The Australian government offers certain payments through the Family Assistance Office to help families with their work and family responsibilities. These payments include Child Care Benefit , the Child Care Rebate and the Family Tax Benefit.

Please note, this article was recently reviewed in light of the 2009-10 Federal Budget.

A range of changes to the system were announced, however, they are not due to take effect until 2012, so from 1 July 2009 upper income thresholds for Family Tax Benefit and the family income limit for the Baby Bonus will remain at current levels.

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What is the Family Tax Benefit?
There are two types of family tax benefit - Part A and Part B.

Family Tax Benefit Part A is:

• A payment to help families with the cost of raising children
• Paid per child
• The most common payment to families
• Calculated based on the actual family income over the full financial year (ie from 1 July to 30 June).

Family Tax Benefit Part B is:

• A payment to give extra assistance to sole parents and families with one main income (sole parents earning over $150,000 do not receive the payment).
• Calculated based on actual income of the lower earner over the full financial year.

Depending on your circumstances, you may receive Part A, Part B or both.

Who is eligible for Family Tax Benefit?
To be eligible for Family Tax Benefit Part A and Part B, you need to meet the following criteria:

• Have a dependant child up to the age of 21, or a full-time student aged 21 to 24 in your care.
• Be an Australian resident, or hold certain visas and be living in Australia.

You don't have to be a parent to receive Family Tax Benefit Part A, foster parents, grandparents and other people with children in their full time care are also eligible.

How much Family Tax Benefit Part A can I receive?
Family Tax Benefit Part A is based on your family's annual income over the full financial year (ie from 1 July to 30 June) and the number of children you have as well as their ages.

This payment is either made fortnightly or through the tax system as a lump sum payment at the end of the financial year. You could also receive the payment as a reduced tax liability by asking your employer to reduce the amount withheld from wages paid to you or your partner.

Maximum Rate of Family Tax Benefit A:

*Maximum rate is paid up to a family income of $42,559 and is reduced by 20 cents for every extra dollar of income. Annual figures include the $686.20 per child supplement for 2008/09.

*Part-payment at the base rate is available up to a family income of $94,316 (plus an additional $3,796 for each dependent child after the first child).

Income Thresholds for Family Tax Benefit

• For maximum rate: Family income can be $42,559 a year before payment is affected.
• For part rate: If your income is more than $42,559 a year, payments will reduce by 20 cents for each dollar above $42,559 until the base rate is reached. It is paid at this level until family income reaches $94,316 a year (plus an additional $3,796 for each dependent child after the first). Payments will then reduce by 30 cents for every dollar over that amount until the payment reaches nil.

To receive some Family Tax Benefit Part A, the maximum income levels are:

• $100,801 a year for a family with one dependent child under 18; and
• $102,249 a year for a family with one dependent 18-24 year old.

These thresholds are lifted by:

• $3,779 for each additional dependent child under 18; and
• $3,835 for each additional dependent 18-24 year old.

Extra Payments Available
Families receiving Family Tax Benefit Part A may also be eligible for extra payments:

• Rent Assistance (if renting privately)
• Large Family Supplement (for third and each subsequent child); and
• Multiple Birth Allowance (for three or more children born during the same birth).
• Rates in this Fact Sheet are current as at 1 July 2008.

How much Family Tax Benefit Part B can I receive?
Family Tax Benefit Part B gives extra assistance to single parent families and to two-parent families with one main income, where one parent chooses to stay at home or balance some paid work with caring for their children.

Family Tax Benefit Part B is based on the income of the lower earner (eg in a couple this would be the stay-at-home parent or the person working part-time) and the age of the youngest child.

Income Test
Sole parents with an income of $150,000 or less are eligible to receive Family Tax Benefit Part B.
For couples the primary earner's income is taken into account.

If the income of the primary earner is $150,000 or less, then the secondary earner's income is taken into account. If the secondary income is above $4,526 in 2008-09, payments are reduced by 20 cents for every extra dollar of income.

Couple families who pass the primary earner income test will receive some Family Tax Benefit Part B if the secondary earner's income is below:

• $22 995 in 2008-09 if the youngest child is under 5 years of age or
• $17 904 in 2008-09 if the youngest child is between 5 and 18 years of age

Federal Budget 2008-09 Changes to Family Tax Benefit Part B
As of 1 July 2008 the Family Tax Benefit (FTB) Part B is limited to families where the primary earner has an adjusted taxable income of $150,000 or less. Previously there was no limit on how much the primary, or higher, income earner could earn.

Couple families where the primary earner has an adjusted taxable income of more than $150,000 per year will no longer be eligible for FTB Part B, regardless of the income of the lower earner.

Couple families where the primary earner has an adjusted taxable income of $150,000 per year or less will be assessed based on the income of the lower earner, as per current FTB Part B income test rules (see above).

More information about Family Tax Benefit
For more information, pick up a copy of The what, why and how of Family Assistance booklet from your nearest Family Assistance Office, call 13 6150 or visit the FAO website.