section 468(5)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MC 3 list of defined terms family tax credit: inserted, on 1 April 2008, by section 468(5)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
In-work tax credit
Heading: substituted, on 1 April 2008, by section 469(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 4 Entitlement to in-work tax credit
Requirements
(1)
A person is entitled to an in-work tax credit for a child if, for an entitlement period, the person meets the 5 requirements of sections MD 5 to MD 9.
When another person entitled to in-work tax credit or child tax credit
(2)
If 2 persons are entitled to an in-work tax credit or a child tax credit for a child for an entitlement period, the entitlement of each is not affected by the entitlement of the other person.
Defined in this Act: child, entitlement period, in-work tax credit
Compare: 2004 No 35 s KD 2AAA(1), (3A)
Section MD 4 heading: amended, on 1 April 2008, by section 469(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 4(1): amended, on 1 April 2008, by section 469(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 4(2) heading: amended, on 1 April 2008, by section 469(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 4(2): amended, on 1 April 2008, by section 469(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 4 list of defined terms in-work payment: repealed, on 1 April 2008, by section 469(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 4 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 469(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 5 First requirement: person’s age
The first requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 is 16 or older.
Defined in this Act: in-work tax credit
Compare: 2004 No 35 s KD 2AAA(1)(a)
Section MD 5: amended, on 1 April 2008, by section 470(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 5 list of defined terms in-work payment: repealed, on 1 April 2008, by section 470(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 5 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 470(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 6 Second requirement: principal care
When child financially dependent
(1)
The second requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 is the principal caregiver for a child who is financially dependent on them.
Inclusions
(2)
A child for whom payments are made under section 363 of the Oranga Tamariki Act 1989, or a child for whom an orphan’s benefit or an unsupported child’s benefit is paid, is treated as financially dependent on the person.
Relationship with section MC 8
(3)
Subsection (2) overrides section MC 8 (Continuing requirements).
Defined in this Act: child, in-work tax credit, orphan’s benefit, principal caregiver, unsupported child’s benefit
Compare: 2004 No 35 s KD 2AAA(1)(b)
Section MD 6(1): amended, on 1 April 2008, by section 471(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 6(2): amended (with effect on 20 April 2020), on 30 April 2020, by section 12(1) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section MD 6(2): amended, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section MD 6(2): amended, on 14 July 2017, by section 149 of the Children, Young Persons, and Their Families (Oranga Tamariki) Legislation Act 2017 (2017 No 31).
Section MD 6(3) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 358(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 6(3): added (with effect on 1 April 2008), on 6 October 2009, by section 358(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 6 list of defined terms in-work payment: repealed, on 1 April 2008, by section 471(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 6 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 471(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 6 list of defined terms orphan’s benefit: inserted (with effect on 20 April 2020), on 30 April 2020, by section 12(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section MD 6 list of defined terms unsupported child’s benefit: inserted (with effect on 20 April 2020), on 30 April 2020, by section 12(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
MD 7 Third requirement: residence
Third requirement
(1)
The third requirement for an entitlement to an in-work tax credit is that the person or child referred to in section MD 4 meet the residence requirements of subsections (2) and (3), as applicable.
When person meets residence requirements
(2)
The person meets the residence requirements of subsection (1) if the person—
(a)
has been—
(i)
both a New Zealand resident and present in New Zealand for a continuous period of 12 months at any time; and
(ii)
resident in New Zealand under section YD 1 (Residence of natural persons) on the days for which a tax credit arises under section MD 1; and
(b)
is neither a transitional resident, nor the spouse, civil union partner, or de facto partner of a transitional resident.
When child meets residence requirements
(3)
The child meets the residence requirements of subsection (1) if the child is both resident and present in New Zealand for the entitlement period.
Defined in this Act: child, civil union partner, de facto partner, entitlement period, in-work tax credit, New Zealand, New Zealand resident, spouse, tax credit, transitional resident
Compare: 2004 No 35 s KD 2AAA(1)(c), (3), (4)
Section MD 7(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 359(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 7(1): amended, on 1 April 2008, by section 472(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 7(2)(a): replaced (with effect on 1 April 2008), on 2 November 2012, by section 125(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 7 list of defined terms in-work payment: repealed, on 1 April 2008, by section 472(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 7 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 472(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 7 list of defined terms resident: repealed (with effect on 1 April 2008), on 2 November 2012, by section 125(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
MD 8 Fourth requirement: person not receiving benefit
The fourth requirement for an entitlement to an in-work tax credit is that the person referred to in section MD 4 and their spouse, civil union partner, or de facto partner, do not receive—
(a)
a main benefit; or
(b)
a basic grant and an independent circumstances grant made under regulations made under section 645 of the Education and Training Act 2020 or an enactment substituted for that section; or
(c)
a parent’s allowance continued by clause 3 of Schedule 1 of the Veterans’ Support Act 2014 or a children’s pension under section 72 or 75 of that Act.
Defined in this Act: civil union partner, de facto partner, in-work tax credit, main benefit, spouse
Compare: 2004 No 35 s KD 2AAA(1)(e)
Section MD 8: amended, on 1 April 2008, by section 473(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 8(a): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 8(b): replaced, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section MD 8(c): replaced, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
Section MD 8 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 8 list of defined terms in-work payment: repealed, on 1 April 2008, by section 473(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 8 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 473(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 8 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
MD 9 Fifth requirement: earner
Normally earner
(1)
The fifth requirement for an entitlement to an in-work tax credit is that either or both the person referred to in section MD 4 and their spouse, civil union partner, or de facto partner, is normally an earner (the earner). Also, the earner must—
(a)
derive income as set out in subsections (2) and (3) as an earner, or derive an amount of compensation described in subsection (4), or not derive income but meet the alternative requirements in subsection (6); or
(b)
if they are an earner in relation to a close company, be a major shareholder in the close company, and the company must derive gross income in the income year.
Income
(2)
The income referred to in subsection (1)(a) is—
(a)
a PAYE income payment that is—
(i)
not excluded under subsection (3), although it does not matter if the person also derives income of the type described in subsection (3); and
(ii)
not a benefit or allowance described in section MD 8; or
(b)
income, other than from a PAYE income payment, to which section RD 3B or RD 3C (which relate to income other than PAYE) applies; or
(c)
income from a business carried on for profit; or
(d)
an amount paid or benefit provided—
(i)
by a person (the claimant), who receives a personal service rehabilitation payment from which an amount of tax has been withheld at a rate specified in section RD 10B (Amounts of tax for schedular payments); and
(ii)
to another person for providing to the claimant a key aspect of social rehabilitation referred to in paragraph (c) of the definition of personal service rehabilitation payment in section YA 1 (Definitions).
Exclusions from income
(3)
The following PAYE income payments are excluded from income under subsection (2):
(a)
a payment referred to in paragraphs (a) to (c) of the definition of accident compensation earnings-related payment:
(b)
a PAYE income payment referred to in section RD 5(6)(a) (Salary or wages), other than a parental leave payment or preterm baby payment referred to in section CF 1 (Benefits, pensions, compensation, and government grants):
(c)
a PAYE income payment referred to in section RD 5(6)(bb), (bc), or (bd):
(d)
a schedular payment that is a contract payment for a contract activity or service of a non-resident contractor:
(e)
an amount paid as a result of incapacity, suffered before 1 January 2006, due to personal injury by accident within the meaning of section 26 of the Accident Compensation Act 2001.
Compensation payments for incapacities suffered between 1 January 2006 and 31 March 2006
(4)
A person meets the fifth requirement if—
(a)
they received a child tax credit for an entitlement period ending on 31 March 2006; and
(b)
between 1 January 2006 and 31 March 2006 (both dates inclusive), they or their spouse, civil union partner, or de facto partner suffered an incapacity due to personal injury by accident within the meaning of section 26 of the Accident Compensation Act 2001; and
(c)
weekly compensation within the meaning of section 6 of the Accident Compensation Act 2001 is being or will be paid for the incapacity; and
(d)
at the time of the incapacity, the person or their spouse, civil union partner, or de facto partner—
(i)
was deriving, as a full-time earner, income as set out in subsections (2) and (3), as those subsections were immediately before the amendment made by section 360(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009; and
(ii)
would have been eligible for the tax credit calculated using the formula in section MD 10, as that section was immediately before the amendments made by section 127(1) and (3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012, had this Act come into force before the date of the incapacity.
Absence from work due to birth of child
(5)
Despite subsection (1), a person also meets the fifth requirement if they normally derive income as set out in subsections (2) and (3) as a full-time earner but, in a 1-week period, they do not work, or work less than, the number of hours required to be a full-time earner because of the birth of a child. However, this subsection applies only if the person is entitled to receive the parental tax credit for the child.
14 day concession
(6)
A person meets the fifth requirement if they do not derive income or otherwise do not meet the fifth requirement, but have met the fifth requirement within the last 14 days.
Defined in this Act: amount, business, child, child tax credit, civil union partner, close company, contract activity or service, contract payment, de facto partner, earner, entitlement period, full-time earner, income, income from employment, income year, in-work tax credit, major shareholder, non-resident contractor, parental tax credit, pay, PAYE income payment, schedular payment, spouse, tax credit
Compare: 2004 No 35 s KD 2AAA(1)(d), (5)–(8)
Section MD 9 heading: amended, on 1 July 2020, by section 19(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 9(1) heading: replaced (with effect on 1 April 2011), on 2 November 2012, by section 126(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 9(1) heading: amended, on 1 July 2020, by section 19(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 9(1): replaced (with effect on 1 April 2011), on 2 November 2012, by section 126(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 9(1): amended, on 1 July 2020, by section 19(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 9(1): amended (with effect on 1 April 2008), on 2 November 2012, by section 126(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 9(1)(a): amended (with effect on 1 April 2021), on 30 March 2022, by section 134(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MD 9(1)(a): amended, on 1 April 2021, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
Section MD 9(1)(b): amended, on 1 July 2020, by section 19(5) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 9(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 360(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 9(2)(b): replaced, on 29 March 2018 (with effect on 30 March 2017), by section 163 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section MD 9(2)(c): amended (with effect on 1 July 2008), on 6 October 2009, by section 360(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 9(2)(d): added (with effect on 1 July 2008), on 6 October 2009, by section 360(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 9(2)(d)(i): replaced, on 1 April 2017, by section 84 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section MD 9(3): substituted (with effect on 1 April 2008), on 6 October 2009, by section 360(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 9(3)(b): amended, on 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section MD 9(3)(c): amended (with effect on 5 January 2010), on 29 August 2011, by section 109 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MD 9(3)(e): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MD 9(4) heading: replaced (with effect on 1 July 2020), on 30 March 2022, by section 134(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MD 9(4): replaced (with effect on 1 July 2020), on 30 March 2022, by section 134(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MD 9(5): amended (with effect on 1 July 2020), on 30 March 2022, by section 134(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MD 9(6) heading: inserted, on 1 April 2021, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
Section MD 9(6): inserted, on 1 April 2021, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
Section MD 9 list of defined terms close company: inserted (with effect on 1 April 2011), on 2 November 2012, by section 126(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 9 list of defined terms earner: inserted, on 1 July 2020, by section 19(6)(b) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 9 list of defined terms full-time earner: inserted (with effect on 1 July 2020), on 30 March 2022, by section 134(4) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MD 9 list of defined terms income year: inserted (with effect on 1 April 2011), on 2 November 2012, by section 126(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 9 list of defined terms in-work payment: repealed, on 1 April 2008, by section 474(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 9 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 474(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 9 list of defined terms major shareholder: inserted (with effect on 1 April 2011), on 2 November 2012, by section 126(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
MD 10 Calculation of in-work tax credit
Entitlement
(1)
A person who meets the requirements of section MD 4 is entitled to an in-work tax credit calculated using the formula in subsection (2).
