Federal Budget 2011 – 2012 - Families

This looks at the taxation implications for families.

Deferral of Paid Paternity Leave start date

The Government is to defer the implementation of Paid Paternity Leave by 6 months, from 1 July 2012 until 1 January 2013.  The measure will provide eligible working fathers, and other partners who are providing full-time care or sharing the child's care, with 2 weeks paternity leave paid at a rate equivalent to the national minimum wage for children born on or after 1 January 2013.

Family Tax Benefit income limits to be fixed for three years

The 2011-12 Federal Budget provides an increase in Family Tax Benefit (FTB) Part A for 16-19 year olds.

From 1 January 2012, the new maximum rate of FTB Part A for 16-17 year olds in secondary school will be increased from the current $52.64 per fortnight to $214.06 per fortnight, ie by around $160 per fortnight - an increase of around $4,200 per year.  For 18-19 year olds in school, the rate will be $3,741 per year.  This will align with the 13-15 year old rate and ensure assistance for families does not drop when children turn 16.  The increases to FTB Part A will only be available for families where their teenager is in full-time secondary study, or the vocational equivalent.

From 1 January 2012, the Government will lower the maximum age of eligibility for FTB Pt A from 24 to 21.  This will bring FTB Pt A into line with the reduction in the Youth Allowance age of independence to 22 from 1 January 2012.  From 1 July 2011, families will be able to advance a maximum of 7.5% of their total rate of FTB Pt A payment, up to $1,000.  For example, a family with 2 children under 12 will be able to receive an advance payment of up to $644.

The Government also said it would extend indexation pauses on higher income limits for a further 2 years until 30 June 2014 in the following areas:

• The FTB Pt B primary earner income limit will remain at $150,000;
• The income limit for receiving dependency tax offsets will remain at $150,000;
• The Baby Bonus eligibility limit will remain at $75,000 family income in the 6 months following the birth or adoption of a child;
• The Paid Parental Leave income limit will stay at $150,000 for the primary carer in the previous financial year before the birth of the child;
• The higher income-free area of FTB Pt A will remain constant.

Fortnightly payment rates for Family Tax Benefit and the Baby Bonus will continue to be indexed every year.  The annual end of year FTB supplements will be held at the current levels for the next 3 years.  The FTB supplements will be fixed at the current 2010-11 levels of $726.35 per annum per child for FTB Pt A and $354.05 per annum for FTB Pt B until 1 July 2014.

HECS: reduction in discounts

The Government will reduce the following discounts applying to payments made under the Higher Education Contribution Scheme (HECS):

• The discount available to students electing to pay their student contribution up-front will be reduced from 20% to 10%; and
• The bonus on voluntary payments to the Tax Office of $500 or more will be reduced from 10% to 5%.