Family Tax Benefit Archives

According to the law, the primary responsibility of raising children and supporting them financially rests with the parents of those children – whether biological, birth parents or adoptive parents. Therefore, if any parent has difficulties in discharging this responsibility, they can approach the government for help. The Australian Government helps individuals and families to balance work and family responsibilities through various financial initiatives which can be grouped under the Family Tax Benefit. This social support is delivered through direct payments to both families and individuals, together with funds for services that offer social and economic support for those with low incomes or who are not employed, or are at a disadvantage due to some other causes. The amount the government pays for each child is dependent on each family’s specific circumstances. Read more about Family Tax Benefit.

Support for families is provided in several ways – through investing in child care, health, education, aged care services, and so on. This support is extended by State and Territory Governments as well as the Australian government.

The welfare system and the taxation system work in tandem to incentivize as well as disincentivize families with regard to the decisions they make about care arrangements and employment, as well as evolving from a specific phase of the work and care lifecycle to the next.

Below, we talk about the chief initiatives of the Australian Government that support families who have to balance paid work and care and the manner in which these initiatives work to help or discourage choices of Australian families. The sections you will read about are based on consultations carried out by the Australian Human Rights Commission, HREOC, and submissions from the public. These were immensely beneficial in framing key components in the welfare and taxation systems, that are necessary to ensure the needs of families and individuals who assume paid work and care.

The Human Rights Commission of Australia has defined this set of principles that must be included in an exhaustive framework to reconcile responsibilities of family and caring, with paid work:

Principle #1 – the welfare system must work in tandem with and not against other support forms that exist for workers who have family and care responsibilities
Principle #2 – the response of the welfare system to dual responsibilities of caring and working, should be firmly based on valued care so that choice can be maximized
Principle #3 – Every type of family and carer who have to balance caring with paid work, should be supported by the system; the system must be flexible so that they can continue supporting families and individuals with care responsibilities even when their needs change throughout their lives.
Principle #4 – the core of the policy development should be the interaction between the taxation system and welfare payments; care should be taken especially when it comes to both incentives and disincentives that may impact the ability of families to undertake both care and paid work.

Current Government Assistance For Families

Australian welfare provisions are underscored by targeted and means-tested entitlements, and their distribution is prioritized for those who need it the most or are disadvantaged the most. These specific initiatives are combined with generic or universal initiatives like maternity payment, applicable to every family.

As income-testing is often performed, it is important for families to keep their family income estimate up to date; it should also include foreign income earned whether you pay tax on that income or not in Australia.

Let us now see in some detail, the tax benefits offered by the Australian Government:

Family Tax Benefit Part A (FTB (A))

This payment is made to families with children who have not yet reached the age of 21 and are dependent on their parents, or on children aged 21 to 24 and are full-time students, and hence dependent. This benefit is tested on the basis of the family’s income. Families with income up to $56,137 or less are eligible for the maximum FTB (A) rate, and those with higher incomes are subject to income testing to determine the rate. Once the family’s income touches the specified limit, only the base amount of benefit is paid. When the income crosses $99,864, the FTB (A) rate is reduced by 30 cents per dollar. The rates are periodically revised to adjust for inflation, cost of living and wages.

FTB (A) is paid for each eligible child with the rate decided on the basis of:

Adjusted taxable income and income test
Number of children in the care of parents and their ages

In case caring responsibilities for children are shared, the percentage of care is used to determine the rate of payment. In case either parent has a child from a previous relationship in their care, they will need to be eligible as per the Maintenance Action Test, to get a sum over the base rate of FTB (A) – and it applies to both parents.

The payment rate is also affected by child support payments received by any parent; it may also be mandatory for children to meet the requirements of immunization and ‘Healthy Start for School’ initiatives. The FTB (A) payments may be reduced if the children don’t meet these requirements. If you want to find out exactly how much payment you are eligible for, you can check the official government services website.

The base rate payable per child in a fortnight is $61.46.; this is not the minimum rate for FTB (A); families may receive less or more depending on their income. The maximum rate depends on the age of each child that you receive the benefit for:

0-12 years, $191.24
13 to 15 years, $248.78
16-19 years, $248.78 for children who meet study requirements
0-19 years for children in approved care organizations, %61.46

The FTB (A) supplement is an annual payment that some families are eligible for. This is determined after the payments to the family are balanced at the financial year-end.

