Understanding Working For Families Tax Credits

There are four different Working for Families Tax Credit payments and you may be entitled to one or more of these if you meet the criteria.

  1. Family Tax Credit

Family Tax Credit is a payment for each dependent child aged 18 years or younger and is assessed against your total annual family income.

You are entitled to a Family Tax Credit if your main income is from:

  • salaries, wages or self-employed earnings; or
  • an income tested government benefit such as Student Allowance or other payments from Work and Income; or
  • NZ Super or Veteran’s Pension.

Family Tax Credit is not payable if you receive a Parent’s Allowance or for any child in your care for whom you receive a Foster Care Allowance, Orphans’ Benefit or Unsupported Child’s Benefit.

You can elect to receive your Working For Families Tax Credits on a weekly or fortnightly basis from Work and Income, or on an annual basis from Inland Revenue.

Maximum Entitlements to Family Tax Credits for the 2012-2013 Financial Year*

Age/Number of Children

Weekly Rate from 1 April 2012 to 31 March 2013

Annual Rate from 1 April 2012 to 31 March 2013

First child if under 16

$92

$4,822

First child if 16 or over

$101

$5,303

Subsequent child if under 14

$64

$3,351

Subsequent child if 13 to 15

$73

$3,822

Subsequent child if 16 or over

$91

$4,745

Abatement Threshold**

 

$36,350

* Maximum Entitlement - all entitlements are subject to many variables including gross family income; maximum income thresholds; the number and ages of the children; and more.

** Abatement Threshold - Working For Families Tax Credits (excluding the Minimum Family Tax Credit) are abated at the rate of 20 cents in the dollar. When a person's annual income exceeds the Abatement Threshold, the Working For Families Tax Credits are abated – Family Tax Credit is abated first, followed by the In-Work Tax Credit and then the Parental Tax Credit.

 

  1. In-Work Tax Credit

In-Work Tax Credit is a payment for families who are in paid work. You can receive an In-Work Tax Credit as long as you're normally in paid work for at least:

  • 30 hours each week as a couple, eg one person works 5 hours and the other works 25 hours; or
  • 20 hours each week as a single parent.

If you normally work less than the required hours but increase your hours from time to time, you may also receive an In-Work Tax Credit for the weeks you work the required hours.

To qualify for an In-Work Tax Credit you must receive one of the following types of income from your work:

  • A salary or wage; or
  • A shareholder salary (if you are a shareholder-employee in a close company; or
  • Income from a business carried on for profit.

As long as you normally work the required hours, you are still eligible if your income includes the following:

  • NZ Super or Veteran’s Pension
  • Parental Tax Credit or Paid Parental Leave (if you worked the required hours prior to taking Paid Parental Leave)
  • Accident compensation for an injury suffered after 1 January 2006, if you worked the required hours prior to your injury
  • Foster Care Allowance, Orphan’s Benefit or Unsupported Child’s Benefit, for one or more children, if this is the only benefit you receive from Work and Income

You cannot receive an In-Work Tax Credit if you receive an income-tested benefit; a Student Allowance; or a Parent's Allowance.

How much you can get depends on your total annual family income before tax, and the number of dependent children in your care.

Maximum Entitlement to In-Work Tax Credit 2013-2014

Number of Children

Maximum In-Work Tax Credit Entitlement

1-3 Children

Up to $60 per week

Each Subsequent Child

An additional $15 per week

  1. Minimum Family Tax Credit

Minimum Family Tax Credit is a payment made to families with dependent children aged 18 or younger, to ensure all families have a minimum income of $437 per week after tax, or $22,724 annually after tax (from 1 April 2013).

If you receive Child Support or have business losses, these amounts will be taken into consideration when calculating your income for the purposes of Minimum Family Tax Credit entitlements.

You can get the minimum Family Tax Credit if you work for a salary or wage for at least 30 hours each week as a couple, or 20 hours each week as a single parent, and you receive Family Tax Credit.

Unless you or your spouse or partner also work the required hours for salary or wages, you won't qualify for Minimum Family Tax Credit for the weeks when your family income is from:

  • NZ Super or Veteran's Pension
  • Student Allowance
  • Self-employment (includes one partner being employed by the other)
  • Shareholder-employee income from a close company you have a 10% or more shareholding in
  • Contract payments to non-resident contractors
  • Income-tested benefits.
  1. Parental Tax Credit

Parental tax credit is a payment up of to $150 per week for a newborn baby (or a baby adopted within the first eight weeks of it’s birth) for the first eight weeks or 56 days after the baby is born.

Your entitlement depends on:

  • Your total family income before tax
  • The number of dependent children in your care
  • The age of these children, and
  • The number of newborn children per year.

You cannot receive a Parental Tax Credit if your family income for the full eight weeks includes:

  • Paid Parental Leave
  • An income-tested benefit, even if it is suspended
  • NZ Super or a Veteran's Pension
  • Student Allowance, or
  • Accident Compensation from ACC, unless you get this for less than three months.

For More Information of Working For Families Tax Credits:

Working For Families Tax Credits Information @ Working For Families Website

Working for Families Tax Credits Information @ IRD

Information You Will Need to Gather Before You Apply for Working For Families Tax Credits:

Apply for Working For Families Tax Credits @ IRD

Estimate Your Working For Families Tax Credit Entitlement (1 April 2013-31 March 2014)

Note: The information contained in this document is current for the 2013-2014 financial year

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