Formula
(2)
The formula is—
(amount A + amount B × (children − 3)) × weekly periods ÷ 52.
Definition of items in formula
(3)
In the formula,—
(a)
amount A is $3,770:
(b)
amount B is $780:
(c)
children is the greater of—
(i)
3; and
(ii)
the number of children for whom the person is allowed the in-work tax credit:
(d)
weekly periods—
(i)
for 2 or more entitlement periods forming 1 continuous period, is the number of whole periods of 1 week in the continuous period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is an earner described in section MD 9(1)(b), and includes whole periods of 1 week to which the alternative requirement in section MD 9(6) applies:
(ii)
for an entitlement period to which subparagraph (i) does not apply, is the number of whole periods of 1 week in the entitlement period for which the person or their spouse, civil union partner, or de facto partner has, from the work activity, income to which section MD 9(2) refers or is an earner described in section MD 9(1)(b), and includes whole periods of 1 week to which the alternative requirement in section MD 9(6) applies.
Order in Council increasing amount
(4)
In subsection (3)(a) and (b), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
Defined in this Act: amount, child, civil union partner, de facto partner, earner, entitlement period, in-work tax credit, spouse
Compare: 2004 No 35 s KD 2AAA(2)
Section MD 10 heading: amended, on 1 April 2008, by section 475(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 10(1): amended, on 1 April 2008, by section 475(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 10(3)(a): amended, on 1 April 2016, by section 4 of the Taxation (Support for Children in Hardship) Act 2015 (2015 No 118).
Section MD 10(3)(c)(ii): amended, on 1 April 2008, by section 475(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 10(3)(d)(i): amended, on 1 April 2021, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
Section MD 10(3)(d)(i): amended, on 1 July 2020, by section 20(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 10(3)(d)(i): amended (with effect on 1 April 2011), on 2 November 2012, by section 127(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 10(3)(d)(ii): amended, on 1 April 2021, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act (No 2) 2020 (2020 No 58).
Section MD 10(3)(d)(ii): amended, on 1 July 2020, by section 20(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 10(3)(d)(ii): amended (with effect on 1 April 2008), on 2 November 2012, by section 127(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 10(3)(d)(ii): amended (with effect on 1 April 2011), on 2 November 2012, by section 127(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section MD 10(3)(d)(ii): amended (with effect on 1 April 2008), on 6 October 2009, by section 361(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MD 10 list of defined terms earner: inserted, on 1 July 2020, by section 20(3) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section MD 10 list of defined terms in-work payment: repealed, on 1 April 2008, by section 475(4)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 10 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 475(4)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Parental tax credit
MD 11 Entitlement to parental tax credit
When this section applies
(1)
This section applies when—
(a)
a person qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) in relation to a dependent child; and
(ab)
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
(b)
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
(c)
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.
Entitlement
(2)
The person is entitled to a parental tax credit for the parental entitlement period.
If dependent child dies during parental entitlement period
(3)
The person continues to be entitled to the parental tax credit if—
(a)
the dependent child dies during the parental entitlement period; and
(b)
the person and their spouse, civil union partner, or de facto partner otherwise meet the requirements of subsection (1).
When another person cares for dependent child
(4)
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.
Relationship with section 2B of Parental Leave and Employment Protection Act 1987
(5)
Section 2B of the Parental Leave and Employment Protection Act 1987 applies for the purposes of subsection (1)(b) if a person—
(a)
gives birth to 2 or more children as a result of 1 pregnancy; or
(b)
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.
Payment of parental tax credit
(6)
The parental tax credit is paid to the person either—
(a)
in a lump sum payment, as a tax credit in an end-of-year assessment for the tax year of the birth; or
(b)
in instalment payments, in the 70 days after the date on which an application is made if—
(i)
the person applies to receive the parental tax credit by instalment under section MF 1 (Application for payment of tax credit by instalment); and
(ii)
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.
Defined in this Act: apply, assessment, civil union partner, de facto partner, dependent child, main benefit, parental entitlement period, parental tax credit, social assistance payment, spouse, tax credit, tax year
Compare: 2004 No 35 ss KD 2AA(3), KD 2AB
Section MD 11(1)(ab): inserted, on 1 July 2018, 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 18 March 2019, 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 18 March 2019, 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 30 March 2021, 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 18 March 2019, 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 18 March 2019, 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 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section MD 11(6)(a): replaced, on 30 March 2017, 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 30 March 2017, 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 1 April 2015 (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 30 March 2021, 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 1 April 2015 (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 2 June 2016, 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 30 March 2021, 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 30 March 2021, 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 30 March 2017, by section 170(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
MD 12 Calculation of parental tax credit
Entitlement
(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).
Formula
(2)
The formula is—
prescribed amount × days ÷ 70.
Definition of items in formula
(3)
In the formula,—
(a)
prescribed amount is—
(i)
$1,200 for each dependent child born on or after 1 October 1999 and before 1 April 2015; or
(ii)
$2,200 for each dependent child born on or after 1 April 2015:
(b)
days is the number of days in the entitlement period—
(i)
that are in the parental entitlement period; and
(ii)
for which the person meets the requirements of section MD 11.
Order in Council increasing amount[Repealed]
(4)
[Repealed]Modification where 70-day period crosses 2 tax years and credit paid in lump sum
(5)
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—
(a)
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—
(i)
in the parental entitlement period; and
(ii)
in an entitlement period in the tax year following the tax year of the birth; and
(b)
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).
Defined in this Act: amount, dependent child, entitlement period, parental entitlement period, parental tax credit, tax year
Compare: 2004 No 35 s KD 2(5)
Section MD 12(1): amended (with effect on 1 April 2008), on 30 March 2017, 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 1 April 2015 (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 1 April 2015 (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 30 March 2017, 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 30 March 2021, 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 30 March 2021, 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 30 March 2017, 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 30 March 2017, 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 30 March 2017, 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 30 March 2017, 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 1 April 2014, 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 1 April 2014, 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 30 March 2017, 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 1 April 2014, 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 1 April 2014, 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 1 April 2014, 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 30 March 2017, by section 171(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
MD 12B Additional parental tax credit amount included in lump sum if 70-day period crosses 2 tax years
When this section applies
(1)
This section applies when—
(a)
a person is entitled under section MD 11 to a parental tax credit for a parental entitlement period; and
(b)
the credit is paid in a lump sum for the tax year of the birth; and
(c)
the birth occurs less than 70 days before the end of the tax year; and
(d)
a day in an entitlement period is in the parental entitlement period.
Amount of additional parental tax credit
(2)
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.
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
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—
(i)
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
(ii)
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:
(b)
extra entitlement days is the number of days, each of which is—
(i)
in the parental entitlement period; and
(ii)
in an entitlement period in the tax year following the tax year of the birth.
Defined in this Act: amount, entitlement period, parental entitlement period, parental tax credit, pay, tax year
Section MD 12B: inserted (with effect on 1 April 2008), on 30 March 2017, 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 30 March 2017, 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 30 March 2017, by section 172(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Credit abatement
Heading: substituted, on 1 April 2008, by section 476(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 13 Calculation of family credit abatement
When this section applies
(1)
This section applies for the purposes of section MD 1 to determine the amount of a person’s family credit abatement for an entitlement period.
Formula
(2)
The formula is—
full-year abatement × days ÷ 365.
Definition of items in formula
(3)
In the formula,—
(a)
full-year abatement is,—
(i)
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 $42,700, 27 cents for each complete dollar of the excess; or
(ii)
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 $42,700, 27 cents for each complete dollar of the excess:
(b)
days is the number of days in the entitlement period excluding the days of any calendar months in which the person receives protected family tax credit as described in section MD 14.
When 70-day period crosses 2 tax years and parental tax credit paid in instalments
(4)
If a person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?) receives instalments of the parental tax credit in a 70-day period that crosses 2 tax years, the formula is applied so that—
(a)
instalments of the parental tax credit received in the first tax year are abated against 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 that tax year; and
(b)
instalments of the parental tax credit received in the second tax year are abated against 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 that tax year.
When 70-day period crosses 2 tax years and parental tax credit paid in lump sum
(4B)
If a person who qualifies under section MC 2 has a 70-day parental entitlement period that crosses 2 tax years and the person receives a lump sum payment of the parental tax credit for the tax year of the birth, then—
(a)
an additional amount of parental tax credit abatement for the tax year of the birth is calculated under section MD 16, based on the number of days that are—
(i)
in the parental entitlement period; and
(ii)
in an entitlement period in the tax year following the tax year of the birth; and
(b)
the formula in subsection (2) should not be used to calculate an amount of parental tax credit abatement for the days described in paragraph (a), except for the purposes of determining the amount of parental tax credit abatement for the single day described in section MD 16(3)(a)(ii).
Order in Council increasing amount
(5)
In subsection (3)(a), the amounts appearing as the amount of the threshold may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
Defined in this Act: amount, civil union partner, de facto partner, entitlement period, family credit abatement, family scheme income, parental tax credit, protected family tax credit, relationship period, spouse, tax year
Compare: 2004 No 35 s KD 2(6), (7)
Section MD 13(3)(a)(i): amended, on 1 April 2022, by section 11(1) (and see section 11(3) for application) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MD 13(3)(a)(i): amended (with effect on 1 July 2018), on 18 March 2019, by section 238(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MD 13(3)(a)(ii): amended, on 1 April 2022, by section 11(2) (and see section 11(3) for application) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MD 13(3)(a)(ii): amended (with effect on 1 July 2018), on 18 March 2019, by section 238(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MD 13(3)(b): amended, on 1 April 2008, by section 476(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 13(4) heading: replaced (with effect on 1 April 2014), on 30 March 2017, by section 173(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(4) heading: amended, on 1 April 2015 (applying for dependent children born on or after that date), by section 8(1) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Section MD 13(4): amended (with effect on 1 April 2014), on 30 March 2017, by section 173(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(4): amended, on 1 April 2015 (applying for dependent children born on or after that date), by section 8(2) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Section MD 13(4): amended, on 27 February 2014, by section 117 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 13(4B) heading: inserted (with effect on 1 April 2014), on 30 March 2017, by section 173(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(4B) heading: amended (with effect on 1 April 2015 and applying for dependent children born on and after that date), on 30 March 2017, by section 173(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(4B): inserted (with effect on 1 April 2014), on 30 March 2017, by section 173(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(4B): amended (with effect on 1 April 2015 and applying for dependent children born on and after that date), on 30 March 2017, by section 173(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13(5): amended, on 30 March 2017, by section 173(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 13 list of defined terms protected family support: repealed, on 1 April 2008, by section 476(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 13 list of defined terms protected family tax credit: inserted, on 1 April 2008, by section 476(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 14 Person receiving protected family tax credit
Requirements
(1)
For the purposes of section MD 13(3)(b), a person who receives protected family tax credit for a calendar month in an entitlement period, is a person who, in the calendar month,—
(a)
has no spouse, civil union partner, or de facto partner, receives a main benefit, and derives family scheme income that is less than the amount set out in section MD 13(3)(a)(i):
(b)
has a spouse, civil union partner, or de facto partner, receives a main benefit, and derives family scheme income that together with the family scheme income of their spouse is less in total than the amount set out in section MD 13(3)(a)(ii).