For the financial year 2021-22, up to $788.40 per eligible child is payable, and this amount depends on:

The family income
Whether the care is shared
The number of days the family was eligible for FTB (A)

Family Tax Benefit Part B (FTB (B))

This benefit is aimed at single income and single-parent families. In families with two parents, the income test for FTB (B) is conducted only on the second or lower-income using the adjusted taxable income. In families where caring responsibilities are shared, the percentage of care is used to work out the payable rate of FTB (B). Families with annual adjusted taxable income under $100,900 are eligible for the maximum FTB (B) rate; those with incomes higher than that are not eligible. FTB (B) is payable till the end of the calendar year in which the youngest child turns 18 years of age. In families with partnered parents or carers, the FTB (B) will be paid till the youngest child reaches 13 years of age. A 2-part income test is used to determine the rate of payment: the cut-off for the primary earner stays the same at $100,900, while for the secondary earner it is $5840; after that, the payments are reduced by 20 cents per dollar earned. Read more about Family tax benefit.

The rate of payment is subject to change for parents returning to work.

For the part of the financial year prior to you or your partner returning to work, you could be eligible to get the maximum rate – this is done after confirming your actual annual income by either:

Balancing your payments
Finalizing the FTB lumpsum claim

If the parent returning to work is earning lower than the other, or is returning to work for the first time since the child’s birth or entering their care, the family may be paid the maximum rate. It is essential to inform the authorities that you have returned to work, within 12 months from the financial year-ending since you went back to work. This can be done through the Centrelink online. Read more about Family tax benefit.

The payments may be paid every fortnight, or as a lump sum at the end of the financial year; it may also be shown as a reduction in tax deducted from wages paid to customers or partners. The maximum amount of FTB(B) that can be paid for a child aged less than five is $162.54 in a fortnight. For children aged 5 to 15, and up to 16-18, if they are full-time students, the maximum amount payable is $113.54 every fortnight.

Parents receiving FTB (B) may also be eligible to get the FTB (B) supplement, an annual payment. Once the payments are balanced at the financial year-ending, the payment will be made to eligible parents.

For the financial year 2021-22, an amount up to $383.25 per family may be paid. The amount is based on:

Whether the care is shared
What the family income is
How many days the family was eligible for FTB(B)

Child Care Benefit (CCB)

This is a benefit paid to families that utilize formal or informal (registered) child care, approved by the authorities. This works either as a fee reduction for child care service or as a lumpsum payment to the parents at year-end. For income testing, only approved care is eligible; it is also payable to families where the care is provided by family members like grandparents.

Child Care Tax Rebate

A 30% tax rebate is offered for child care expenses out of the pocket, less the CCB, reconciled at the financial year-end, subject to a maximum amount per child as specified by the Government from time to time. Parents can claim this rebate in the next financial year, for the child care expenses incurred in the current financial year.

Parenting Payment

This is an income-tested payment made to those caring for children aged less than 16, chiefly in single income and single-parent families who have low income. The amount paid to single parents is usually slightly more than the amount paid to each parent in a two-parent family. The amounts are revised every year or as the Government sees fit. Read more about Family tax benefit.

Carer Payment

This is an income-tested payment, given under pension conditions to people who are unable to support themselves with substantial employment because they have to provide care. Two adjustments are made in a year, to align with the increase in wages or living costs.

Often, families receive multiple benefit payments at the same time, with FTB (A) being the most common payment made to parents to help them meet the cost of raising children. Here the amount paid is based on factors like the annual income of the family, the number of children, and their ages. Several single income and single-parent families are paid FTB (B) which provides additional assistance.

There are also other government payments like disability support, veteran’s affairs payments, etc., which are made to carers and parents. Many fathers are also given Newstart Allowance as parenting payment is restricted to a single partner in low-income families, and where parents are separated and both provide care, even if the care is shared equally.

Grandparents who are mainly responsible for bringing up grandchildren, and who receive support payments like Age Pensions, are eligible to receive a special CCB rate to cover the entire expense of approved care for up to 50 hours per week. If they care full time for the children, they can also get parenting payment and FTB (A or B) which can help grandparents, especially if they are on income support.

Additional Information on Family Tax Benefit

Parents can appoint representatives to deal with the Family Services department; they can be authorized to receive payments, make enquiries and more.
Sometimes, families are paid more than what they are eligible for, due to some errors; in such a case, they incur a Centrelink debt and need to pay that money back.
If any of the recipients disagree with the decision of the Government, they have the right to file for a review of those decisions.
In cases where parents are separated, the authorities provide support and information to help them with their situation.

Posts in category: Family Tax Benefit

A Complete Guide to Family Tax Benefit