Income Tax in Australia - Family Tax Benefit

Family Tax Benefit

For families with dependent children the income tax system includes a supplementary set of rules known as Family Tax Benefits (FTB) that are applied in a more complex way by different departments. The benefits and thresholds vary depending on the number of children, and which of the married partners earns the additional income.

There are two parts, FTB-A and FTB-B.

For FTB-A each family receives a payment for each child. In 2008/9 this was

These payments are reduced by 20% for total family income over $42,559 ($45,114 for 2010/11). It plateaus at roughly $1,300 per child until income over $94,000 is reached, at which point it is reduced by 30%.

FTB-B pays about $3,358 if the youngest child is under 5, $2,339 if 5..15. Only one payment for the youngest child is made. The payment is means tested on the income of the parent with the lower income, reducing by 20% for income over $4,526 ($4,745 for 2010/11).

Income is calculated more strictly for FTB purposes. For example, investment losses are considered to be income for the purpose of FTB, and salary sacrifice superannuation contributions are also counted as income.

There are other benefits related to this, for example the 2009 stimulus package included payments to those who received FTB-B.

The full system is more complex, and some information can be found on the websites of the Australian Tax Office, Centrelink, and the Family Assistance Office.

Contrary to the FTB's name, as from 1 July 2009 it will not be possible to claim FTB payments through the taxation system. All payments will be handled by Centrelink.