Income Tax Act 2007

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).