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FAMILY ASSISTANCE

30 June 2017

WHAT IS ELIGIBLE FAMILY TAX BENEFIT INCOME?
 

Assessable taxable income less deductions
Plus net investment losses e.g. rental properties
Plus reportable fringe benefits x 0.535 (Ungrossed up)
Plus tax free benefits or pension
Plus child support received
Less child support paid
Plus reportable superannuation contributions
Plus all foreign income


 

FAMILY TAX BENEFIT PART A & B
 

1. Must meet resident requirements.

2. Must be a dependent child > 35% of time
3. Must be < 20 years old. You will receive benefits up to the 31 December in the year in which they turned 19 years old. 16 to 19 years old  must be studying full-time
secondary study or equivalent.
4. Must be studying full time
.
5. Must not receive another benefit e.g. youth allowance.

6. You and your partner must lodge a tax return within 12 months after the end of the relevant financial year.

 

 

FAMILY TAX BENEFIT PART A

CHILDREN UNDER 13


1 Child

Family Income < $80,000

If under 13 then FTB Part A is $5,493.25 per year until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $68,091. At this level family income of $68,091 the FTB Part A Base Amount is $2,255.70 until family income reaches $80,000.

Family Income > $80,000.

At this level family income of $80,000 the FTB Part A Base Amount is $2,255.70 less $726.35 supplement per child = $1,529.35 until family income reaches $94,316 then FTB Part A reduces by 30c per $1 until Family income reaches $99,414.

2 Children

Family Income < $80,000

If under 13 then FTB Part A is $5,493.25 x 2 = $10,987 until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $84,279. At this level family income of $84,279 the FTB Part A Base Amount is $2,255.70 x 2 = $4,511.40.

Family Income > $80,000 (The first income test is used as it is usually higher than the 2nd income test).

At this level family income of $84,279 the FTB Part A Base Amount is $2,255.70 less $726.35 supplement per child = $1,529.35 x 2 = $3,058.70 until family income reaches $94,316 then FTB Part A reduces by 30c per $1 until Family income reaches $104,512.

3 Children

Family Income < $80,000

If under 13 then FTB Part A is $5,493.25 x 3 = $16,479.75 until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $100,466. At this level FBT Part A is $2,255.70 x 3 = $6,767.10

Family Income > $80,000 (The first income test is used as it is usually higher that the 2nd income test).

At this level family income of $100,466 the FTB Part A Base Amount is $2,255.70 x 3 = $6,767.10 until family income reaches $100,466 then FTB Part A reduces by 30c per $1 until Family income reaches $123,023..


CHILDREN 13 TO 19


1 Child

Family Income < $80,000

If under 13 then FTB Part A is $6,927.70 per year until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $75,263. At this level family income of $75,263 the FTB Part A Base Amount is $2,255.70.

Family Income > $80,000

At this level family income of $80,000 the FTB Part A Base Amount is $2,255.70 less $726.35 supplement per child = $1,529.35 until family income reaches $94,316 then FTB Part A reduces by 30c per $1 until Family income reaches $99,414

2 Children

Family Income < $98,623 (The first income test is used as it is usually higher that the 2nd income test).

If under 13 then FTB Part A is $6,927.70 x 2 = $13,855.40 until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $98,623. At this level family income of $98,623 the FTB Part A Base Amount is $2,255.70 x 2 = $4,511.40.

Family Income > $98,623 (The first income test is used as it is usually higher that the 2nd income test).

At this level family income of $98,623 the FTB Part A Base Amount is $2,255.70  x 2 = $4,511.40 reduces by 30c per $1 until Family income reaches $113,917.

3 Children

Family Income < $121,983 (The first income test is used as it is usually higher that the 2nd income test).

If under 13 then FTB Part A is $6,927.70 x 3 = $20,783.10 until family income reaches $51,903 then FTB Part A reduces by 20c per $1 until family income reaches $121,983. At this level FBT Part A is $2,255.70 x 3 = $6,767.10

Family Income > $121,983 (The first income test is used as it is usually higher that the 2nd income test).

At this level family income of $121,983 the FTB Part A Base Amount is $2,255.70 x 3 = $6,767.10 then reduces by 30c per $1 until the Family income reaches $144,540.





 

CHILD SUPPORT RECEIVED MAY REDUCE PART A

One parent receiving child support

1 Child > $1,565.85 reduces by 50c per $1
.

2 Children > $2,087.80 reduces by 50c per $1
.

Couple each receiving child support

1 Child each > $3,131.70 reduces by 50c per $1
.

Additional children add $521.95 per child then reduces by 50c per $1
.

 

 



FAMILY TAX BENEFIT PART B

The higher earner or single parent must earn < $100,000

The lower earner or single parent must earn as follows:

CHILD UNDER 5

$4,409.20 until lower earner or single parent's income reaches $5,475 then the amount reduces by 20c per $1 until $27,521.

