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Budget 2015: Families & Individuals

May 2015

How will families and individuals benefit – or lose out – as a result of the 2015 Budget? Most changes will not apply until 2016 and 2017.

Families

Date of effect: 1 July 2017

New subsidy replaces three 

A new single Child Care Subsidy (CCS) will be introduced to replace the existing Child Care Benefit, Child Care Rebate and the Jobs, Education and Training Child Care Fee Assistance payments.  The current childcare related benefits will cease on 30 June 2017.

The new subsidy is means and activity tested to align it with hours of work, study etc.  An indexed cap also applies to the hourly fees that can be claimed of $11.55 for long day care, $10.70 for family day care and $10.10 for outside school hours care.*

For families with an annual income of up to $65,000 who meet the activity test, the subsidy covers 85% of the actual fee paid up to an hourly fee cap.  The subsidy then tapers to 50% for families with annual incomes of $170,000 where it stays until family income reaches $185,000.  Families with income levels of $185,000 or more will have the CSS capped at $10,000 per child per annum.

* Based on 2017/2018 fee and income levels

Home based care trial

As previously announced, the Government is also introducing a trial of a home based carer subsidy that provides funding for a nanny in a child's home from 1 January 2016.  The pilot program is limited to approximately 10,000 children.  

Families selected for the program have difficulty accessing childcare with sufficient flexibility (shift workers such as nurses and paramedics etc.,).   Support will be based on the CSS parameters and provides $7 per hour per child.

Child care safety net

Additional funding will provide targeted support to disadvantaged or vulnerable families.  The assistance will be provided through the Child Care Safety Net, which consists of three programmes:

  • The Additional Child Care Subsidy (ACCS) - additional assistance to supplement the Child Care Subsidy for eligible disadvantaged or vulnerable families
  • A new Inclusion Support Programme (ISP) – assistance for families of children with special needs 
  • The Community Child Care Fund (CCCF) - grants to child care services to improve access to child care in disadvantaged communities

No jab no pay

Date of effect: 1 January 2016

As previously announced, families will no longer be eligible for subsidised child care or the Family Tax Benefit Part A end of year supplement unless their child is up to date with all childhood immunisations.

'Double dip' on parental leave pay

Date of effect: 1 July 2016

Saving $967.7m over four years, primary carers with employer provided paid parental leave will be prevented from claiming Government support.

Large family supplement axed

Date of effect: 1 July 2016

The Large Family Supplement of Family Tax Benefit Part A will be axed.  Families will continue to receive a per child rate of FTB Part A for each eligible child in their family.

Changes to parental income testing for youth payments

Dates of effect
  • 1 january 2016 – change to parental income support tests
  • 1 july 2016 – changed tests for families with a child receiving income support and other siblings qualify to receive ftb a 
  • 1 january 2017 – introduction of a maintenance income test
Parental income testing arrangements will be amended to provide more support for families with dependent young people who qualify for certain income support payments, including Youth Allowance, ABSTUDY Living allowance (ABSTUDY), and the Assistance for Isolated Children Scheme.

From 1 January 2016, families with dependent children receiving income support payments would be subject to the Parental Income Test arrangements currently in place for FTB Part A and will no longer be subject to the Family Assets Test or Family Actual Means Test. 

From 1 July 2016, where a family has a dependent child who receives an individual income support payment and younger siblings who qualify the family to receive FTB Part A, one Parental Income Test will be applied taking into account all income support benefits the family receive. This will result in a lower rate of reduction to the dependent child's individual payment than is currently the case where separate Parental Income Tests are applied to each payment.

From 1 January 2017, a Maintenance Income Test will be introduced for dependent children receiving individual income support payments.  This test will apply to that child only and not include other child support amounts provided in relation to other children in the family. The same Maintenance Income Test already applies to FTB Part A.  This will be of particular benefit to rural and regional families whose children continue to study beyond year 12.

Benefits cut for those outside of Australia

Date of effect: 1 January 2016

Family Tax Benefit A will be reduced for people outside of Australia.  Families will only be able to receive FTB A for 6 weeks in a 12-month period while they are overseas.  Currently, FTB A recipients who are overseas are able to receive their usual rate of payment for 6 weeks and then the base rate for a further 50 weeks. Portability extension and exception provisions, which allow longer portability under special circumstances, will continue to apply.

Individuals

Changes to work related car expenses

Date of effect: From 2015/2016 Tax Income Year

The way work related deductions for car expenses are calculated will change. The '12% of original value method' and the 'one-third of actual expenses method' will be removed - the Government says they are only used by less than 2% of those who claim work related car expenses.

The 'cents per kilometre method' will be modernised by replacing the three current rates based on engine size with one rate set at 66 cents per kilometre to apply for all motor vehicles, with the Tax Commissioner responsible for updating the rate in following years.  
The 'logbook method' of calculating expenses will be retained.  These changes will not affect leasing and salary sacrifice arrangements.

Zone Tax Offset excludes fly in fly out and drive in drive out workers

Date of effect: 1 July 2015

'Fly in fly out' and 'drive in drive out' (FIFO) workers will be excluded from the Zone Tax Offset (ZTO) where their normal residence is not within a 'zone'. This means that some individuals who currently qualify for the offset will miss out from the 2016 income year onwards if they do not actually live full-time in a zone.

The ZTO is a concessional tax offset available to individuals in recognition of the isolation, uncongenial climate and high cost of living associated with living in identified locations.  Eligibility is based on defined geographic zones.

Currently, to be eligible for the ZTO, a taxpayer must reside or work in a specified remote area for more than 183 days in an income year.  The Government estimated that around 20% of all claimants do not actually live full-time in the zones.  Many of these are FIFO workers who do not face the same challenges of remote living that the ZTO was designed to address.

For those FIFO workers whose normal residence is in one zone, but who work in a different zone, they will retain the ZTO entitlement associated with their normal place of residence.

Medicare levy low income threshold increased

Date of effect: From 2014/2015 Tax Income Year

The Medicare levy low-income thresholds for singles, families and single seniors and pensioners will increase to take account of movements in the CPI so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.  

The threshold will be increased to:

Who  Amount
 Singles  $20,896
 Couples with no Children  $35,261
 Additional amount of threshold for each dependent child or student  $3,238
 Single seniors and pensioners  $33,044

Low income supplement axed

Date of effect: 1 July 2017

The Low Income Supplement will be axed from 1 July 2017. Recipients of most Government payments will continue to receive carbon tax compensation through the Energy Supplement, which provides up to $14.10 per fortnight depending on individual circumstances.

More from the 2015 Budget:

 

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Disclaimer

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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