SMSF – ATO finalises its position in relation to event-based reporting
After detailed consultation with the self-managed super fund (SMSF) sector, the ATO announced today that its i
The Federal Government hopes its revised welfare legislation introduced into Parliament is more palatable than the tougher cuts proposed in the 2014 budget.
What is being proposed?
The Government says it needs to make the welfare system more sustainable, so it will reduce the amount of money it spends on Family Tax Benefit payments Part A and B.
It tried to make these changes in the 2014 budget, but was blocked in the Senate, following concerns it would hit hard for low-to-middle income earners.
Today’s legislation is a compromise that the Government hopes is more palatable for Parliament.
What will happen under Family Tax Benefit Part A?
An extra $10 will be paid every fortnight for each child up to the age of 19.
There will also be an extra $10 for those under 18 years old and living at home, while receiving youth allowance and disability support payments.
It will kick in from July 1 2018 and will cost $584 million.
The FTB Part A supplement payments will be gradually phased out completely by July 2018. It is currently worth up to $726 a year, but will be cut to $602 in July 2016 and $303 in July 2017.
What will happen under Family Tax Benefit Part B?
Single-parent families whose youngest child turns 13 will have their payments reduced from $2,737 a year to $1,000 a year.
The Federal Government’s proposal in the 2014 budget would have seen the cut-off age set at six years old.
The new payments will continue until the age of 16, and will also be extended to couple grandparents who are also looking after children.
Families with children under the age of one will receive an extra $1,000 a year.
The changes are due to start from July 2016 and will save $1.36 billion.
The FTB Part B supplement payments will also be gradually phased out completely by July 2018.
It is currently worth up to $354 a year, but will be cut to $303 in July 2016 and $153 in July 2017.
Combined with the FTB Part A supplements, the changes will save the budget $4.06 billion.
How much money will the Government save?
The Government is expected to save $4.8 billion over the forward estimates, but it depends on whether there are any changes to the legislation as part of negotiations with Labor and the crossbenchers.
The Government says the extra savings will be used to help fund its overhaul of childcare funding, which will be introduced to Parliament later this year.
What difference is there to the Government’s original proposal?
In the 2014 federal budget, the cut-off age for Family Tax Benefit part A would have been as low as six years.
It would have saved $4.5 billion over the forward estimates.