Key elementsThis measure will remove the option of payments of Family Tax Benefit (FTB) from the tax system from 1 July 2009. This includes lump sum FTB payments, FTB top-ups (including any end-of-year supplement) paid with tax assessments, and the option for reduced Pay As You Go (PAYG) deductions. This means that ATO shopfronts will no longer process FTB claims.
Removing this option for delivery of FTB payments will simplify and reduce duplication in FTB delivery. There will be no change to payment rates arising from this delivery change.
Lump sum FTB claims, end of year top-ups and FTB fortnightly instalments will continue to be available through Centrelink and Medicare. Information will still be exchanged between the ATO and Centrelink. Adjusted Taxable Income (ATI) will continue to be used for family assistance income testing and the FTB reconciliation process. Tax refunds will continue to be available to offset FTB debts (and vice versa).
BackgroundFTB was introduced on 1 July 2000 as part of broader reform of the taxation system. Eligibility for FTB is assessed on a family's estimated ATI for the financial year, and this estimate is then reconciled with actual ATI at the end of the financial year.
Families can receive regular payments, end-of-year lump sums or have their PAYG withholdings reduced. Families have been able to claim their payments through Centrelink, Medicare or the ATO. Only around 7 per cent of customers claim FTB through the ATO.