CHILD UNDER 18

$3,186.45 until lower earner or single parent's income reaches $5,475 then the amount reduces by 20c per $1 until $21,407.

 

 

RENT ASSISTANCE

A family must receive more than Family Tax Benefit
Part A base rate.


CHILDREN UNDER 13

1 Child
Family income must be < $68,091
.
If rent >
$180.93 or $218.10 (couple) per week then $4,036.76

2 Children
Family income must be < $84,279
If rent >
$180.93 or $218.10 (couple) per week then $4,036.76

3 Children
Family income must be < $104,512
If rent > $194.37 or $231.54 (couple) per week then $4,560.92

CHILDREN 13 to 19

1 Child
Family income must be < $75,263
If rent >
$180.93 or $218.10 (couple) per week then $4,036.76

2 Children
Family income must be < $98,623
If rent >
$180.93 or $218.10 (couple) per week then $4,036.76

3 Children
Family income must be < $121,983
If rent > $194.37 or $231.54 (couple) per week then $4,560.92

 

 

 

 

CHILD CARE BENEFIT RATES

1 Child is $4.24 per hour or $42.40 per 10 hours per day or $212 for 50 hours.

The Child Care Benefit is income tested and you must use the Child Care Benefit Ready Reckoner to see what % you are entitled to. I have listed part of the schedule below.

Income                     Number of children in care

                                   One           Two          Three

< $44,457               100.00%    104.49%    108.70%

$53,000                      91.45%      98.07%    104.42%

$70,000                      75.77%      86.31%      96.58%

$85,000                      61.93%      75.94%      89.66%

$102,000                    46.25%      64.16%      81.81%

$118,000                    31.50%      45.72%      64.59%

$133,000                    17.66%      28.42%      48.45%

$149,000                       2.90%        9.98%     31.23%

>$154,697                    Nil             4.21%      25.85%

>$160,308                    Nil                Nil         21.55%

>$181,024                     Nil                Nil             Nil

You must also satisfy the following:

1. You must use approved child care.
2. You must have been eligible for Child Care Benefit.
3. You and your partner must have passed the Child Care Benefit test and be working, looking for work, doing voluntary work, training or studying at least 15 hours per week or 30 hours per fortnight.

Google Deewr.gov.au Child Care Benefit Ready Reckoner



CHILD CARE REBATE

Child Care Rebate is 50% of your out of pocket child care costs.

You must calculate your out of pocket Child Care Cost by first calculating if you are eligible for any Child Care Benefits. See below.

The Child Care Rebate annual cap is $7,500 per child per year.

There is no income test for the Child Care Rebate but you must satisfy the following:

1. You must use approved child care.
2. You must have been eligible for Child Care Benefit (entitled at a rate of zero or more).
3. You and your partner must have passed the Child Care Benefit test and be working, looking for work, doing voluntary work, training or studying at least 15 hours per week or 30 hours per fortnight.

Payments are made quarterly other than for the 30 June quarter when the final payment is reconciled your income tax return as the Child Care Benefit payments are income tested using family adjusted taxable income.

 

THINGS THAT CAN GO WRONG

My clients have a 15% error rate for Family Assistance payments.

These are usually due to information not being supplied or dropping off the system.


MOST COMMON ERRORS

1. When children turn 16 you must notify Family Assistance that they are still in full time education.

2. Families are eligible for rent assistance but think that they are over the threshold and do not submit rental lease information.

3. Child Support Agency is not told who the parents are. e.g. a parent is living overseas.

THE AVERAGE ERROR IS APPROX $2,000


 

CHILD SUPPORT AGENCY BASIC FORMULA

This is a complex calculation and it is best to contact the CSA and google "child support agency basic formula" for a full explanation.

There are 8 steps:

Step 1 Parent's child support income is:

Adjusted taxable income (including fringe benefits, reportable superannuation, investment losses, foreign income and tax free pensions) less the self support amount ($23,752) for 30 June 2016 less (if any) dependant child and multi-case allowance.

 

Step 2 Combined parent's child support income.

 

Step 3 The income percentage of each parent.

Divide each parent's child support income by the total.

 

Step 4 Work out each parent's care percentage.

This is the number of nights each parent has the child.

Below is a segment of the table, please review the entire table on the CSA web site.

Care percentage  Nights in a year      Care level                     Child support cost %

0-13%                     0-51 nights               Below regular care       Nil

14-34%                   52-127 nights           Regular care                  24%

35-47%                  128-175 nights          Shared care                   25% + 2% for every % over 35%

 

Step 5 Cost percentage

This is the percentage of the child's costs that each parent meets directly through care.

There is a cost of the children table on the CSA web site.

 

Step 6 Child support percentage.

Each parent's costs of the child percentage is worked out by subtracting the parent's cost percentage from their income percentage.

 

Step 7 Costs of the child.

The costs of the child are determined by the parents' income, the number of children and the age of the children. There is a Costs of Children Table.