Annualised equivalent
(2)
Section MB 2 (Adjustment for period that is less or more than 1 year) applies to adjust the amount of family scheme income to provide an annualised equivalent.
Defined in this Act: amount, civil union partner, de facto partner, entitlement period, family scheme income, main benefit, protected family tax credit, spouse
Compare: 2004 No 35 s KD 2(6B)
Section MD 14 heading: amended, on 1 April 2008, by section 477(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 14(1): amended, on 1 April 2008, by section 477(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 14(1)(a): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 14(1)(b): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 14 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 14 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MD 14 list of defined terms protected family support: repealed, on 1 April 2008, by section 477(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 14 list of defined terms protected family tax credit: inserted, on 1 April 2008, by section 477(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MD 15 Family scheme income for purposes of section MD 14
For the purposes of section MD 14, in the calculation of family scheme income,—
(a)
section MB 1(1)(a) and (b) (Adjustments for calculation of family scheme income) does not apply; and
(b)
any income from employment that is derived in the calendar month as a result of an extra pay period that occurs in that month is disregarded; and
(c)
for a person who derives, for part of an income year, income, other than from a PAYE income payment, to which section RD 3B or RD 3C (which relate to income other than PAYE) applies, or income from a business, the assessable income and any expenditure incurred in deriving that income that is allowed as a deduction are treated as derived and incurred, respectively, at a uniform daily rate throughout that part of the income year.
Defined in this Act: assessable income, business, deduction, family scheme income, income, income from employment, income year, pay period
Compare: 2004 No 35 s KD 2(6C)
Section MD 15(c): amended, on 29 March 2018 (with effect on 30 March 2017), by section 164 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
MD 16 Additional parental tax credit abatement amount for lump sum if 70-day period crosses 2 tax years
When this section applies
(1)
This section applies when—
(a)
a person is entitled under section MD 11 to a parental tax credit for a parental entitlement period; and
(b)
the credit is paid in a lump sum for the tax year of the birth; and
(c)
the birth occurs less than 70 days before the end of the tax year; and
(d)
a day in an entitlement period is in the parental entitlement period.
Amount of additional abatement
(2)
An additional amount of abatement for the parental tax credit is calculated for the tax year of the birth using the formula:
daily parental tax credit abatement × extra entitlement days.
Definition of items in formula
(3)
In the formula,—
(a)
daily parental tax credit abatement is the amount by which the person’s parental tax credit would be reduced by a family credit abatement calculated as if for the person and an entitlement period consisting of—
(i)
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:
(ii)
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:
(b)
extra entitlement days is the number of days, each of which is—
(i)
in the parental entitlement period; and
(ii)
in an entitlement period in the tax year following the tax year of the birth.
Defined in this Act: amount, entitlement period, family credit abatement, parental entitlement period, parental tax credit, pay, tax year
Section MD 16: added, on 1 April 2008, by section 478 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MD 16 heading: replaced (with effect on 1 April 2014), on 30 March 2017, by section 174(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 16 heading: amended (with effect on 1 April 2015), on 30 March 2017, by section 174(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MD 16(1)(b): replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 118(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(1)(c): replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 118(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(1)(c): amended, on 1 April 2015 (applying for dependent children born on or after that date), by section 9(1) of the Taxation (Parental Tax Credit) Act 2014 (2014 No 28).
Section MD 16(1)(d): inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 118(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(2) heading: replaced, on 1 April 2014, by section 118(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(2): replaced, on 1 April 2014, by section 118(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(3) heading: replaced, on 1 April 2014, by section 118(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16(3): replaced, on 1 April 2014, by section 118(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section MD 16 compare note: repealed (with effect on 1 April 2008), on 17 July 2013, by section 78 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Subpart ME—Minimum family tax credit
Subpart ME heading: substituted, on 1 April 2008, by section 479 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Contents
ME 1 Minimum family tax credit
Tax credit
(1)
A person who qualifies under sections MC 3 to MC 6 (which relate to the qualifying criteria) is entitled to a tax credit (the minimum family tax credit) for an entitlement period equal to an amount calculated using the formula in subsection (2).
Formula
(2)
The formula is—
(prescribed amount − net family scheme income) × weekly periods ÷ 52.
Definition of items in formula
(3)
In the formula,—
(a)
prescribed amount is $34,216:
(b)
net family scheme income is the net family scheme income, calculated using the formula in section ME 3, for a relationship period containing the entitlement period, of—
(i)
the person; or
(ii)
their spouse, civil union partner, or de facto partner; or
(iii)
the person and their spouse, civil union partner, or de facto partner:
(c)
weekly periods is the number of periods of 1 week in the entitlement period for which the person is a full-time earner.
Order in Council increasing amount
(4)
In subsection (3)(a), the amount referred to may be increased as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
Relationship with section 80KW of the Tax Administration Act 1994
(5)
This section is overridden by section 80KW of the Tax Administration Act 1994.
Defined in this Act: amount, civil union partner, de facto partner, entitlement period, full-time earner, minimum family tax credit, net family scheme income, relationship period, spouse, tax credit
Compare: 2004 No 35 s KD 3(2)–(5)
Section ME 1 heading: substituted, on 1 April 2008, by section 480(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 1(1): amended, on 1 April 2008, by section 480(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 1(2) formula: substituted (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 113(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section ME 1(3)(a): amended, on 1 April 2023, by clause 5(1) (and see clause 5(2) for application) of the Income Tax (Tax Credit) Order 2022 (SL 2022/296).
Section ME 1(3)(b): amended, on 1 April 2008, by section 480(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 1 list of defined terms family tax credit: repealed, on 1 April 2008, by section 480(4)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 1 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 480(4)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
ME 2 Meaning of employment for this subpart
Meaning
(1)
For the purposes of the calculation of a minimum family tax credit, employment in the definition of full-time earner, means the activity of a person that gives rise, or will give rise, to an entitlement to a PAYE income payment other than—
(a)
a payment of any of the kinds referred to in section RD 5(3) and (6)(b), (bb), (bc), (bd), and (c) (Salary or wages):
(b)
a schedular payment that is a contract payment for a contract activity or service of a non-resident contractor:
(c)
a payment made by a close company to a person who is a major shareholder of the close company:
(d)
a payment made by a person to their spouse, civil union partner, or de facto partner:
(e)
a payment made by a business carried on by 2 or more persons jointly, whether in partnership or otherwise, to a spouse, civil union partner, or de facto partner of 1 of the persons in business.
When subsections (3) and (4) apply
(2)
Subsections (3) and (4) apply when a person—
(a)
receives a PAYE income payment; and
(b)
on the date of receipt—
(i)
does not undertake any employment; or
(ii)
performs an activity to an extent less than would give rise to an entitlement to the PAYE income payment.
Commissioner’s determination
(3)
The Commissioner may treat the person as having undertaken the employment or performed the activity that would have given rise to the PAYE income payment.
Considerations
(4)
The Commissioner must have regard to—
(a)
the date of receipt of the PAYE income payment; and
(b)
the pay period in which the PAYE income payment occurs; and
(c)
the circumstances giving rise to the PAYE income payment; and
(d)
any other matters that the Commissioner considers relevant.
Defined in this Act: business, civil union partner, close company, Commissioner, contract activity or service, contract payment, de facto partner, employment, full-time earner, minimum family tax credit, major shareholder, non-resident contractor, pay, pay period, PAYE income payment, schedular payment, spouse
Compare: 2004 No 35 ss KD 3(1) “employment”
, KD 3A(10)
Section ME 2(1): amended, on 1 April 2008, by section 481(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 2(1)(a): amended (with effect on 5 January 2010), on 29 August 2011, by section 110 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section ME 2 list of defined terms family tax credit: repealed, on 1 April 2008, by section 481(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section ME 2 list of defined terms full-time earner: inserted (with effect on 1 April 2008), on 6 October 2009, by section 362 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section ME 2 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 481(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
ME 3 Meaning of net family scheme income
When this section applies
(1)
This section applies for the purposes of this subpart.
Formula
(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.
Definition of items in formula
(3)
In the formula,—
(a)
adjusted income is—
(i)
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
(ii)
calculated without reference to the amounts referred to in section MB 1(2) and (3):
(b)
[Repealed](c)
adjusted liability is the amount that would be the person’s income tax liability—
(i)
treating the amount of adjusted income under paragraph (a) as if it were the person’s net income:
(ii)
[Repealed](d)
amount received is the amount referred to in section MB 1(2) for the tax year:
(e)
amount paid is the amount of the deduction referred to in section MB 1(3) for the tax year.
Defined in this Act: amount, deduction, family scheme income, full-time earner, income tax liability, net income, pay, relationship period, tax credit, tax year
Compare: 2004 No 35 s OB 1 “net specified income”
Section ME 3: added, on 1 April 2008, 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 6 October 2009, 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 6 October 2009, 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 17 July 2013, 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 6 October 2009, 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 29 May 2008, 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 29 May 2008, 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 17 July 2013, by section 79(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Subpart MF—Payment of credits
Contents
MF 1 Application for payment of tax credit by instalment
When this section applies
(1)
This section applies when—
(a)
a person who is a principal caregiver expects to be entitled, throughout a selected period, to a WFF tax credit; and
(b)
section MF 2 does not apply to the person; and
(c)
the person wants the tax credit to be paid by instalment before the end of the tax year that contains the selected period.
Application
(2)
The person may ask the Commissioner to pay the tax credit by instalment to them.
Meaning of selected period
(3)
Selected period is a relationship period chosen by the person for the purposes of this section and sections 80KA to 80KG of the Tax Administration Act 1994.
Defined in this Act: ask, Commissioner, pay, principal caregiver, relationship period, selected period, tax credit, tax year
Compare: 2004 No 35 s KD 5(1), (1A)
Section MF 1(1)(a): replaced, on 1 July 2018, by section 18 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 1 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
MF 2 When person not entitled to payment by instalment
When this section applies
(1)
This section applies when—
(a)
a person—
(i)
expects that in a relationship period they will be entitled to receive a main benefit; or
(ii)
applies under section 80KP of the Tax Administration Act 1994 to the chief executive for payment of a tax credit for a period after a main benefit has ended; and
(b)
the chief executive is authorised by section 80KN of that Act to pay to the person—
(i)
an abating WFF tax credit:
(ii)
a Best Start tax credit; and
(bb)
the chief executive and the Commissioner do not agree that the Commissioner will, and the chief executive will not, pay to the person, or each person in a class of persons to which the person belongs, the WFF tax credit that they are entitled to receive and that the chief executive is authorised to pay; and
(c)
the chief executive does not ask the Commissioner under section 80KQ of that Act to accept from the person an application for a notice of entitlement.
