Revised Explanatory Memorandum
(Circulated by authority of the Minister for Social Services, the Hon Christian Porter MP)Schedule 2 - Family tax benefit Part B rate
Summary
Under this Schedule, family tax benefit Part B will be removed from 1 July 2016 for couple families (other than grandparents and great-grandparents) with a youngest child aged 13 or over. Single parents, grandparents and great-grandparents caring for a youngest child aged 13 to 18 will continue to have access to family tax benefit Part B (subject to satisfying other relevant requirements).
Background
Under the current rules, an individual's standard rate of family tax benefit Part B is worked out using the table in clause 30 of Schedule 1 to the Family Assistance Act. There are two different rates, depending on whether the individual's youngest child is under five years of age or five years and over. An FTB child who has turned 16 is disregarded for the purposes of family tax benefit Part B unless they are a senior secondary school child (as defined in section 22B of the Family Assistance Act) and the calendar year in which the child turned 18 has not ended.
The current rules also prescribe circumstances in which an individual's Part B rate is nil. An example is where the individual's adjusted taxable income is more than $100,000.
From 1 July 2016, amendments made by this Schedule ensure that an individual who is a member of a couple, with a youngest child who has turned 13 years of age, will not be able to access family tax benefit Part B (their Part B rate will be nil). This rule will not, however, apply where the individual is a grandparent or great-grandparent of that youngest FTB child.
Explanation of the changes
Amendments to the Family Assistance Act
Item 4 inserts a new clause 28D into Schedule 1 to the Family Assistance Act.
Subclause 28D(1) sets out the general rule that an individual's Part B rate is nil if the individual is a member of a couple and their youngest FTB child has turned 13. However, this rule does not apply where the individual is a grandparent or great-grandparent of that FTB child (subclause 28D(2) refers).
Subclauses 28D(3) and (4) then provide a definition of grandparent or great-grandparent, which takes account of biological, adoptive, step and relationship child-parent relationships and is consistent with the definition that applies for the purposes of determining eligibility for the special grandparent rate where an individual is eligible for child care benefit by fee reduction.
Item 10 is an application provision. It provides that the amendments made by this Schedule apply in working out the rate of family tax benefit for days on or after commencement (that is, 1 July 2016).