Issued
2011

Family tax credit raised for under 16s

2011 Order in Council increases family tax credits for children aged under 16.

Family tax credits for children aged under 16 have been raised.

Background

The Income Tax (Family Tax Credit) Order 2011, made on 31 October 2011, increases for inflation the three prescribed family tax credit amounts for children under 16 in sections MD 3(4)(a)(i) and (b)(i) and (ii) of the Income Tax Act 2007 from 1 April 2012.

Key features

The family tax credit amounts per year before and after the increase are provided below.

Qualifying child Current amount New amount
First child if under 16 $4,578 $4,822
First child if 16 or over $5,303 $5,303
Second child if under 13 $3,182 $3,351
Second child if 13 to 15 $3,629 $3,822
Second child if 16 or over $4,745 $4,745

The two family tax credit amounts for children 16 or over in sections MD 3(4)(a)(ii) and (b)(iii) are not increased for inflation in accordance with section MF 7(1)(a) of the Income Tax Act 2007. Inflation increases for these children will resume when family tax credit amounts for children under 16 or aged between 13 and 15 reach the amounts for children aged 16 and over.

Together with this order, section 5(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 comes into force on 1 April 2012. This section is legislated to come into effect when the family tax credit amounts are increased in accordance with section MF 7 of the Income Tax Act 2007.

Section 5(1) of the Taxation (Annual Rates and Budget Measures) Act 2011 amends the Working for Families abatement rate and the abatement threshold in section MD 13(3)(a) of the Income Tax Act 2007. The abatement rate will increase from 20 cents to 21.25 cents. The abatement threshold will decrease from $36,827 to $36,350.

Application date

The new prescribed family tax credit amounts will apply for the 2012-13 and later tax years.

Income Tax (Family Tax Credit) Order 2011 (SR 2011/403)