No entitlement
(2)
The person is not entitled to apply under section MF 1 for the payment of the tax credit by instalment for the relationship period.
Defined in this Act: abating WFF tax credit, apply, ask, Best Start tax credit, chief executive, Commissioner, main benefit, notice of entitlement, pay, relationship period, tax credit, WFF tax credit
Compare: 2004 No 35 s KD 5(8)
Section MF 2(1)(a)(i): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 2(1)(a)(ii): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 2(1)(b): replaced, on 1 July 2018, by section 19(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 2(1)(bb): inserted (with effect on 1 July 2018), on 18 March 2019, by section 239(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 2(1)(c): inserted, on 1 July 2018, by section 19(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 2(2): amended (with effect on 1 July 2018), on 18 March 2019, by section 239(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 2 list of defined terms abating WFF tax credit: inserted, on 1 April 2008, by section 484(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 2 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section MF 2 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section MF 2 list of defined terms Best Start tax credit: inserted, on 1 July 2018, by section 19(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 2 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 484(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 2 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 2 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 2 list of defined terms WFF tax credit: inserted (with effect on 1 July 2018), on 18 March 2019, by section 239(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
MF 3 Calculating amount of interim WFF tax credit
When this section applies
(1)
This section applies when the Commissioner receives an application under section MF 1 and is required under section 80KD(2) of the Tax Administration Act 1994 to determine the amount of the tax credit to which the person applying would be entitled.
Method for determining family assistance credit
(2)
The Commissioner must—
(a)
calculate an amount (the annual amount) using the formula in subsection (3); and
(b)
ascertain the amount (amount A) that, in schedule 31, column 2 (Annualised equivalent amount for Part M) is the equivalent of the annual amount represented in schedule 31, column 1; and
(c)
calculate the WFF tax credit that the person would be entitled to for the tax year in which the calculation period falls if the family scheme income of the person for the calculation period were equal to amount A.
Formula
(3)
The formula is—
attributed net income × 365 ÷ days.
Definition of items in formula
(4)
In the formula,—
(a)
attributed net income is equal to such amount of the family scheme income expected to be attributable to the part of the tax year that is the part (the calculation period) for which the Commissioner determines that a tax credit is allowable to the person:
(b)
days is the number of days in the calculation period.
Defined in this Act: amount, apply, Commissioner, family scheme income, tax credit, tax year, WFF tax credit
Compare: 2004 No 35 s KD 5(6)
Section MF 3 heading: amended, on 1 April 2008, by section 485(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 3(2)(c): amended, on 1 April 2008, by section 485(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 3 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section MF 3 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 485(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 3 list of defined terms WFF tax credit: inserted, on 1 April 2008, by section 485(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MF 4 Requirements for calculating instalment of tax credit
When this section applies
(1)
This section applies for an instalment by way of tax credit under—
(a)
section MD 1 (Abating WFF tax credit):
(b)
section ME 1 (Minimum family tax credit):
(c)
section MG 1 (Best Start tax credit entitlement).
How to calculate instalment: period
(2)
The Commissioner must calculate the amount of the instalment as if the calculation period referred to in section MF 3 were a relationship period.
How to calculate instalment: amount
(3)
The Commissioner must calculate the amount of the instalment using—
(a)
a value for family scheme income as directed by section MF 3(2)(c); and
Adjustments to instalment amount: abating WFF tax credit and minimum family tax credit
(3B)
Despite subsection (3), when the Commissioner expects that the total of the parts of the instalments paid and still to be paid to a person for a tax year that relate to the person’s estimated tax credit under sections MD 1 and ME 1 for the tax year will differ from the person’s entitlement to a tax credit under sections MD 1 and ME 1 for the tax year if the Commissioner were, for the remaining instalments for the tax year, to pay to the person the part of the amount of the instalment calculated under subsection (3) that relates to amounts of family tax credit, in-work tax credit, child tax credit, parental tax credit, family credit abatement, and minimum family tax credit set out in sections MD 3, MD 4, MD 11, MD 12, MD 13, and ME 1, the Commissioner may—
(a)
decrease the amount of the person’s remaining instalments for the tax year to offset all or part of the expected excess; or
(b)
increase the amount of the person’s remaining instalments for the tax year to offset all or part of the expected shortfall.
Instalment shown in complete dollars
(4)
The instalment is to be shown in a notice of entitlement in complete dollars.
Defined in this Act: amount, Best Start credit abatement, Best Start tax credit, child tax credit, Commissioner, family credit abatement, family scheme income, family tax credit, in-work tax credit, minimum family tax credit, notice of entitlement, parental tax credit, pay, relationship period, tax credit, tax year
Section MF 4: replaced, on 1 July 2018, by section 20 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 4(3B) heading: inserted, on 1 April 2019, by section 240(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 4(3B): inserted, on 1 April 2019, by section 240(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 4 list of defined terms pay: inserted, on 1 April 2019, by section 240(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 4 list of defined terms tax year: inserted, on 1 April 2019, by section 240(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
MF 4B Calculation of instalments: 1 April 2008 to 30 September 2008
[Repealed]Section MF 4B: repealed, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 63(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
MF 4C Calculation of instalments: 1 October 2008 to 31 March 2009
[Repealed]Section MF 4C: repealed, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 63(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
MF 4D Calculation of instalments: 1 April 2010 to 30 September 2010
[Repealed]MF 4D: repealed, on 20 December 2017, by section 53 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
MF 4E Calculation of instalments: 1 October 2010 to 31 March 2011
[Repealed]MF 4E: repealed, on 20 December 2017, by section 54 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
MF 4F Calculation of instalments: 1 April 2018 to 30 June 2018
[Repealed]Section MF 4F: repealed (with effect on 1 April 2021), on 24 May 2021, by section 5 of the Taxation (Budget 2021 and Remedial Measures) Act 2021 (2021 No 19).
MF 4G Calculation of instalments: 1 July 2018 to 31 March 2019
[Repealed]Section MF 4G: repealed (with effect on 1 April 2021), on 24 May 2021, by section 5 of the Taxation (Budget 2021 and Remedial Measures) Act 2021 (2021 No 19).
MF 4H Calculation of instalments: 1 April 2021 to 30 June 2021
When this section applies
(1)
This section applies for calculating the amount of an instalment by way of tax credit under section ME 1 (Minimum family tax credit) for the period starting on 1 April 2021 and finishing on 30 June 2021.
Minimum family tax credit formula: section ME 1
(2)
The instalments for the tax credit under section ME 1 are calculated using the formula—
(prescribed amount − net family scheme income) × weekly periods ÷ 52.
Definition of items in formula
(3)
In the formula,—
(a)
prescribed amount is $30,576:
(b)
net family scheme income is the net family scheme income, calculated using the formula in section ME 3 (Meaning of net family scheme income), for a relationship period containing the entitlement period, of—
(i)
the person; or
(ii)
their spouse, civil union partner, or de facto partner; or
(iii)
the person and their spouse, civil union partner, or de facto partner:
(c)
weekly periods is the number of periods of 1 week in the entitlement period for which the person is a full-time earner.
Defined in this Act: amount, civil union partner, de facto partner, entitlement period, full-time earner, minimum family tax credit, net family scheme income, relationship period, spouse, tax credit
Section MF 4H: inserted (with effect on 1 April 2021), on 24 May 2021, by section 6 of the Taxation (Budget 2021 and Remedial Measures) Act 2021 (2021 No 19).
MF 4I Calculation of instalments: 1 July 2021 to 31 March 2022
When this section applies
(1)
This section applies for calculating the amount of an instalment by way of tax credit under section ME 1 (Minimum family tax credit) for the period starting on 1 July 2021 and finishing on 31 March 2022.
Minimum family tax credit formula: section ME 1
(2)
The instalments for the tax credit under section ME 1 are calculated using the formula—
(prescribed amount − net family scheme income) × weekly periods ÷ 52.
Definition of items in formula
(3)
In the formula,—
(a)
prescribed amount is $31,096:
(b)
net family scheme income is the net family scheme income, calculated using the formula in section ME 3 (Meaning of net family scheme income), for a relationship period containing the entitlement period, of—
(i)
the person; or
(ii)
their spouse, civil union partner, or de facto partner; or
(iii)
the person and their spouse, civil union partner, or de facto partner:
(c)
weekly periods is the number of periods of 1 week in the entitlement period for which the person is a full-time earner.
Defined in this Act: amount, civil union partner, de facto partner, entitlement period, full-time earner, minimum family tax credit, net family scheme income, relationship period, spouse, tax credit
Section MF 4I: inserted (with effect on 1 April 2021), on 24 May 2021, by section 6 of the Taxation (Budget 2021 and Remedial Measures) Act 2021 (2021 No 19).
MF 5 Recovery of overpaid tax credit
When this section applies
(1)
This section applies when the Commissioner considers that the amount of a tax credit under section MD 1 (Abating WFF tax credit) or ME 1 (Minimum family tax credit) set off or refunded to a person for a tax year is more than the proper amount.
Recovery of overpayment
(2)
The Commissioner may recover the excess as if it were income tax payable by the person. However, if, throughout the tax year, the person is in a relationship with a spouse, civil union partner, or de facto partner, the person and that spouse or partner are jointly and severally liable for the payment of the excess.
Shortfall penalties
(3)
The person is not liable for a shortfall penalty under Part 9 of the Tax Administration Act 1994 in relation to an amount that the Commissioner may recover under this section if the amount set off or refunded is more than the proper amount because the person—
(a)
applied for a tax credit under section 41 of that Act before 1 April 2007; and
(b)
was eligible to be a transitional resident at the time of the application; and
(c)
notified the Commissioner before 1 June 2007 that they did not wish the application to be treated under section HR 8(5) (Transitional residents) as an election under section HR 8(4).
Defined in this Act: amount, apply, civil union partner, Commissioner, de facto partner, income tax, notify, pay, shortfall penalty, spouse, tax credit, tax year, transitional resident
Compare: 2004 No 35 s KD 4(4)
Section MF 5(1): amended, on 1 April 2008, by section 487 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 5(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 364(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MF 5 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
MF 6 Overpayment or underpayment of tax credit
When this section applies
(1)
This section applies for the purposes of sections LA 3 and LA 4 (which relate to the treatment of a person’s total tax credits) when—
(a)
a person has an entitlement to a tax credit under section MD 1 (Abating WFF tax credit) or ME 1 (Minimum family tax credit); and
(b)
the person—
(i)
applies under section MF 1 to have the tax credit paid by instalment; or
(ii)
is paid a tax credit under section 80KN of the Tax Administration Act 1994 by the chief executive of the administering department; and
(c)
the instalments of the estimated tax credit, or the total of those instalments, differs from the tax credit, or total tax credit, to which the person is entitled under the family scheme because the instalment has, or the total instalments have, either been overpaid resulting in an excess or underpaid resulting in a shortfall; and
(d)
the Commissioner—
(i)
gives the person a notice of entitlement for the tax year because an instalment of the estimated tax credit has been paid to the person during the tax year; or
(ii)
finds out, otherwise than by way of a notice of entitlement, that an instalment of the estimated tax credit has been paid to the person for the tax year.
