What are family tax credit assistance
Working for Families Tax Credits is financial help for families who have children, aged 18 years or under, who are financially dependent.
The amount of Working for Families Tax Credits you get depends on:
- how many children aged 18 years or younger you have in your care
- how much you and your partner earn
- where you get your income from (for example, employment, self-employment or a benefit)
Types of family tax credits
There are 5 types of working for family assistance available to you from Inland Revenue.
- Working for Family tax credit – WFFTC.
Family tax credit is the main part of family tax assistance. It is a payment made to low and middle income families for each dependent child 18 and under. The amount you receive depends on your income, how many children you have and how old they are.
- In-work tax credit – IWTC.
This is a payment for families with dependent children who work the required hours each week.
- Minimum family tax credit – MFTC.
This is an extra payment for families who earn up to $23,764 a year.
- Parental tax credit – PTC.
This is a payment available for families with a new-born baby who don’t receive paid parental leave or a Work and Income benefit.
- Paid parental leave – PPL.
Paid parental leave is an entitlement for eligible parents when they take parental leave from their job to care for their new-born or adopted child under six.
Families tax credit requirements
Families Tax Credit is financial help for low to middle income families with children who are 18 years or younger and living at home.
The children must also be financially dependent.
It is not strictly a benefit, but a recognition that not everybody can comfortably afford all the costs of bringing up a family today.
To be able to receive Family Tax Credits you must be:
- A New Zealand resident and have been in New Zealand continuously for at least 12 months at any time.
- A tax resident and be resident in New Zealand when you apply for your payments.
- Caring for a child who is both resident and living in New Zealand.
If in NZ unlawfully
If you and your children are in New Zealand unlawfully or hold only a temporary permit or visa, then for Family Assistance purposes, you are not considered a New Zealand resident. If you recently arrived in New Zealand and meet the residence conditions, you will need to attach a copy of your residence permit to your application for Family Tax credits.
Eligibility of the person claiming family tax credits
To be eligible to receive Family Assistance you must be 16 years old or older, are a New Zealand resident and you have been in New Zealand continuously for at least 12 months at any time.
You must be both a tax resident and resident in New Zealand and caring for a child who is both resident and present in New Zealand.
If your only income is from an income-tested benefit, you are only entitled to family support and if you choose to you will receive it from Work and Income as part of your benefit.
When you move into full-time work or cancel your benefit, Work and Income will transfer your details to IRD to ensure your payments continue – you won’t need to fill in a form to register for Family Assistance from IRD.
Who qualifies for family tax credit
You can get a family tax credit if you have dependent children and your family income is from:
- salary or wages
- a student allowance
- NZ Superannuation or Veteran’s Pension
- an income tested benefit, or
- any other source
You can’t get family tax credit for child (ren) you receive a foster care allowance, orphan’s benefit or unsupported child’s benefit for.
How much is the family tax credit entitlement
The amount and type of payments (tax credits) you are entitled to depend on:
- the number of dependent children you care for
- your total annual family income (this includes any income you and/or your spouse or partner earn)
- if working, the number of hours you and your spouse or partner work each week
- the type of income you and/or your spouse or partner earn then distinguishing between:
(a) earning a salary or wage
(b) being self-employed (includes people who earn income through self-employment, a partnership, estate or trust, rental income, income from overseas, or someone who earns schedular payments
(c) receiving an income-tested benefit, student allowance or other payments from Work and Income
- other income such as interests, dividends, Maori Authority distributions, or passive income of children
Who pays the credit?
Inland Revenue pays the credit if your main income is from working, a student allowance, NZ Super or ACC. Work and Income generally pays your family tax credit if you receive an income-tested benefit as your main income. If you receive an income-tested benefit you can choose to receive your family tax credit from either Work and Income or Inland Revenue. You can only receive Family Tax Credits from either Work and Income or Inland Revenue.