Family tax payments will be tightened from 2015, with families on sole incomes – those who currently receive family tax benefit part B – to be hit hardest.
The new income threshold test for recipients of FTB part B will be reduced to $100,000 and these families will be cut off from the payment when their youngest child turns six, a drastic change from the current situation where it stops when the youngest child turns 16.
This change reflects the government’s view that assistance should be limited once a child is in school, and will save the government $18 million over two years.
FTB part B was a pet policy of the Howard government and targets families with stay-at-home mothers. ”Staying at home should be a parents’ choice but there are limits to how much support the taxpayer can give,” the Treasurer Joe Hockey said in his budget speech.
The policy changes were designed to help boost female workforce participation, he said.
The effect of this measure is softened for the poorest single parents by a supplementary payment of $750 per year for each child aged between six and 12 years old.
The reduction in the FTB B income threshold will save the government $4 million in 2014-15.
Recipients of family tax benefit A have also been slugged, with the income threshold for eligible families reduced from a maximum of about $150,000 to a new maximum of $94,316. The FTB A and FTB B end-of-year supplements will be reduced to $600 and $300 respectively, a measure which will save the government $3 million over the next two years.
Although these changes will not be implemented until July 2015, the payment rates of the two benefits will be frozen for the next two years.
There are two million families currently receiving family tax benefit A or B, and most families who receive one of the FTBs receive the other as well, a fact Mr Hockey said on Tuesday was a surprise to him when he began the Expenditure Review Committee process.
Family tax benefit payments account for well over half the family assistance budget, and will cost $19 billion in the 2014-15 budget year.
Families and those wishing to start them will still be able to access a range of other payments, from the large-family supplement of up to $314 for the fourth child and subsequent children, and a newborn supplement and upfront payment of up to $2,001 per child.
The government was also keen to advertise its ”genuine” paid parental leave scheme, which budget papers confirm will be reduced from a maximum income threshold cap of $150,000 to a threshold cap of $100,000.
The scheme will be introduced from July 1, 2015 and will include superannuation. It provides up recipients up to 26 weeks pay at their replacement wage at no less than the minimum wage.
With Matt Wade
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