Overpayment
(2)
For an overpayment of the person’s entitlement, an amount equal to the excess is—
(a)
added to the tax payable by the person for the tax year; and
(b)
recoverable by the Commissioner under section 80KLB of the Tax Administration Act 1994 as if it were tax payable by the person for the tax year.
Underpayment
(3)
For an underpayment of the entitlement, an amount equal to the shortfall is used to satisfy the person’s income tax liability, and any balance remaining is treated as tax paid in excess and available for use under section LA 7(2) (Remaining refundable credits: tax credits for social policy and other initiatives).
Treatment when tax credits paid by chief executive to certain persons
(4)
The Commissioner may, in relation to a person referred to in subsection (1)(b)(ii), choose to treat the amount of the tax credit paid to the person for the tax year as equal to the person’s entitlement for the tax year.
Defined in this Act: amount, apply, Commissioner, family scheme, income tax liability, notice of entitlement, pay, tax, tax credit, tax year
Section MF 6: substituted (with effect on 1 April 2008), on 6 October 2009, by section 365(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MF 6(1)(a): amended, on 1 April 2008, by section 488 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 6(1)(b): replaced (with effect on 1 April 2008), on 23 March 2020, by section 166(1) (and see section 166(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section MF 6(3): amended, on 1 April 2016, by section 212 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MF 6(4) heading: inserted (with effect on 1 April 2019), on 23 March 2020, by section 166(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section MF 6(4): inserted (with effect on 1 April 2019), on 23 March 2020, by section 166(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section MF 6 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
MF 7 Orders in Council
What may be done by Order in Council
(1)
The Governor-General may, by Order in Council,—
(a)
increase the amounts in section MD 3(4)(a) and (b) (Calculation of family tax credit) by amounts that—
(i)
correspond to the movement in the Consumers Price Index (all groups) after the quarter ended with 30 September 2021 that has not yet been taken into account by an increase:
(ii)
are rounded up to the nearest whole dollar, without affecting the calculation of later increases made under this paragraph:
(ab)
[Repealed](b)
increase the amounts appearing as items in the formula for the in-work tax credit set out in section MD 10(3) (Calculation of in-work tax credit):
(c)
[Repealed](cb)
increase the amounts appearing as the amount of the threshold set out in section MD 13(3):
(d)
increase the amount appearing as an item in the formula for the minimum family tax credit in section ME 1(3) (Minimum family tax credit):
(db)
change the amounts in section MG 2(2)(a) (Best Start tax credit) by an amount that—
(i)
corresponds to the movement in the Consumers Price Index (all groups) after the quarter ended with 30 September 2021 that has not yet been taken into account by an increase:
(ii)
is rounded up to the nearest whole dollar, without affecting the calculation of later increases made under this paragraph:
(dc)
change the amounts in section MG 3(2)(a) (Best Start tax credit abatement):
(e)
replace schedule 31 (Annualised equivalent amount for Part M).
Order in Council under subsection (1)(a): requirements
(2)
An Order in Council under subsection (1)(a),—
(a)
[Repealed](b)
in the case of the first Order in Council made under subsection (1)(a) after the date on which the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 receives the Royal assent, must be made when the total percentage increase in the movement in the Consumers Price Index (all groups) measured from that applying on 1 October 2021 is 5% or more:
(c)
in the case of a subsequent Order in Council under subsection (1)(a), must be made when the total percentage increase in the movement in the Consumers Price Index (all groups) measured from that applying on the date when the requirement to make the immediately preceding adjustment arose is 5% or more.
Order in Council under subsection (1)(db): requirements
(2BA)
An Order in Council under subsection (1)(db),—
(a)
in the case of the first Order in Council made under subsection (1)(db) after the date on which the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 receives the Royal assent, must be made when the total percentage increase in the movement in the Consumers Price Index (all groups) measured from that applying on 1 October 2021 is 5% or more:
(b)
in the case of a subsequent Order in Council under subsection (1)(db), must be made when the total percentage increase in the movement in the Consumers Price Index (all groups) measured from that applying on the date when the requirement to make the immediately preceding adjustment arose is 5% or more.
How movement in CPI determined
(2B)
For the purposes of subsections (1)(a)(i) and (db)(i), (2), and (2BA), a movement in the Consumers Price Index (all groups) over a period is determined by comparing the following numbers:
(a)
the number that, when the period started, was the most recent quarterly index number of the Consumers Price Index (all groups):
(b)
the number that, when the period ended, was the most recent quarterly index number of the Consumers Price Index (all groups).
Order in Council under subsection (1)(ab)[Repealed]
(2C)
[Repealed]Timing of Order in Council
(3)
An Order in Council made under this section must be published under the Legislation Act 2019 no later than 1 December in each year and must apply from 1 April following that date.
Secondary legislation
(3B)
An Order in Council under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Review of in-work tax credit
(4)
The Minister responsible for the Inland Revenue Department, in consultation with the Minister responsible for the department currently responsible for administering the Social Security Act 2018, must cause a review to be undertaken of the amounts of the in-work tax credit allowable under subparts MB to MF and MZ.
Timing of review
(5)
A review undertaken under subsection (4) must occur,—
(a)
in the case of the first review, not later than 30 June 2008; and
(b)
in the case of subsequent reviews, not later than 30 June in the third year after each preceding review.
Definitions
(6)
In this section, Consumers Price Index (all groups) means the Consumers Price Index (all groups) published by Statistics New Zealand or, if that index ceases to be published, any measure certified by the Government Statistician as being equivalent to that index.
Defined in this Act: amount, family tax credit, in-work tax credit, minimum family tax credit, quarter
Compare: 2004 No 35 s KD 5C
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section MF 7(1)(a): amended (with effect on 1 July 2018), on 18 March 2019, by section 241(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 7(1)(a): amended, on 24 May 2011, by section 6(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section MF 7(1)(a): amended (with effect on 20 May 2010), on 28 May 2010, by section 94(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section MF 7(1)(a): amended, on 1 April 2008, by section 489(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7(1)(a)(i): replaced, on 25 November 2021, by section 13(1) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(1)(a)(i): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(1)(ab): repealed (with effect on 1 July 2018), on 18 March 2019, by section 241(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 7(1)(b): amended, on 1 April 2008, by section 489(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7(1)(c): repealed, on 30 March 2021, by section 123(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 7(1)(cb): inserted (with effect on 20 May 2010), on 28 May 2010, by section 94(3) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section MF 7(1)(d): amended, on 1 April 2008, by section 489(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7(1)(db): inserted, on 1 July 2018, by section 21(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(1)(db)(i): replaced, on 25 November 2021, by section 13(2) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(1)(db)(i): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(1)(dc): inserted, on 1 July 2018, by section 21(1) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2)(a): repealed, on 25 November 2021, by section 13(3) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(2)(b): replaced, on 25 November 2021, by section 13(3) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(2)(b): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2)(c): inserted, on 1 April 2018, by section 56(2) (and see section 56(4) for application) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2)(c): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2BA) heading: inserted, on 1 July 2018, by section 21(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2BA): inserted, on 1 July 2018, by section 21(2) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2BA)(a): replaced, on 25 November 2021, by section 13(4) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(2BA)(a): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2BA)(b): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2B) heading: replaced, on 1 April 2018, by section 56(3) (and see section 56(4) for application) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2B): replaced, on 1 April 2018, by section 56(3) (and see section 56(4) for application) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2B): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2B): amended, on 1 July 2018, by section 21(3) of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MF 7(2B)(a): replaced, on 25 November 2021, by section 13(5) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(2B)(a): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2B)(b): replaced, on 25 November 2021, by section 13(5) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Section MF 7(2B)(b): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(2C) heading: repealed (with effect on 1 July 2018), on 18 March 2019, pursuant to section 241(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 7(2C): repealed (with effect on 1 July 2018), on 18 March 2019, by section 241(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MF 7(3): amended, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section MF 7(3B) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section MF 7(3B): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section MF 7(4) heading: amended, on 30 March 2021, by section 123(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 7(4) heading: amended, on 1 April 2008, by section 489(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7(4): amended, on 30 March 2021, by section 123(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 7(4): amended, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section MF 7(4): amended, on 1 April 2008, by section 489(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7(6) heading: inserted, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7(6): inserted, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
Section MF 7 list of defined terms family support: repealed, on 1 April 2008, by section 489(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7 list of defined terms in-work payment: repealed, on 1 April 2008, by section 489(6)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 489(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 489(6)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MF 7 list of defined terms parental tax credit: repealed, on 30 March 2021, by section 123(4) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MF 7 list of defined terms quarter: inserted, on 25 November 2021, by section 13(6) of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Act 2021 (2021 No 52).
Subpart MG—Best Start tax credit
Subpart MG: inserted, on 1 July 2018, by section 22 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Contents
MG 1 Best Start tax credit entitlement
Best Start tax credit for dependent child
(1)
A person is entitled to a tax credit, the Best Start tax credit, for an entitlement period for a dependent child equal to an amount calculated using the formula in subsection (2), if—
(a)
the person qualifies under section MC 2 (Who qualifies for entitlements under family scheme?); and
(b)
the person is a principal caregiver for the dependent child during the entitlement period; and
(c)
the dependent child is aged less than 3 years old; and
(d)
the dependent child is born—
(i)
on or after 1 July 2018; or
(ii)
before 1 July 2018, but the expected due date for the child is on or after 1 July 2018.
Best Start tax credit formula
(2)
The formula is—
Best Start tax credit − credit abatement.
Definition of items in formula
(3)
In the formula,—
(a)
Best Start tax credit is the person’s Best Start tax credit for the entitlement period for the dependent child, calculated using the formula in section MG 2:
(b)
credit abatement is the person’s Best Start credit abatement, calculated using the formula in section MG 3.
Extra instalment
(4)
This section is overridden by section 80KW of the Tax Administration Act 1994.
Defined in this Act: Best Start credit abatement, Best Start tax credit, dependent child, entitlement period, principal caregiver
Section MG 1: inserted, on 1 July 2018, by section 22 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
MG 2 Best Start tax credit
Best Start tax credit for dependent child
(1)
For the purposes of section MG 1(3)(a), the person’s Best Start tax credit for the entitlement period for the dependent child is calculated using the formula—
prescribed amount × days ÷ 365.
Definition of items in formula
(2)
In the formula,—
(a)
prescribed amount is, for the dependent child, $3,632:
(b)
days is the number of days in the entitlement period.
If dependent child dies during entitlement period
(3)
The person continues to be entitled to the Best Start tax credit for 4 weeks after the dependent child dies, if the person otherwise meets the requirements of section MG 1(1).
Order in Council increasing amount
(4)
The amount in subsection (2)(a) may be changed as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).
When another person cares for dependent child
(5)
A Best Start tax credit must be reduced in proportion to the time in the entitlement period that the dependent child spends in the exclusive care of another person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?).
