FocusOn - Family Tax Benefit

The Family Tax Benefit is a payment to assist families with the cost of raising children. There are two types of payments comprising the benefit:

	Family Tax Benefit Part A – based on the family’s income, and
	Family Tax Benefit Part B – based on the secondary earner’s income for families with children aged under 18.

The Baby Bonus of $4,133 (indexed) per child is payable at birth or adoption and is paid irrespective of income. The benefit will increase to $5,000 per child from 1 July 2008. Please note that the Baby Bonus must be claimed within 26 weeks of the child’s birth or from the date the child was entrusted into your care, otherwise the entitlement is lost.

Other benefits include payments for large families (three children or greater) or multiple births, rent assistance and a Health Care Card. We recommend you contact Centrelink directly on 13 61 50 for further details or visit www.familyassist.gov.au.

Family Tax Benefit (FTB) – Part A

You can receive FTB Part A if you have a dependent child under 21 years, or have a dependent full-time student aged 21 to 24 years. The payment is for each child.

FTB Part A is based on your family’s yearly taxable income. There is no assets test. The benefit is calculated depending on the number of children you have and ages of your children.

For the 2008 financial year, the maximum FTB Part A is $4,460.30 per year for a child under 13 if the family’s income is below $41,318 a year. This benefit reduces by 20 cents for each dollar of income the family receives above this threshold, until the ‘base rate’ is reached. The ‘base rate’ for a child under 18 is $1,890.70.

Your Family Tax Benefit Part A will stay at the ‘base rate’ until your family’s income reaches $91,542 a year (plus $3,650 for each dependent child after the first). The Family Tax Benefit will then reduce by 30 cents for each dollar over that amount until your payment reaches ‘nil’.

The graph below illustrates the benefit received as the family’s income increases. Please note that the amounts described relate to only one child under 13.

Family Tax Benefit – Part B

You may receive the FTB Part B if:

	You are a single parent family, or if the ‘secondary’ earner in the family earns below the income levels described below, and
	You have a dependent child aged under 16, or you have a dependent child aged between 16 and 18 who is a full time student and does not receive Youth Allowance or any other payment.

For the 2008 financial year, the maximum rate of FTB Part B is $3,584.30 if the youngest child is under 5 years of age and $2,595.15 if the youngest child is between the ages of 5 to 15 (or up to years if a full-time student).

Sole parents receive the maximum rate of FTB Part B. Their income is not taken into account in working out how much benefit the family will receive.
For two-parent families the primary earner’s income is not considered, instead the benefit is determined on the secondary earner’s income (ie. the partner earning the lesser amount).

As shown on the graph below, the secondary earner can earn up to $4,380 a year before the payment is affected, with a reduction of 20 cents for each dollar over that amount. As a secondary earner you will still receive some FTB Part B if your income is below:

	$22,302 a year, if your youngest child is under 5, or
	$17,356 a year, if your youngest child is aged between 5 and 18.

Payment method

There are three ways to receive the FTB:

	As fortnightly payments, paid into your bank account or credit union
	As a lump sum at the end of the financial year from the Family Assistance Office. The amount is calculated when you (and your partner, if applicable) lodge your tax return(s)
	Through the tax system as a lump sum at the end of the financial year.

We recommend contacting Centrelink directly to apply for the benefits as fortnightly payments to reduce compliance requirements in your tax return.

Published : 6 July 2007