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In-work tax credit

In-work tax credit (IWTC) is an entitlement for families who are in paid work. You need to tell us how many weeks you qualify for the in-work tax credit.

Do I qualify for in-work tax credit? 

To qualify for in-work tax credit you must be 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.

You must receive one of the following types of qualifying income from that work:

  • a salary or wage
  • a shareholder salary, if you are a shareholder-employee in a close company, or
  • business income

Who doesn’t qualify for in-work tax credit?

You can't get in-work tax credit if you receive:

  • an income-tested benefit
  • a student allowance, or
  • Children's Pension.

You may still qualify

You must "normally" work the required hours. If you work less than the required hours for a short period of time, you may still receive in-work tax credit.

If you're not sure your situation qualifies as "normally" working the required hours, please contact us on 0800 227 773.

If you work the required hours, and receive qualifying income, you are still eligible if your income includes the following:

  • parental tax credit or paid parental leave if you worked the required hours before taking parental leave
  • NZ Superannuation
  • accident compensation for incapacity, suffered 1 January 2006 or later, due to personal injury by accident, if you worked the required hours before your injury (the date of incapacity - the inability to physically work - can be later than the date of the injury or accident)
  • 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, or
  • Weekly Income Compensation (WIC) or Weekly Compensation (WC) paid by Veterans' Affairs New Zealand (VANZ).

Example - NZ Superannuation and wages

Adam and Linda have three school-aged foster children in their care. Adam receives NZ Superannuation and Linda works 35 hours per week. They receive a foster care allowance from Work and Income, so they can only receive in-work tax credit from us.

If you occasionally work the required hours

If you occasionally work the required hours, you’ll need to let us know which weeks you qualify for in-work tax credit. You can:

  • keep a record of each time you work over the required hours, and let us know before we send out your personal tax summary in July or when you file your Individual income tax return (IR3), or
  • let us know each time you work the required hours if you receive your Working for Families Tax Credits payments weekly or fortnightly during the year.

Self-employed

The type of self-employed income you receive may affect whether you can receive in-work tax credit. Please check with us on 0800 227 773 if you have any of the following:

  • trust income
  • self-employed and/or partnership losses
  • income as a shareholder-employee in a close company
  • losses from a loss attributing qualifying company
  • losses from a look-through company (LTC).

Example - Receiving a benefit and working part time

Stu is a single dad who shares the care for his son Dan. He's unemployed and receives sole parent support from Work and Income. He's also got a part-time job as a pizza deliverer for 22 hours a week. Stu doesn’t qualify for in-work tax credit because he receives an income-tested benefit .

Example - Single parent works as a teacher’s aide

Dale is a single parent who works as a teacher aide for 22 hours a week. She's contracted to work for the school from February to December although she doesn’t work during the term holidays. She's entitled to receive in-work tax credit from February until December because she normally works the required hours and receives income during that period. Dale can’t receive in-work tax credit during the summer holidays because she’s not contracted to work for that period.

Example - Away from work sick so worked less hours

Diane is a single parent, who works 25 hours a week for wages. One week she is sick, and can only work 15 hours. Because she normally works 25 hours, she's still entitled to in-work tax credit for the week she is sick.

Example - Finished a job and starting another

Rob worked 40 hours a week as a salesperson. He got a new job as a store manager, also working 40 hours a week. He resigned from his sales job, but had two weeks after he finished before his new job started. He couldn’t receive in-work tax credit for the two weeks while he was between jobs, because he wasn’t working at all.

Example - Occasional hours

Chris is a single parent who works 15 hours a week as a receptionist. Occasionally she works for six hours on a Saturday for another employer selling takeaways.Chris only qualifies for in-work tax credit for the weeks she works 21 hours.

How much can I get? 

The amount of in-work tax credit depends on:

  • your annual family income before tax
  • the number of dependent children in your care.

If you have 1, 2 or 3 children the maximum you can receive is:

  • $72 a week, or
  • $145 a fortnight.

If you have more than 3 children, for each additional child a further:

  • $15 a week, or
  • $30 a fortnight.

Coming off a benefit 

If you're coming off a benefit to start work you may be eligible for in-work tax credit. You need to confirm your working hours with Work and Income as you cancel your benefit or with us after your benefit has cancelled.

To make sure you receive all your entitlements, see Coming off a benefit.

Calculate your entitlement online 

Our online calculator helps you estimate your Working for Families entitlement:

Enter the required information and the calculator will estimate your entitlement. The help text will guide you as you work through the calculator, which will take about 10 minutes to complete.

The calculator will not provide an accurate result if:

  • the number of dependent children in your care changes often
  • you currently receive Working for Families Tax Credits
  • you qualify for the minimum family tax credit and you receive income other than salary or wages
  • your "other income" adjustments total to a negative amount.

Next steps

Check whether you can get any of the other Working for Families Tax Credits payments: