Changes to Family Tax Benefit payments and thresholds

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 Part A into line with the reduction in the Youth Allowance age of independence to 22 from 1 January 2012.

The Government will extend indexation pauses on higher income limits until 30 June 2014 in the following areas: 
    - the FTB Part 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 Part A will remain constant.

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 Part A and $354.05 per annum for FTB Part B until 1 July 2014. 

The education tax refund to include the cost of uniforms from 1 July 2011.

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Minors not eligible to the low income tax offset

The Government will remove the ability of minors (children under 18 years of age) to access the low income tax offset (LITO) to reduce tax payable on their unearned income, such as dividends, interest, rent, royalties and other income from property, with effect from 1 July 2011.

The increases in low income tax offset over recent years have increased the amount of income that can be allocated to children tax-free, especially from discretionary trusts. The distributions to minors (children under 18 years of age) are limited to $416 from 1 July 2011.

Income earned by minors from work will still be eligible for the full benefit of the LITO.

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Self education expenses not deductible against government assistance programs

From 1 July 2011 the law will be amended to prevent deductions being claimed against all government assistance payments, in response to the 2010 High Court decision in FCT v Anstis [2010] HCA 40. 

Commencing the denial of deductions from 1 July 2011 is designed to allow individuals who receive Youth Allowance (Student) to claim a deduction for expenses incurred in gaining their payment for the 2010-11 income year. This is to ensure individuals who have maintained records of their expenditure following the High Court decision are able to claim a deduction. For each of the years 2006-07 to 2009-10, the Commissioner of Taxation has determined that he will administer the law to allow eligible taxpayers to receive an automatic deduction of $550 or make potentially higher claims if expenses can be substantiated.

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Under the levy: 
    - individuals with a taxable income between $50,001 and $100,000 will pay a 0.5% levy on that part of taxable income above $50,000; 
    - individuals with a taxable income of $100,001 or more will pay a 0.5% levy on that part of their taxable income between $50,001 and $100,000 and a 1% levy on that part of their taxable income above $100,000; and 
    - no levy is payable where the taxpayer has a taxable income of $50,000 or less, or where they fall into an exemption category as specified in a legislative instrument that is made by the Minister.

Exemption: Individuals are exempt from the levy if they were affected by a natural disaster during 2010-11 and received an Australian Government Disaster Recovery Payment. Where a trustee has income that is taxed as if the income was of an individual, they will be liable for the levy as per the relevant thresholds.

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