A report in yesterday's Sydney Morning Herald suggesting one in 10 Sydney households (110,000 in total) will be caught by the Government's new $150,000 means tests for Family Tax Benefit B and the Baby Bonus is incorrect.
Across the entire country it is estimated around 56,000 families in total would be affected by either means test.
This includes 40,000 families who would lose eligibility for FTB-B – just 3 per cent of existing recipients – and 16,000 families who would lose eligibility for the Baby Bonus – around 6 per cent of all families having a birth.
Clearly it is impossible for Sydney to have twice as many families affected as the entire country.
The report appears to rely on ABS Census data for all households, including singles and couples without dependent children, and even wealthy retirees who will never be affected by the proposed means tests for family assistance.
Further, for those households in the Census data with dependent children, approximately three quarters of them would not be affected by the new means test for Family Tax Benefit B because they are two income households that are ineligible for the benefit currently due to the income of the secondary earner.
Similarly many would not be affected by the Baby Bonus means test because it has been designed to take into account family income in the six months after the birth – often when a family loses part or all of a mother's income.
In this instance it is most likely that family income will be determined by the primary earner who would need to have an income approaching $150,000 per annum alone to trigger the means test.
The operation of these means tests mean it is highly unlikely households dependent on the incomes of blue or pink collar employees would be affected - as also suggested in the report.
The Government is determined to ensure taxpayer funded benefits are targeted to those most in need.
The tax system has delivered significant gains in disposable income to higher income families in recent years. For example an earner on $150,000 has seen their post tax income leap $9,112 a year as a result of the tax cuts over the last three years.
And they will receive tax cuts worth a further $3,650 a year once the currently scheduled tax cuts are fully implemented.
18 May 2008