Below is a segment of the table, please review the entire table on the CSA web site.

Parents' combined Child Support Income

Children 0 to 12 years

Amounts  0 to $35,628     >$35,629                   >  $71,256                  > $106,885                   > $142,513          >$178,140

1 child       17c per $      $6,057+15c per $      $11,401+12c per $   $15,676+$10c per $   $19,239+7c per $         $21,733               

2 children 24c per $      $8,551+23c per $      $16,745+20c per $   $23,871+$18c per $    $30,284+10c per $       $33,847             

 

Children > 13 years

Amounts  0 to $35,628     >$35,629                   >  $71,256                  > $106,885                   > $142,513         >$178,140

1 child        23c per $       $8,194+22c per $      $16,032+12c per $  $20,307+$10c per $   $23,870+9c per $       $27,077               

2 children 29c per $       $10,332+28c per $     $20,308+25c per $   $29,215+$20c per $  $36,341+13c per $      $40,973

 

Children of mixed age

Amounts  0 to $35,628     >$35,629                   >  $71,256                  > $106,885                   > $142,513          >$178,140

2 children 26.5c per $   $9,441+25.5c per $  $18,526+22.5c per $ $26,542+$19c per $    $33,311+11.5c per $    $37,408            

3 children 29.5c per $  $10,510+28.5c per $ $20,664+27.5c per $ $30,462+$26.5c per $ $39,903+19c per $       $46,672

       

Step 8 Annual rate of child support.

Child support percentage x the costs of the child

 

Some Child Support Additional Payments:

When the costs of maintaining a child are significantly affected. E.g. special needs.

Is the child being cared for, educated or trained in the manor expected by their parents? E.g. private schools, child care costs, before and after school caring, etc.

 

Example: 1

Peter's adjusted taxable income is $80,000. He has contact with his children, aged 5 & 8, every 2nd weekend and on holidays which totals 73 nights in regular care. Jane's (his ex-spouse) adjusted taxable income is $20,000 and does not exceed the self support amount of $23,752.

Step 1 Peter's child support income is $80,000 less self support amount $23,752 = $56,248.

Step 2-3 Peter's income percentage is $56,248/$56,248 = 100% as Jane's child support income is under $23,752.

Step 4-5 Peter's child support cost percentage would be 24% based on 73 nights of regular care.

Step 6 Peter's child support percentages would be 100% - 24% = 76%.

Step 7 Peter's costs of the children would be $8,551 + ($56,248-$35,628) x 23c = $13,293.60.

Step 8 Peter's annual rate of child support is $13,293.60 less 24% = $10,103.14.

 

Example: 2

John's adjusted taxable income is $80,000. He has contact with his children, aged 5 & 8, every 2nd weekend and on holidays which totals 73 nights in regular care. Mary's (his ex-spouse) adjusted taxable income is $80,000. Both their incomes exceed the self support amount of $23,752. Their children attend private schools.

Step 1 John's child support income is $80,000 less self support amount $23,752 = $56,248. Mary's child support income is $80,000 less $23,752 = $56,248. Their combined child support income is $56,248 + $56,248 = $112,496.00.

Step 2-3 John's income percentage is $56,248/$112,496 = 50%. Mary's income percentage is $56,248/$112,496 = 50%.

Step 4-5 John's child support cost percentage would be 24% based on 73 nights of regular care.

Step 6 John's child support percentages would be 50% - 24% = 26%.

Step 7 John's costs of the children would be $23,871 + ($112,496-$106,884) x 18c = $24,881.16.

Step 8 John's annual rate of child support is $24,881.16 x 50% = $12,440.58 less 24% = $9,454.84 plus additional contributions for special needs for private school fees of $5,000 = $14,454.84.

 

Example: 3

John's adjusted taxable income is $80,000. He has contact with his children, aged 5 & 8, every 2nd weekend and on holidays which totals 73 nights in regular care. Mary's (his ex-spouse) adjusted taxable income is $40,000. Both their incomes exceed the self support amount of $23,752. Their children attend private schools.

Step 1 John's child support income is $80,000 less self support amount $23,752 = $56,248. Mary's child support income is $40,000 less $23,752 = $16,248. Their combined child support income is $56,248 + $16,248 = $72,496.00.

Step 2-3 John's income percentage is $56,248/$72,496 = 77.6%. Mary's income percentage is $16,248/$72,496 = 22.4%.

Step 4-5 John's child support cost percentage would be 24% based on 73 nights of regular care.

Step 6 John's child support percentages would be 77.6% - 24% = 53.6%.

Step 7 John's costs of the children would be $16,745 + ($72,496-$71,256) x 20c = $16,993.

Step 8 John's annual rate of child support is $16,993 x 77.6% = $13,186.57 less 24% = $10,021.79 plus additional contributions for special needs for private school fees of $3,000 = $13,021.79.


Disclaimer
The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

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