Federal Budget 2014/15 - End of Entitlement

May 2014

Anyone accessing Government support and assistance is likely to feel the impact of the Budget's tightening of access and eligibility. In addition, eligibility thresholds themselves will be frozen saving the Government $1.5bn over 4 years.  

Eligibility thresholds for non-pension payments will be maintained for 3 years from 1 July 2014.  Major non-pension payments include Family Tax Benefit, Child Care Benefit, Child Care Rebate, Newstart Allowance, Parenting Payments and Youth Allowance.

Eligibility thresholds for pension and pension related payments will be maintained for 3 years from 1 July 2017. Major pension related payments include the Aged Pension, Carer Payment, Disability Support Pension and the Veterans' Service Pension.

In general, Family Tax Benefit payments will reduce in value with payment rates frozen at 1 July 2014 levels for the next two years. 

Plus, the end of year supplements will be returned to their original values and indexation ceased.  The revised supplements provide $600 per annum per Family Tax Benefit A child and $300 per family per annum for each Family Tax Benefit B family.

Access to family tax benefit B tightened
Effective: 1 July 2015

The Family Tax Benefit B (FTBB) primary earner income limit will be reduced from $150,000 per annum to $100,000 from 1 July 2015.  

The income threshold for the Dependent (Invalid and Carer) Tax Offset will also be reduced to $100,000.

Plus, access to FTBB will be restricted to families whose youngest child is younger than 6 years of age from 1 July 2015.  To manage the transition, families with a youngest child aged 6 and over on 30 June 2015 will continue to be eligible for FTBB for 2 years.

Although for single parents, there is a small reprieve from the age based restrictions on FTBB.  Single parents on the maximum rate of Family Tax Benefit A (FTBA), at the point at which their youngest child turns 6 and they become ineligible for FTBB, they can access a new allowance of $750 per child aged between 6 and 12 years of age. 

Family Tax Benefit A (FTBA) add-on removed for additional children
Effective: 1 July 2015

The Government will remove the FTBA per child add-on to the higher income free threshold for each additional child from 1 July 2015.

Large family supplement restricted
Effective: 1 July 2015

The Family Tax Benefit Part A Large Family Supplement available to families with 4 or more children will be cut.  While the supplement will remain in place the nature of the payment will change.  Instead of an annual payment of $313.90 per child, the supplement will only be paid on the fourth and subsequent child.

New Family Tax Benefit Allowance
Effective: 1 July 2015

A new allowance will be provided for single parents on the maximum rate of Family Tax Benefit Part A whose youngest child is aged between six and 12 years old from the point when they become ineligible for FTB Part B. From 1 July 2015 the allowance will provide $750 per child aged between six and 12. 

First Home Saver Accounts scheme scrapped
Effective: 1 July 2015

The First Home Saver Accounts scheme has been scrapped.  New accounts opened from Budget night will not be eligible for the concession with the Government co-contribution to cease from 1 July 2014 and tax concessions and the income and asset test exemptions for government benefits associated with these accounts to cease from 1 July 2015.

Pensioners & Seniors 

Age pension qualifying age increased to 70
Effective: 1 July 2025

From 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035.

Change to how pensions indexed
1 July 2014 for Parenting Payment Single recipients
1 September 2017 for recipients of the Bereavement Allowance and pension payments such as the Age Pension, Disability Support Pension, Carer Payment and Veterans' Affairs pensions

The way the Government indexes pensions and pension equivalent payments will change to link increases to the CPI.  The change in indexing method will mean that pensions will not grow at the same rate as they would under previous indexing methods as the Government expects savings of $449m over 5 years.

Currently, these payments are indexed in line with the higher of the increases in the CPI, Male Total Average Weekly Earnings or the Pensioner and Beneficiary Living Cost Index.

Seniors health card indexed and eligibility tightened
Effective:  2 July 2015

The income limits for the Commonwealth Seniors Health Card will be indexed by the CPI from September 2014. 

Eligibility for the health card will be restricted by the inclusion of untaxed superannuation income in the eligibility test from 1 January 2015.  All superannuation account-based income streams held by health care card holders before 1 January 2015 will be grandfathered under the existing rules. 

The Seniors Supplement for health care cardholders will be abolished from 20 September 2014. Eligible seniors who do not receive a pension will continue to be eligible for a concession card.

Job seekers 

Learn or earn with 6 month wait for dole
Effective: 1 January 2015 for new claimants; 1 July 2015 for existing recipients

From 1 January 2015, all new Newstart Allowance and Youth Allowance (Other) claimants who are under 30 years of age must demonstrate appropriate job search and participation in employment services support for 6 months before receiving payments. 

Prior workforce participation may reduce the waiting period.  After 6 months, claimants will be required to participate in 25 hours per week Work for the Dole to receive income support, and following this may continue to access employment services for a further six month period, including access to a wage subsidy in lieu of income support.

From 1 July 2015, existing recipients of the Newstart Allowance and Youth Allowance (Other) who are under 30 years of age will also be subject to these new arrangements. These people will have already served six months on Work for the Dole.

Those who have a partial capacity to work, are the principal carer of a child, are part-time apprentices, are in education or are job seekers in Disability Employment Services or Job Services Australia Streams 3 and 4 will be exempt.

Deterrents for refusing work
From 15 September 2014, all job seekers who refuse any work without a good reason will lose their payment for 8 weeks and will no longer be able to waive their penalty through participation in additional activities or due to financial hardship. 

The 8 week non-payment period will also apply to all job seekers who incur penalties for persistent non-compliance.  Job seekers will only be given one opportunity to waive the penalty for persistent non-compliance while in receipt of an income support payment.

Access to disability support pension tightened and restricted 
A range of assessments and restrictions will be introduced for those under the age of 35 on a disability support pension (DSP).  These include:
  • Compulsory work activities for all those assessed as having a work capacity of 8 hours or more per week. Sanctions will be imposed for non-compliance.
  • Compulsory assessment of those granted DSP between 1 January 2008 and 31 December 2011. 
Plus, the time spent overseas by all disability support pension recipients will be restricted to a maximum of 4 weeks in a 12 month period (previously 6 weeks).  The new rules apply from 1 January 2015.

More from the Federal Budget

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Last updated May 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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