Low-income working families who are eligible for the minimum family tax credit (MFTC) will receive an increase for the 2016–17 tax year, Revenue Minister Todd McClay has announced.

The tax credit currently guarantees recipients an after-tax income of $23,036 a year ($443 a week).  This will increase to $23,764 a year ($457 a week) for the 2016–17 tax year, beginning on 1 April 2016.

The minimum family tax credit provides a top-up to after-tax income that gives a working family a guaranteed minimum level of income, provided a couple is employed for at least 30 hours a week, or 20 hours a week for a sole parent. 

The tax credit is a transitional measure, to help working families moving off a benefit into paid employment.  Around 3,900 families received the MFTC for the tax year ending 31 March 2014, most of whom were a sole parent caring for one or two children.

The increase, which takes into account rises in inflation and the Budget 2015 increases to benefit rates and the in-work tax credit, was approved by Order in Council on 23 November 2015.

The new rate comes into force on 1 April 2016.