Protected family tax credit while getting a main benefit
Family tax credit is part of an annual tax system - payment is assessed using a family's income in the whole of the tax year.
Client is getting a main benefit
A client will get the maximum rate of family tax credit and Best Start tax credits while they are getting a main benefit.
If the client had a high income before going on benefit or after moving off benefit they still qualify for the maximum rate of family tax credit while they are getting a benefit.
Note this protection applies for the whole of a calendar month if the client receives benefit at any time during that month (provided their gross income in that month does not exceed $3,741 as at 1 April 2026).
For example, if a client gets a main benefit in the first week of the month only, they will still receive protected family tax credit for the whole of that calendar month.
Important exception - Do not include any income from a main benefit, pension or employment obtained in the calendar month because of an extra pay in that month.
Family tax credit is paid by Inland Revenue
The family tax credit protection rules also apply if Inland Revenue pays the family tax credit when the client is getting a benefit.
Example of protected family tax credit
A client is married with 2 children. He was a seasonal worker at the local freezing works, worked full-time from April to end of July, and then again from December to end of March and earned $925.00 gross per week ($4,008 per month).
From August to the end of November, he was on Jobseeker Support during his off-season and earned no other income.
This means that while the client was getting Jobseeker Support, he could get the maximum rate of family tax credit because his total gross income was below $3,741 for each calendar month, even though his total income for the tax year was more than $44,900 (as at 1 April 2026).
Legislation
- Person receiving protected family tax credit section MD 14 Income Tax Act 2007
