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Minimum family tax credits:

It ensures the minimum take home pay for all person is at acceptable level. For example if Mary and Thomas both are not working more than 30 hours a week between them they will not receive the minimum tax credit, and if any one of them is receiving income tested benefit they will also not receive minimum familty tax credit.


Qualifying criteria (section MC3 to section MC6)

 

1. A person to be over 16 years of age
2. A person to be a principal care giver
3. Either the person or child meets the residence requirement
     a. A person to be a resident who has been both resident and present in New Zealand for a continuous period of 12 months at any time. And a person is not a transitional resident.
    b. A child meets the residence requirement when child is present in New Zealand and is a New Zealand resident.
4. Despite above criteria a person will not qualify for In-work tax credit, parental tax credit, or minimum family tax credit if they have received:
    a. An income tested benefit


The formula (section ME1):


Prescribed amount – net family scheme income x weekly period/52
1) Prescribed amount (year 2013) is $22,568
2) Net family scheme income of a person or their spouse or both of them using below formula (section ME3)
    a) Adjustment for calculation of family scheme income (MB1 )
         i) Employment income- tax + exempt income – less any maintenance payment made and don’t include tax loss of qualifying company, income from PIE
3) Weekly period is the number of period for which the person is a fulltime earner.

 

Example

It ensures the minimum take home pay for all person is at acceptable level. For example if Mary and Thomas both are not working more than 30 hours a week between them they will not receive the minimum tax credit, and if any one of them is receiving income tested benefit they will also not receive minimum familty tax credit.

For examle- If Mary is full time mother, and Tom is working 30 hours a week @ $15 an hour. His take home pay is $20,285 (23,400 less tax of 3115). Together they have 3 childern born in 2002,2004 and 2006. They will receive $10,942 family tax credit, and $3120 Inwork tax credit. Their net family income is $20,285 the prescribed amount for minimum family tax credit is $22,724 so they will recieve $2,439 of minimum family tax credit.

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