Responsible Economic Management – Better targeting and delivery of Family Tax Benefit – $150,000 income test on primary earner for FTB-B 

Key elements

Family Tax Benefit (FTB) Part B will be limited to families where the primary earner has an adjusted taxable income of $150,000 or less.

Couple families where the primary earner has an adjusted taxable income of more than $150,000 per year will no longer be eligible for FTB Part B, regardless of the income of the lower earner.

Couple families where the primary earner has an adjusted taxable income of $150,000 per year or less will be assessed based on the income of the lower earner, as per current FTB Part B income test rules.

Sole parents whose adjusted taxable income is more than $150,000 per year will no longer be eligible for FTB Part B. Sole parents with income below the limit will continue to receive the maximum rate of payment.

A similar income test will apply to these complementary tax offsets which are delivered through the Australian Taxation Office (ATO): the Dependent Spouse Tax Offset; Housekeeper Tax Offset; Child Housekeeper Tax Offset; Parent/ Parent-in-law Tax Offset and the Invalid Relative Tax Offset, to ensure that those who lose access to FTB Part B will not become eligible for this assistance through the ATO.

Background

The Family Tax Benefit program consists of two parts – Part A and Part B. FTB Part A assists families with the direct costs of raising dependent children and is paid on a 'per child' basis. It is means tested on the combined adjusted taxable income of a family.

FTB Part B provides extra assistance to single parent families, and to families with one main income. It is paid on a 'per family' basis and varies according to the age of the youngest child.

FTB Part B is currently income tested only on the lower earner's income. The lower income earner can earn up to $4,380 per annum before their FTB Part B payment is affected. Previously there was no limit on how much the primary, or higher, income earner could earn.

FTB Part B reduces at 20 cents for each dollar earned over $4,380. The lower income earner can earn up to $22,302 before they lose all entitlement if they have a child under five (or $17,356 for the youngest child aged five to 18).

Single income families, including sole parents, receive the maximum rate of FTB Part B.

Implementation

The measure will commence on 1 July 2008.

Total Government Funding

This measure will reduce government expenditure by $543.8 million over five years.
Content Updated: 1 June 2012