Defined in this Act: amount, Best Start tax credit, dependent child, entitlement period
Section MG 2: inserted, on 1 July 2018, by section 22 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MG 2(2)(a): amended, on 1 April 2023, by clause 6(1) (and see clause 6(2) for application) of the Income Tax (Tax Credit) Order 2022 (SL 2022/296).
MG 3 Best Start credit abatement
When this section applies
(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.
Definition of items in formula
(2)
In the formula,—
(a)
full-year abatement is,—
(i)
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
(ii)
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:
(b)
days is the number of days in the entitlement period excluding—
(i)
the days on which the dependent child is less than 1 year old:
(ii)
the days of any calendar months in which the person receives protected Best Start tax credit as described in section MG 4.
Order in Council increasing amount
(3)
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).
Defined in this Act: amount, Best Start credit abatement, Best Start tax credit, civil union partner, de facto partner, dependent child, entitlement period, family scheme income, protected Best Start tax credit, relationship period, spouse
Section MG 3: inserted, on 1 July 2018, 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 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
MG 4 Person receiving protected Best Start tax credit
Requirements
(1)
For the purposes of section MG 3(2)(b)(ii), a person who receives protected Best Start tax credit for a calendar month in an entitlement period, is a person who, in the calendar month,—
(a)
has no spouse, civil union partner, or de facto partner, receives a main benefit, and derives family scheme income that is less than the amount set out in section MG 3(2)(a)(i):
(b)
has a spouse, civil union partner, or de facto partner, receives a main benefit, and derives family scheme income that together with the family scheme income of their spouse, civil union partner, or de facto partner is less than the amount set out in section MG 3(2)(a)(ii).
Annualised equivalent
(2)
Section MB 2 (Adjustment for period that is less or more than 1 year) applies to adjust the amount of family scheme income to provide an annualised equivalent.
Defined in this Act: amount, Best Start tax credit, civil union partner, de facto partner, entitlement period, family scheme income, main benefit, protected Best Start tax credit, spouse
Section MG 4: inserted, on 1 July 2018, by section 22 of the Families Package (Income Tax and Benefits) Act 2017 (2017 No 51).
Section MG 4(1)(a): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MG 4(1)(b): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MG 4 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MG 4 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Subpart MK—Tax credits for KiwiSaver schemes and complying superannuation funds
Contents
MK 1 Tax credits for superannuation contributions
Tax credits for members paid to fund providers
(1)
A fund provider of a person’s KiwiSaver scheme or a complying superannuation fund has a tax credit equal to an amount calculated under section MK 4 for a member credit contribution to the scheme or fund. Section MK 2 imposes some eligibility requirements for the year described in subsection (3) in relation to the person.
Tax credits for employers[Repealed]
(2)
[Repealed]Calculations: fund providers
(3)
A tax credit referred to in subsection (1) is calculated for a year that begins on 1 July and ends on 30 June.
Calculations: employers[Repealed]
(4)
[Repealed]Defined in this Act: amount, complying superannuation fund, employee, employer, employer contribution, fund provider, KiwiSaver scheme, member credit contribution, pay, tax credit, tax year
Compare: 2004 No 35 ss KJ 1, KJ 6, OB 1 “member credit year”
Section MK 1: substituted, on 1 April 2008, by section 125 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 1(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 366 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MK 1(2) heading: repealed, on 1 April 2009, pursuant to section 53 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section MK 1(2): repealed, on 1 April 2009, by section 53 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section MK 1(4) heading: repealed, on 1 April 2009, pursuant to section 53 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section MK 1(4): repealed, on 1 April 2009, by section 53 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Tax credits for fund providers
Heading: inserted, on 1 April 2008, by section 126 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
MK 2 Eligibility requirements
Requirements for person
(1)
For the purposes of section MK 1(1), the requirements for the person for the year described in section MK 1(3) are the following:
(a)
they must be 18 years or older; and
(b)
they must have a creditable membership of a complying superannuation fund or a KiwiSaver scheme; and
(c)
they must not be entitled under schedule 1, clause 4 of the KiwiSaver Act 2006 or an equivalent provision to withdraw an amount from the scheme or fund; and
(cb)
they must not have made a withdrawal under clause 12B of the KiwiSaver scheme rules (which relates to life-shortening congenital condition withdrawals); and
(d)
they must reside mainly in New Zealand, or otherwise they must—
(i)
be an employee of the State services under the Public Service Act 2020 serving outside New Zealand; or
(ii)
work overseas as a volunteer or for token payment for a charity (within the meaning of section 4(1) of the Student Loan Scheme Act 2011) and the work meets 1 or more of the requirements in schedule 1, clause 2(1) of that Act.
Evidence
(2)
For the purposes of subsection (1)(d)(i) and (ii), the person must give the fund provider written evidence that they meet the requirements, and of the period in which they meet the requirements.
Defined in this Act: amount, complying superannuation fund, creditable membership, employee, KiwiSaver scheme, New Zealand, resident in New Zealand, tax credit
Compare: 2004 No 35 s KJ 2
Section MK 2(1) heading: substituted, on 1 April 2008, by section 127(1) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 2(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 367 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MK 2(1): amended, on 1 April 2008, by section 127(1) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 2(1)(b): substituted, on 1 April 2008, by section 127(2) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 2(1)(c): amended, on 1 July 2019, by section 242 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MK 2(1)(cb): inserted, on 1 April 2020, by section 167 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section MK 2(1)(d)(i): amended, on 7 August 2020, by section 135 of the Public Service Act 2020 (2020 No 40).
Section MK 2(1)(d)(ii): replaced, on 14 May 2016, by section 45 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section MK 2 list of defined terms creditable membership: inserted, on 1 April 2008, by section 127(3) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
MK 3 Payment of tax credits
When this section applies
(1)
This section applies when a member credit contribution is made to a KiwiSaver scheme or a complying superannuation fund.
Payment
(2)
The Commissioner must pay a tax credit to the trustees of the scheme or fund (the fund provider) to which the person has contributed. The amount of the tax credit is calculated under section MK 4. Subsection (5) overrides this subsection.
Full amount paid
(3)
The Commissioner must pay the full amount of the tax credit by direct credit to the fund provider without subtracting any amount that the person or fund provider may be obliged to pay to the Commissioner. Subsection (5) overrides this subsection.
Payment
(4)
The Commissioner must pay the amount of the tax credit to the fund provider within 30 working days of the provider filing a claim form under section 68C(3) or (4) of the Tax Administration Act 1994.
Exception: payment to person or another provider
(5)
Despite subsections (2) and (3), the Commissioner may pay the amount of the tax credit as follows:
(a)
to the person, if it would be impossible or impractical to pay it to the person’s fund provider because either the person has no fund provider, or because the person has died or has suffered a serious illness as defined in schedule 1, clause 12(3) of the KiwiSaver Act 2006; or
(b)
to a fund provider (provider B) other than the fund provider referred to in subsections (2) and (3), if the person is transferring or has transferred to provider B.
Defined in this Act: amount, Commissioner, complying superannuation fund, employer contribution, employer’s superannuation contribution, fund provider, KiwiSaver scheme, member credit contribution, pay, tax credit, trustee
Compare: 2004 No 35 ss KJ 1, KJ 4, OB 1 “member credit contributions”
Section MK 3(1) heading: substituted, on 1 April 2008, by section 128(1) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(1): substituted, on 1 April 2008, by section 128(1) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(2): amended, on 1 April 2008, by section 128(2) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(3): amended, on 1 April 2008, by section 128(3) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(4) heading: substituted, on 1 April 2008, by section 128(4) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(4): substituted, on 1 April 2008, by section 128(4) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(5) heading: added, on 1 April 2008, by section 128(4) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(5): added, on 1 April 2008, by section 128(4) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3(5)(b): amended, on 29 August 2011, by section 111 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section MK 3 list of defined terms employer contribution: inserted, on 1 April 2008, by section 128(5)(a) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3 list of defined terms member credit contribution: inserted, on 1 April 2008, by section 128(5)(a) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 3 list of defined terms superannuation contribution: repealed, on 1 April 2008, by section 128(5)(b) of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
MK 4 Amount of tax credit
What this section does
(1)
This section sets out how to calculate the amount of a tax credit paid to a fund provider under section MK 3(2) for a year described in section MK 1(3).
Amount of credit for year
(2)
The amount of the tax credit is an amount equal to half of a person’s total member credit contributions for the year for all of their complying superannuation funds and KiwiSaver schemes up to a maximum amount of $521.43.
Part-year equivalents: amount of tax credit
(3)
Despite subsection (2), if the person meets the requirements of section MK 2 for only part of the year, the amount of the tax credit is,—
(a)
equal to half of their total member credit contributions for the year, if that amount is equal to or less than the part-year maximum amount calculated under subsection (4); or
(b)
equal to the part-year maximum amount calculated under subsection (4), if half of their total member credit contributions for the year is greater than the part-year maximum amount calculated under subsection (4).
Part-year equivalents: maximum amount
(4)
The part-year maximum amount referred to in subsection (3) is calculated using the formula—
$521.43 × days ÷ 365.
Definition of item in formula
(5)
In the formula, days is the number of days in the year in which the person meets the requirements of section MK 2.
Parts of years
(6)
In subsection (3), a part of the year may include 1 or more periods of the year in which the person meets the relevant requirements and, if there are several periods, for the purposes of the item days in the formula, the days in those periods are added together.
Defined in this Act: amount, employee, employer contribution, first payment period, fund provider, member credit contribution, salary or wages, second payment period, tax credit
Compare: 2004 No 35 ss KJ 3, OB 1 “member credit year”
Section MK 4: substituted, on 1 April 2008, by section 129 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 4(2): amended, on 1 July 2011 (applying for calculating a tax credit for the year starting on 1 July 2011 and later years), by section 7(1)(a) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section MK 4(2): amended, on 1 July 2011 (applying for calculating a tax credit for the year starting on 1 July 2011 and later years), by section 7(1)(b) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section MK 4(3)(a): substituted, on 1 July 2011 (applying for calculating a tax credit for the year starting on 1 July 2011 and later years), by section 7(2) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section MK 4(3)(b): substituted, on 1 July 2011 (applying for calculating a tax credit for the year starting on 1 July 2011 and later years), by section 7(2) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
Section MK 4(4) formula: amended, on 1 July 2011 (applying for calculating a tax credit for the year starting on 1 July 2011 and later years), by section 7(3) of the Taxation (Annual Rates and Budget Measures) Act 2011 (2011 No 23).
MK 5 Crown contributions for members
A tax credit paid to a person’s fund provider under section MK 3 is treated as a Crown contribution for the person, and the KiwiSaver scheme rules and complying fund rules, as applicable, apply to the amount.
Defined in this Act: amount, complying fund rules, fund provider, KiwiSaver scheme, pay, tax credit
Compare: 2004 No 35 s KJ 5(2)
MK 6 Credit given by fund providers
A fund provider who receives a tax credit under section MK 3 must credit the relevant person with the amount which must vest in the person immediately after it is paid to the fund provider. The provider must use the contribution allocation for a member to credit the amount of the tax credit on a pro rata basis across the investment products to which the person has subscribed or been allocated as a member of a KiwiSaver scheme or complying superannuation fund.
