Schedule 1—Age of FTB child for family tax benefit

Amendment proposed

1.1                   Schedule 1 of the Family Assistance and Other Legislation Amendment Bill 2011 proposes to amend the A New Tax System (Family Assistance) Act 1999 to enact measures announced in the 2011–12 Budget.

1.2                   The substance of the proposed amendment is that the maximum age of a child for eligibility for Family Tax Benefit (FTB) Part A be lowered from 24 to 21 on 1 January 2012.

1.3                   As a transitional measure, FTB Part A payments will not be withdrawn on 1 January 2012 from families where a child is aged between 22 and 24 and is enrolled in a course of full-time study immediately before 1 January 2012. The payments will continue until the end of the course of full-time study in such cases.

1.4                   This measure is intended to align the age of non-dependence for FTB Part A with the age of independence for Youth Allowance.

1.5                   The Australian Government calculates that this measure would save $29.2 million over four years.

Issues and impacts

1.6                   The amendment would make families ineligible for FTB Part A payments for children aged 22 years and above, with the exception of 22–24 year old students, from 1 January 2012.

1.7                   On that same date, the age of independence for the purpose of Youth Allowance will be 22, according to the Social Security Act 1991. This means that a person aged 22 years and above who is enrolled in full-time study will be assessed for eligibility for Youth Allowance against their own income, not that of the parents. Moreover, the Youth Allowance payment is paid to the individual, not to their family.

1.8                   Thus, a family may lose FTB Part A when their child turns 22, but the individual could gain personal support through Youth Allowance instead.

Committee comment

1.9                   The Committee considers the harmonisation of legislation a sensible goal that enables individuals, families and organisations to navigate and understand the laws that apply at various stages of people’s and families’ lives. The Committee also supports the view that young people aged 22 years and above are independent.

1.10               The Committee notes that this amendment reflects the view that families do not require family payments for children who are no longer dependent. Independent children can instead receive direct support if they meet Youth Allowance eligibility requirements and are studying full-time.

1.11               Effectively, the Australian Government will be transferring benefits from the parents of 22–24 year old full-time students through FBT Part A directly to 22–24 year old full-time students through Youth Allowance.

1.12               The Committee is of the view that Schedule 1 will not result in significant disadvantage for Australian families and recommends that the Australian Parliament agree to pass Schedule 1 of the Family Assistance and Other Legislation Amendment Bill 2011.