Are you missing out on the Family Tax Benefit?

The Family Tax Benefit is designed to support low and middle income with the cost of raising a family.  It is not only a generous payment, it is non-taxable – meaning you get to keep the lot.

So generous that they must be taken into account when undertaking any tax planning.

There are two Family Tax Benefit components:-

  • Part A is based of combined family income.

  • Part B is based of the secondary earner’s income (but the main income earner’s income must be below $100,000).

Part A is paid in graduated levels:-

  • The full amount per child is paid where the combined family income is under $55,626.

  • For every dollar of income over $55,626, the Part A entitlement is reduced by 20 cents until it reaches what is called a base rate.

  • Families are paid the base rate until combined income exceeds $98,988. Every extra dollar of income then reduces the benefit by 30 cents in the dollar until any entitlement is exhausted.

  • The maximum payment rates are $4,929pa for each child under 13, $6,410pa for children aged between 13 and 15 and the same rate for children aged between 16 and 19 who meet study requirements.

  • The base rate is $1,583pa.

Part B is paid in respect of one child only:-

  • Is paid at $4,190pa where the youngest child is under 5.

  • Is paid at $2,927pa where the youngest child is aged 5 to 18.

  • After the first $5,767 of annual income of the secondary income earner, the rate of payment is reduced by 20 cents for extra dollar of income.

  • This means that no entitlement is paid where the youngest child is under 5 and the secondary income earner’s income exceeds $28,671; $22,388 for youngest child being 5 and over.

Payments can be received either fortnightly or after lodgement of your Tax Return for that year.  But a Tax Return must be lodged by the following 30th June otherwise all entitlements are denied.

The amounts payable can be substantial.  They can mean that a two child family can effectively be paying no income tax on incomes of $60,000.

A lack of proper planning by your accountant could see a loss of not just of tax of 39% but may be 30% of a Part A entitlement and even all of the Part B entitlement.  As they say, proper planning prevents poor performance!

If your accountant hasn’t spoken to you about the Family Tax Benefit then you could be missing out on many thousands of dollars.  We welcome the opportunity to discuss your situation.

At MRS, we will spend today planning for your success.