Family Tax Benefit Reform
The Treasurer has announced a number of measures which tighten the eligibility for Family Tax Benefit and put a freeze on indexation of payments. These measures and their impact are outlined below. It’s important to note that for Family Tax Benefit purposes; eligibility is based on Adjusted Taxable Income (ATI).
From 1 July 2014
Family Tax Benefit A & B – freezing of indexation
Indexation will freeze on the following rates and thresholds:
base rate and maximum rate will be fixed for two years for FTB part A
income free area will be fixed for three years for FTB part A
maintenance income free area will be fixed for three years for FTB part A
secondary earner income free area will be fixed for three years for FTB part B
From 1 July 2015
- Family Tax Benefit A – removal of the per child add on
Under this measure, a per child add-on amount will no longer be used to calculate a family’s higher income-free area. The higher income-free area of $94,316 will remain, without the add-on amount of $3,796 for the second FTB child and subsequent FTB children.
- Limit the Large Family Supplement
The Large Family Supplement will only be paid to families with four or more children. This change applies automatically for new and existing recipients of the supplement and will no longer be paid to families with three children from 1 July 2015.
- Family Tax Benefit B – reduction of primary earner income limit to $100,000
The primary earner income limit for FTB part B will reduce to $100,000 from $150,000. Families with primary earner income of more than $100,000 will no longer be eligible to receive FTB part B.
This change applies automatically for new and existing recipients.
As part of this measure the Dependant (Invalid and Carer) Tax Offset income threshold will also reduce to $100,000.
- Family Tax Benefit B – limited to families with children under 6 years
Eligibility for FTB B will be limited to families whose youngest child is younger than 6 years of age from 1 July 2015. During the period between 1 July 2015 and 30 June 2017, existing recipients with a youngest child aged six years and over will not be affected until 1 July 2017.
- Family Tax Benefit A & B – change to end of year supplements
The end of year supplements will be brought back to their original amounts, which were $600 per annum per FTB part A child and $300 per annum to each FTB part B family. There will be no indexation of these amounts from 1 July 2015.
GEM Capital Comment
The impact of this measure is that the maximum income thresholds where FTB part A is no longer payable will decrease where you have more than one child.
- New Family Tax Benefit Allowance
A new allowance will be paid over 4 years to single parents on the maximum rate of FTB part A whose youngest child is aged between 6 and 12 years old from the point when they become ineligible for FTB Part B. This allowance will provide $750 for each child aged between 6 and 12 years in each eligible family.