Defined in this Act: amount, complying superannuation fund, fund provider, KiwiSaver scheme, pay, tax credit
Compare: 2004 No 35 s KJ 5(3), (4)
Section MK 6: amended, on 1 April 2008, by section 130 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
MK 7 Amounts paid in excess
Despite section MK 6, a fund provider is treated as having the amount of a tax credit paid under section MK 3 for the purposes of recovering any amount paid in excess of that properly payable. For the purposes of this section, the fund provider may subtract an amount from a person’s account to pay the Commissioner the excess amount.
Defined in this Act: amount, Commissioner, fund provider, pay, tax credit
Compare: 2004 No 35 s KJ 5(1), (5)
MK 8 Treatment of tax credits on permanent emigration
When this section applies
(1)
This section applies in the case of a permanent emigration from New Zealand when a person for whom a tax credit has been paid asks their fund provider after their emigration to withdraw or transfer from their KiwiSaver scheme or complying superannuation fund under schedule 1, clause 14 of the KiwiSaver Act 2006 for a KiwiSaver scheme or under a provision equivalent to that one for a complying superannuation fund.
Payment to Commissioner
(2)
The fund provider must pay to the Commissioner as soon as practicable the lesser of—
(a)
the amount of the tax credit paid for the person and held by the provider:
(b)
the amount of member’s accumulation, as defined in the KiwiSaver Act 2006 for the person for a KiwiSaver scheme:
(c)
the amount of employee’s superannuation accumulation for the person for a complying superannuation fund.
Recovery
(3)
If the fund provider does not pay the amount under subsection (2) as soon as practicable, they are treated as having an amount of tax credit paid in excess of that properly payable.
Defined in this Act: amount, ask, Commissioner, complying superannuation fund, employee’s superannuation accumulation, fund provider, KiwiSaver scheme, New Zealand, pay, tax credit
Compare: 2004 No 35 ss KJ 3, OB 1 “member credit year”
Section MK 8 heading: amended, on 1 July 2013, by section 115(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MK 8 heading: amended, on 1 July 2013, by section 94(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section MK 8(1): amended, on 1 July 2013, by section 115(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section MK 8(1): amended, on 1 July 2013, by section 94(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section MK 8(1): amended, on 1 July 2013, by section 94(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section MK 8(2)(a): amended, on 1 April 2008, by section 131 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Section MK 8 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Tax credits for employers[Repealed]
Heading: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 9 Eligibility requirements
[Repealed]Section MK 9: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 10 Amount of credit
[Repealed]Section MK 10: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 11 When tax credits arise
[Repealed]Section MK 11: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 12 Using tax credits
[Repealed]Section MK 12: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 13 When short payment and unpaid compulsory employer contributions found after tax credit used
[Repealed]Section MK 13: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 14 Employees opting out
[Repealed]Section MK 14: repealed, on 1 April 2009, by section 54 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
MK 15 Groups of persons
For the purposes of this subpart, a group of persons described in 1 of the following paragraphs is treated as 1 employer:
(a)
2 or more companies, if the companies are a group of companies; and
(b)
all partners in a partnership; and
(c)
all persons in whom property has become vested, or to whom the control of property has passed in the case of an estate of a deceased person, or a trust, or a company in liquidation, or an assigned estate, or other case in which property is vested or controlled in a fiduciary capacity.
Defined in this Act: company, employer, group of companies, group of persons
Compare: 2004 No 35 s KJ 12
Section MK 15: added, on 1 April 2008, by section 132 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
MK 16 Private domestic workers
For the purposes of this subpart, a private domestic worker who is an employer under paragraph (c) of the definition of employer in section 4 of the KiwiSaver Act 2006 is treated as paying salary or wages to themselves in the capacity of employee.
Defined in this Act: employee, private domestic worker, salary or wages
Compare: 2004 No 35 s KJ 6(4)
Section MK 16: added, on 1 April 2008, by section 132 of the Taxation (KiwiSaver) Act 2007 (2007 No 110).
Subpart ML—Tax credits for redundancy payments
[Repealed]Subpart ML: repealed, on 1 April 2013, by section 10 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
Contents
| ML 1 | What this subpart does [Repealed] | ||
| ML 2 | Tax credit for redundancy payments [Repealed] | ||
| ML 3 | Payment by Commissioner [Repealed] | ||
ML 1 What this subpart does
[Repealed]Section ML 1: repealed, on 1 April 2013, by section 10 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
ML 2 Tax credit for redundancy payments
[Repealed]Section ML 2: repealed, on 1 April 2013, by section 10 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
ML 3 Payment by Commissioner
[Repealed]Section ML 3: repealed, on 1 April 2013, by section 10 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
Subpart MX—Tax credits for R&D tax losses
Subpart MX: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Contents
MX 1 When subpart applies
When this subpart applies
(1)
This subpart applies to a person for an income year when—
(a)
the person chooses that the subpart apply to the person for the income year; and
(b)
the corporate eligibility criteria in section MX 2 are met; and
(c)
ignoring this subpart, the person has a net loss for the corresponding tax year; and
(d)
if the person is a member of a group of entities meeting the requirements of subsection (2), the R&D group, in aggregate and ignoring this subpart, has a net loss for the corresponding tax year; and
(e)
the person incurs R&D expenditure in the income year; and
(f)
the wage intensity criteria in section MX 3 are met; and
(g)
intellectual property and know-how that results from the research or development vests in the person, solely or jointly.
Meaning of R&D group
(2)
R&D group means a group of entities for which—
(a)
each member of the group is a company, look-through company, or limited partnership; and
(b)
all the members of the group that are companies are members of the same group of companies (the company group); and
(c)
each member of the group that is a look-through company would be a member of the company group if the look-through company were treated as being a company; and
(d)
each member of the group that is a limited partnership would be a member of the company group if the partnership were treated as being a company and each partner were treated as holding a proportion of the total shares in the company equal to the proportion of the total capital contributions, as defined in section HG 11 (Limitation on deductions by partners in limited partnerships), to the partnership that is capital contributions made by the partner to the partnership.
Defined in this Act: capital contribution, company, group of companies, income year, intellectual property, know-how, limited partnership, look-through company, net loss, partner, partnership share, R&D expenditure, R&D group, tax year
Section MX 1: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MX 1(1) heading: inserted, on 29 March 2018 (with effect on 1 April 2015), by section 165 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
MX 2 Corporate eligibility criteria
For the purposes of section MX 1(1)(b), a person meets the corporate eligibility criteria for an income year if, for the income year or for the part of the income year for which the person exists if that is not the whole income year,—
(a)
the person is a company that is resident in New Zealand; and
(b)
there is no double tax agreement under which the person is treated as being resident in a foreign country or territory; and
(c)
the person is not an entity established by or subject to—
(i)
(ii)
(iii)
the Crown Entities Act 2004; and
(d)
a total of less than 50% of the shares in the person are held by entities that are each—
(i)
a public authority:
(ii)
a local authority:
(iii)
a Crown Research Institute:
(iv)
a State enterprise; and
(e)
the person is not a listed company or otherwise listed on a recognised exchange.
Defined in this Act: company, Crown Research Institute, double tax agreement, income year, listed company, local authority, public authority, recognised exchange, resident in New Zealand, State enterprise
Section MX 2: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MX 2(c)(i): amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section MX 2(c)(ii): amended, on 1 July 2022, by section 104 of the Pae Ora (Healthy Futures) Act 2022 (2022 No 30).
MX 3 Wage intensity criteria
Wage intensity criteria
(1)
For the purposes of section MX 1(1)(f), a person meets the wage intensity criteria for an income year if, for the income year or for the part of the income year for which the person exists (the part-year) if that is not the whole income year,—
(a)
the amount calculated for the person using the formula in subsection (2) is 0.2 or more; and
(b)
if the person is a member of an R&D group, the amount calculated for the R&D group in aggregate using the formula in subsection (2) is 0.2 or more.
Formula
(2)
The formula is—
total R&D labour expenditure ÷ total labour expenditure.
Definition of items in formula
(3)
In the formula,—
(a)
total R&D labour expenditure for a person, or an R&D group of which the person is a member, is the total, for amounts incurred in the income year or the part-year, of—
(i)
the total amount of contractor R&D consideration multiplied by 0.66:
(ii)
the amount of salary or wages paid to employees for providing R&D material:
(iii)
if the person chooses to include the amount referred to in subsection (4), the same proportion of that amount, for each employee who provides R&D material, as the proportion of the employee’s salary or wages that is paid to the employee for providing R&D material:
(iv)
the amount paid to shareholder-employees, to which section RD 3B(3) or RD 3C(4) (which relate to income derived by shareholders who are employees) apply, for providing R&D material:
(b)
total labour expenditure for a person, or an R&D group of which the person is a member, is the total, for amounts incurred in the income year or the part-year, of—
(i)
the total amount of contractor R&D consideration multiplied by 0.66:
(ii)
the amount of salary or wages paid to employees:
(iii)
if the person makes the election referred to in paragraph (a)(iii), the amount referred to in subsection (4) for each employee:
(iv)
the amount paid to shareholder-employees to which section RD 3B(3) or RD 3C(4) apply.
Amount for optional inclusion in total R&D labour expenditure and total labour expenditure
(4)
For the purposes of subsection (3)(a)(iii) and (b)(iii), the expenditure of an employer for an employee that the person may choose to include in the items total R&D labour expenditure and total labour expenditure is the total of all—
(a)
the employer’s superannuation cash contributions for the employee that are not salary or wages:
(b)
tax on the employer’s superannuation cash contributions for the employee:
(c)
fringe benefits provided by the employer and attributed to the employee:
(d)
the employer’s FBT liability in relation to the employee and fringe benefits attributed to the employee.
Meaning of contractor R&D consideration
(5)
In this Act, contractor R&D consideration means—
(a)
for a person, an amount, excluding GST, paid by the person to another person (the contractor) who is not a member of an R&D group that includes the person and is not employed by the person or by a member of an R&D group that includes the person, as consideration for R&D material provided by the contractor to the person:
(b)
for an R&D group, an amount, excluding GST, paid by a member of the R&D group to a person (the contractor) who is not a member of the R&D group and is not employed by a member of the R&D group, as consideration for R&D material provided by the contractor to a member of the R&D group.
Defined in this Act: contractor R&D consideration, employee, income year, R&D group, R&D material, salary or wages, shareholder-employee
Section MX 3: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MX 3(3)(a)(iv): amended (with effect on 30 March 2017), on 30 March 2022, by section 135(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section MX 3(3)(b)(iv): amended (with effect on 30 March 2017), on 30 March 2022, by section 135(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
MX 4 R&D loss tax credits
Amount of tax credit
(1)
For a tax year, the person has a tax credit equal to the least of the following:
(a)
$500,000 multiplied by the basic tax rate for a company, if the tax year is the 2015–16 tax year:
(b)
$800,000 multiplied by the basic tax rate for a company, if the tax year is the 2016–17 tax year:
(c)
$1,100,000 multiplied by the basic tax rate for a company, if the tax year is the 2017–18 tax year:
(d)
$1,400,000 multiplied by the basic tax rate for a company, if the tax year is the 2018–19 tax year:
(e)
$1,700,000 multiplied by the basic tax rate for a company, if the tax year is the 2019–20 tax year:
(f)
$2,000,000 multiplied by the basic tax rate for a company, if the tax year is the 2020–21 or later tax year:
(g)
the person’s net loss for the tax year multiplied by the basic tax rate for a company:
(h)
the person’s total R&D expenditure, incurred in the income year corresponding to the tax year, multiplied by the basic tax rate for a company:
(i)
1.5 multiplied by the person’s total R&D labour expenditure, incurred in the income year corresponding to the tax year and described in section MX 3(3)(a), multiplied by the basic tax rate for a company.
