Media Release by The Hon Larry Anthony MP

Family Adjustment Payment

Today, Acting Minister for Family and Community Services, Larry Anthony announced the details of the Family Adjustment Payment. This payment is designed to ensure that Australian families are not financially disadvantaged by the introduction of the Family Tax Benefit Part B (FTB(B)).

Mr Anthony said that ‘the vast majority of families will be significantly better off from the changes to family assistance, but that this scheme would help reassure those families who are concerned about the effect of the changes on their financial circumstances’.

Where families feel they are disadvantaged by the introduction of FTB(B), the Family Assistance Office (FAO) will conduct a review of their financial circumstances taking into account the combined effects of family assistance changes, income tax changes, other changes to the social security system made as part of the A New Tax System package and the effect of the GST. If they are found to be disadvantaged, they will be paid the difference for a period of 12 months. The payment will be made as a lump sum, non-taxable payment at the time of the claim being approved.

Mr Anthony said ‘the generous extension of the scheme to cover the first 12 months of the New Tax System will ensure that families are not disadvantaged’. He pointed out that families could now lodge a claim for the Family Adjustment Payment up to 30 June 2002.

Families should wait until they receive the advice of their entitlements under the new payment arrangements before contacting the FAO (136 150) to discuss the Family Adjustment Payment.

Mr Anthony pointed out that this measure does not extend to any financial advantages that people have previously benefited from, noting that the current treatment of employer-provided fringe benefits for family assistance purpose will change under the New Tax System.

‘Families will be much better off after 1 July 2000 when the full benefits of the new payment arrangements and overall tax reform are assessed’, Mr Anthony said.

FAMILY ADJUSTMENT PAYMENT

Introduction

On 10 April 2000 the Minister for Family and Community Services announced the broad parameters of a scheme to enable people to claim a top-up payment if they are able to demonstrate that they are disadvantaged by the introduction of Family Tax Benefit (FTB) B. The assessment will be made by the Family Assistance Office and based on the combined effects of changes to income tax, family assistance and other social security payments as part of the taxation reforms and the effect of the GST. The top-up payment, to be known as the Family Adjustment Payment, is to cover the period from 1 July 2000 to 30 June 2001 and will be paid as a lump sum at the time of the claim being approved.

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The detailed parameters for the scheme are set out below.

Design Features

The following sets out the key principles to cover eligibility for the scheme and the review process.

  • Eligibility for the scheme will be based on the following:

The family unit needs to have been receiving one or more of the family payments or rebates which will be incorporated into the Government’s new Family Tax Benefit (B). That is, on 30 June 2000 the family unit was receiving at least one of the following payments or rebates:

  • Basic Parenting Payment
  • Guardian Allowance
  • Family Tax Payment Part B
  • Dependent Spouse Rebate (with children)
  • Sole Parent Rebate
  • Family Tax Assistance Part B

And

The family unit can show that due to the introduction of FTB (B) they are receiving from 1 July 2000 less assistance from FTB (B) than they were receiving from the above family payments immediately before July 2000.

And

They believe that overall they are worse off, after taking into account the combined effects of family assistance, income tax changes, changes to income support payments and the effect of the GST.

  • Where the family meets the above conditions a review of their situation, using a model, will be undertaken to identify and quantify any financial disadvantage arising from the combined impact of changes to family assistance, other social security payments that take effect from 1 July 2000, personal income tax rates and the net impact of the GST.
  • In assessing whether any financial disadvantage has occurred, losses caused by changes in circumstances not related to the introduction of the new family arrangements (ie, changes in income, changes in childcare arrangements and patterns and changes in share patterns) will be excluded. The measure will not extend to any financial advantages people have previously benefited from. The impact of changes to the treatment of employer provided fringe benefits will also be excluded.
  • In calculating the impact of the GST on the financial position of each income unit, the Treasury estimate of the average impact of the GST on the CPI in 2000-01 (2.75%) will be used.
  • The top-up payment will be in respect of the period 1 July 2000 to 30 June 2001. A claim can be lodged any time up to 30 June 2002, but must relate to the transition from the existing family assistance system to the new system.
  • The top-up payment will be paid as a lump sum at the time of the claim being approved. The top-up will be a non-taxable, ex gratia payment. The standard internal review procedures will apply in respect to the payment.
  • The payment will not be subject to a reconciliation or acquittal process.
  • The customer will be required to lodge a claim form.

Administration of the Scheme

The Family Assistance Office (FAO) will manage the processing of claims. Claim forms will be available from the FAO Call Centre (136150) from 1 July 2000. The FAO call centre will also help people to determine if they may be eligible for the payment.

People should wait until they receive their family assistance advices detailing their new entitlements, which will be going out from late June, before ringing the FAO for a claim form. Claims for the Family Adjustment Payment will be accompanied by a return paid envelope or can be lodged at any FAO outlet.