What is Family Tax Benefit & is it Taxable Income?

Juston Jirwander Bishop Collins Accountant

Juston Jirwander

Associate Director

What is family tax benefit?

Family Tax Benefit (FTB)

The Family Tax Benefit (FTB) is a 2-part payment to assist with the cost of raising children.

To qualify for Family Tax benefit you must meet the following:

  • You must have a dependent child or full-time secondary student aged 16 to 19 who isn’t getting a pension, payment, or other benefits like Youth Allowance.
  • Care for the child for at least 35% of the time.
  • Meet an income test.

Family Tax Benefit Part A

Family Tax Benefit Part A eligibility

Family Tax Benefit (FTB) Part A is paid per child. The amount you will receive depends on your family’s circumstances.

 

You may be eligible for FTB Part A if you care for a dependent child who’s either:

However, you must also meet all the following:

Your child also needs to meet the immunisation requirements and Healthy Start for School requirements, if they apply. Your FTB Part A payment may be reduced per fortnight for each child who doesn’t meet these requirements.

After the financial year, if you didn’t get enough FTB during the year, you may also get a top up. For periods before 1 July 2018, immunisation requirements apply to the FTB Part A supplement.

To get the FTB Part A supplement for 2018-19 your family’s adjusted taxable income must be $80,000 or less.

How much is Family Tax Benefit Part A?

The maximum rate for FTB Part A depends on the age of the child you receive it for, and your taxable income for the year.

You may receive the maximum rate for each child per fortnight if your family’s adjusted taxable income is $55,626 or less. The maximum rate (p/fortnight) is:

  • $189.56 for a child 0 to 12 years
  • $246.54 for a child 13 to 15 years
  • $246.54 for a child 16 to 19 years who meets the study requirements
  • $60.90 for a child 0 to 19 years in an approved care organisation.

What is the FTB Part A supplement rate?

If you receive FTB Part A, you may also be eligible to receive the FTB Part A supplement. This is a yearly payment.

If you’re eligible, you’ll receive it after Centrelink has balanced your payments. Your payments are balanced after the end of the financial year.

For the 2019-20 financial year, the Family Tax benefit Part A supplement is a  payment of up to $766.50 for each eligible child.

For the 2020-21 financial year, this payment has gone up to $781.10 for each eligible child. The amount you’re paid depends on all of the following:

  • The number of children you have in your care
  • If you share care the care of your children
  • Your family’s income
  • The number of days you were eligible for FTB Part A.

There is more information regarding FTB Part A here:

https://www.servicesaustralia.gov.au/individuals/services/centrelink/family-tax-benefit/how-much-you-can-get/ftb-part-payment-rates

Family Tax Benefit Part B

FTB Part B eligibility

Family Tax Benefit Part B is a separate entitlement to FTB Part A and you may receive both parts of the FTB entitlement or you may only receive Part A or Part B.

To receive Family Tax Benefit Part B you need to be either a single parent or non-parent carer, a grandparent carer, or part of a couple with 1 main income.

You may be eligible if:

  • You’re a member of a couple with 1 main income and care for a dependent child aged under 13, or
  • You’re a single parent or non-parent carer, or a grandparent carer and care for a dependent child aged under 18. The child must meet study requirements if they’re aged 16 to 18.

It is also necessary for you to meet the following 3 requirements:

Neither you nor your partner can receive FTB Part B while also receiving Parental Leave Pay.

You also won’t be eligible for FTB Part B if your annual adjusted taxable income is more than $100,000.

Payments of FTB part B will be received up until the end of the calendar year your youngest child turns 18. If this child is between 16 and 18, they must be in secondary school full-time.

There is separate information for single grandparent carers.

How much is FTB Part B?

If your income is $100,000 or less, you will be eligible to receive the maximum rate of Family Tax Benefit Part B.

The maximum rate for FTB Part B depends on the age of your youngest child.

The maximum rate per family each fortnight is:

  • $161.14 when the youngest child is 0 to 5 years of age.
  • $112.56 when the youngest child is 5 to 18 years of age.

There is more information regarding Family Tax Benefit Part B on the Centrelink Website. Click the link below to read more.

https://www.servicesaustralia.gov.au/individuals/services/centrelink/family-tax-benefit/how-much-you-can-get/ftb-part-b-payment-rates

Is family tax benefit taxable income

Is Family Tax Benefit Taxable Income?

Taxable income is your gross income minus allowable deductions. It’s the income you must pay tax on. It includes income from:

  • Wages and salaries
  • A business
  • Investments
  • Any taxable payments you receive from Services Australia
  • Taxable payments you receive from the Department of Veterans Affairs
  • JobKeeper Payment from your employer.

Income under the tax-free threshold counts as taxable income.

Taxable lump sum payments also count in your taxable income. These may include:

Centrelink will not count superannuation withdrawals made under either the:

  • First Home Super Saver Scheme as taxable income
  • COVID-19 early release of superannuation.

If you make a loss for the year, your taxable income will be nil. It’s nil when your allowable deductions are more than your gross income. You can find out more about gross income and allowable deductions on the Australian Taxation Office (ATO) website.

Payments you receive from Centrelink not included as taxable income are:

All Family Tax Benefit payments are not included in Taxable income. However, It is important you do not underestimate your gross family income when applying for Family Tax benefit. Although you may not be taxed on your FTB payments, if you have underestimated your income or you have neglected to update any increase or change in your income, which may affect the amount of FTB you receive, you will incur a debt from Centrelink. This debt will be required to be paid back, similar to a tax debt. There is no interest charged on this debt and you will have the option to set up a payment plan if you are unable to pay the full amount back at once.