Related provision in Tax Administration Act 1994
(2)
Section 70C of the Tax Administration Act 1994 applies for an R&D loss tax credit.
Defined in this Act: basic tax rate, company, net loss, R&D expenditure, R&D labour expenditure, R&D loss tax credit, tax year
Section MX 4: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MX 4(1) heading: inserted, on 29 March 2018 (with effect on 1 April 2015), by section 166 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
MX 5 Cancellation of R&D tax losses
The Commissioner must extinguish the person’s tax loss for a tax year to the extent of the amount calculated by dividing the amount of the R&D loss tax credits for the tax year by the basic tax rate for a company.
Defined in this Act: basic tax rate, Commissioner, company, R&D loss tax credit, tax loss, tax year
Section MX 5: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
MX 6 Deduction if increase in basic tax rate for company
When this section applies
(1)
This section applies for a person who has an R&D loss tax credit for a tax year (the credit year) before a tax year (the current year) for which the basic tax rate for a company is increased (the rate increase) if the rate increase results in a basic tax rate for a company that is greater than the basic tax rate for—
(a)
the latest tax year, before the current year, corresponding to an income year for which the person received a deduction under this section relating to the R&D loss tax credit; or
(b)
the credit year, if the person has not received a deduction under this section relating to the R&D loss tax credit for an income year corresponding to a tax year before the current year.
Deduction
(2)
The person has a deduction, for the current year, of an amount calculated for each credit year using the formula—
tax credits × (new rate – old rate) ÷ (new rate × old rate).
Definition of items in formula
(3)
In the formula,—
(a)
tax credits is the greater of zero and the amount calculated from the total amount of the company’s R&D loss tax credits, for tax years before and including the credit year, minus the total amount of—
(i)
the company’s terminal tax, plus tax credits giving rise to imputation credits, minus refundable tax credits giving rise to imputation debits, for the period beginning with the earliest credit year and ending with the tax year before the current year:
(ii)
earlier payments of R&D repayment tax relating to the R&D loss tax credits for credit years before the current year:
(b)
new rate is the basic tax rate for a company after the rate increase:
(c)
old rate is the greatest of—
(i)
the basic tax rate for a company before the rate increase:
(ii)
the basic tax rate for a company for the latest tax year, before the current year, corresponding to an income year for which the person received a deduction under this section relating to the credit year, if there is such a tax year:
(iii)
the basic tax rate for a company for the credit year.
Defined in this Act: basic tax rate, company, income year, R&D loss tax credit, R&D repayment tax, tax year
Section MX 6: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
MX 7 Reinstatement of R&D tax losses and R&D repayment tax
When this section applies
(1)
This section applies when a person (the company) has an R&D loss tax credit for a tax year (the credit year), and in an income year (the reinstatement year) corresponding to the credit year or a later tax year,—
(a)
the company—
(i)
disposes of or transfers intangible property, core technology, intellectual property, or know-how, other than to the amalgamated company as part of an amalgamation and other than for consideration that is assessable income of the company and has a value no less than the market value of the property transferred:
(ii)
fails to meet a corporate eligibility requirement in section MX 2(a) or (b):
(iii)
has a liquidator appointed:
(b)
there is no group of persons that has, for the period (the ownership period) starting on the first day of the income year corresponding to the credit year and ending on the last day of the reinstatement year,—
(i)
lowest voting interests in the company of each person for the ownership period that add up to 10% or more; and
(ii)
when a market value circumstance exists for the company in the ownership period, lowest market value interests in the company of each person for the ownership period that add up to 10% or more.
R&D repayment tax: transfer of intellectual property
(2)
If subsection (1)(a)(i) applies, and subsection (1)(a)(ii) and (iii) does not apply, for the reinstatement year, the company is liable for an amount of R&D repayment tax equal to the lesser of—
(a)
the total of the company’s R&D loss tax credits, for the tax years in the period that begins with the earliest credit year and ends with the tax year corresponding to the reinstatement year, minus the total amount of—
(i)
the company’s terminal tax, plus tax credits giving rise to imputation credits, minus refundable tax credits giving rise to imputation debits, for the tax years in the period:
(ii)
earlier payments of R&D repayment tax relating to R&D loss tax credits for the tax years in the period:
(b)
the amount calculated for the reinstatement year using the formula—
intangibles’ market value × basic tax rate for a company.
Definition of item in formula
(3)
In the formula, intangibles’ market value is the market value of the company’s intangible property, core technology, intellectual property, or know-how disposed of or transferred in the income year other than for consideration that is assessable income of the company and that has a value no less than the market value of the property transferred for that consideration.
R&D repayment tax: loss of continuity
(4)
If subsection (1)(b) applies, and subsection (1)(a)(ii) and (iii) does not apply, for the reinstatement year, the company is liable for an amount of R&D repayment tax, calculated for the tax years in the period that begins with the earliest credit year and ends with the tax year corresponding to the reinstatement year, equal to the lesser of—
(a)
the total of the company’s R&D loss tax credits for the tax years in the period minus the total amount of—
(i)
the company’s terminal tax, plus tax credits giving rise to imputation credits, minus refundable tax credits giving rise to imputation debits, for the tax years in the period:
(ii)
earlier payments of R&D repayment tax relating to R&D loss tax credits for the tax years in the period:
(b)
the total of the amounts calculated for each tax year in the period using the formula—
shares’ market value × basic tax rate for a company.
Definition of item in formula
(5)
In the formula, shares’ market value is the market value of the company’s voting interests or market value interests disposed of or transferred in the income year.
R&D repayment tax: eligibility loss or liquidation
(6)
If subsection (1)(a)(ii) or (iii) applies, the company is liable for an amount of R&D repayment tax equal to the total of the company’s R&D loss tax credits, for the tax years in the period that begins with the earliest credit year and ends with the tax year corresponding to the reinstatement year, minus the total amount of—
(a)
the company’s terminal tax, plus tax credits giving rise to imputation credits, minus refundable tax credits giving rise to imputation debits, for the tax years in the period:
(b)
earlier payments of R&D repayment tax relating to R&D loss tax credits for the tax years in the period.
Reinstatement of R&D tax losses
(7)
The company is allowed a deduction under section DV 26 (Deduction for reinstatement of R&D tax losses) of an amount equal to the R&D repayment tax divided by the basic tax rate for a company.
Related provisions in Tax Administration Act 1994
(8)
Sections 70C and 97C of the Tax Administration Act 1994 apply for R&D repayment tax.
Defined in this Act: amalgamated company, amalgamation, assessable income, basic tax rate, company, core technology, deduction, imputation credit, imputation debit, income tax, income year, intellectual property, know-how, liquidation, market value, market value circumstance, market value interest, R&D loss tax credit, R&D repayment tax, refundable tax credit, tax credit, tax year, terminal tax, voting interest
Section MX 7: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 213(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section MX 7(2): replaced (with effect on 1 April 2016 and applying for the 2016–17 and later income years), on 30 March 2017, by section 175(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MX 7(4): replaced (with effect on 1 April 2016 and applying for the 2016–17 and later income years), on 30 March 2017, by section 175(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MX 7(6): replaced (with effect on 1 April 2016 and applying for the 2016–17 and later income years), on 30 March 2017, by section 175(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section MX 7 list of defined terms tax year: inserted (with effect on 1 April 2016), on 30 March 2017, by section 175(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Subpart MZ—Terminating provisions
Contents
MZ 1 Entitlement to child tax credit
When this section applies
(1)
This section applies when—
(a)
a person is claiming or receiving a child tax credit for a child for an entitlement period ending on 31 March 2006; and
(b)
the person is not entitled to an in-work tax credit under section MD 4 (Entitlement to in-work tax credit).
Entitlement
(2)
If the person maintains continuously their entitlement after 31 March 2006, they remain entitled to receive the child tax credit for entitlement periods after that date.
When another person entitled to credit
(3)
If 2 persons are entitled to an in-work tax credit or a child tax credit for a child for an entitlement period, the amount to which each is entitled is not affected by the entitlement of the other person.
Defined in this Act: amount, child, child tax credit, entitlement period, in-work tax credit
Compare: 2004 No 35 ss KD 2AA(3A), KD 2AAAB
Section MZ 1(1)(b): amended, on 1 April 2008, by section 491(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MZ 1(3): amended, on 1 April 2008, by section 491(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MZ 1 list of defined terms in-work payment: repealed, on 1 April 2008, by section 491(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section MZ 1 list of defined terms in-work tax credit: inserted, on 1 April 2008, by section 491(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
MZ 2 Calculation of child tax credit
Entitlement
(1)
A person who meets the requirements of section MZ 1 is entitled to a child tax credit calculated using the formula in subsection (2).
Formula
(2)
The formula is—
$780 × dependent children × days in entitlement period ÷ 365.
Definition of items in formula
(3)
In the formula,—
(a)
dependent children is the number of dependent children for whom the person is a principal caregiver during the entitlement period:
(b)
days in entitlement period is the number of days in the entitlement period for which 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.
Defined in this Act: amount, child tax credit, civil union partner, de facto partner, dependent child, entitlement period, main benefit, principal caregiver, social assistance payment, spouse
Compare: 2004 No 35 s KD 2(4)
Section MZ 2(3)(b): amended, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MZ 2 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section MZ 2 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
MZ 3 Exclusions from determination of family scheme income
When this section applies
(1)
This section applies for the purposes of determining under section MB 1 (Adjustments for calculation of family scheme income) the entitlement and tax credit of a person under the family scheme.
Refunds of main deposit
(2)
An amount of main deposit made in relation to the 2002–03 or earlier income year that is refunded to the person in the 2003–04 or later income year under any of sections EH 10, EH 13, EH 15, EH 17, and EH 23 (which relate to income equalisation accounts) is not included in family scheme income.
Refunds of adverse event deposit[Repealed]
(3)
[Repealed]Treatment of interest
(4)
The amount of a refund under subsections (2) and (3) does not include an amount of interest payable under section EH 6 or EH 40 (which relate to interest on deposits), as applicable.
Defined in this Act: adverse event deposit, amount, family scheme, family scheme income, income year, interest, main deposit, tax credit
Compare: 2004 No 35 s KD 1(1)(e)(i), (vi)
Section MZ 3: added (with effect on 1 April 2008), on 6 October 2009, by section 371(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section MZ 3(3) heading: repealed, on 18 March 2019, pursuant to section 243(1) (and see section 243(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section MZ 3(3): repealed, on 18 March 2019, by section 243(1) (and see section 243(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
"Related Legislation
"Related Legislation
"Related Legislation
Versions
Income Tax Act 2007
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