Explanatory Memorandum
(Circulated by authority of the Minister for Community Services, the Hon Larry Anthony MP)Schedule 4 - Increase in deductible child maintenance expenditure for family tax benefit and child care benefit
Summary of proposed changes
This measure will increase the family tax benefit and child care benefit income test deductions for child support payers from 50% to 100%, by allowing a dollar for dollar deduction for any child support paid. This will mean that child support payers with children in a new family will have their family tax benefit (FTB) and child care benefit (CCB) assessed on income that reflects the actual income available to their new family.
Explanation of the changes
The income test for FTB and CCB involves, in part, working out an individuals adjusted taxable income under Schedule 3 to the A New Tax System (Family Assistance) Act 1999 . Under clause 2 of that Schedule, that amount is the sum of a number of prescribed income components, less the amount of the individuals deductible child maintenance expenditure. That expenditure amount is provided by clause 8.
Under clause 8, if an individual incurs an amount of child maintenance expenditure during an income year, 50% of the amount is deductible child maintenance expenditure. This amount is not taken into account in working out the individuals adjusted taxable income.
Under this measure, 100%, instead of only 50%, of child maintenance expenditure is to be excluded from adjusted taxable income. Item 1 achieves this. Thus, a child support payers FTB and/or CCB will be assessed on income that reflects the actual income available to their new family.
This measure commences on 1 July 2001, or (should Royal Assent not be given on or before that date) on proclamation.