Issue
Is Parenting Payment (single) a component of adjusted taxable income (ATI) under Schedule 3 to the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act) for Family Tax Benefit (FTB) purposes?
Decision
Yes. Parenting Payment (single) is a component of ATI under Schedule 3 to the Family Assistance Act. However, single parents in receipt of an income support payment from Centrelink, such as Parenting Payment (single), are not required to estimate their ATI in order to receive Family Tax Benefits.
Facts
The taxpayer is in receipt of Parenting Payment (single).
Reasons for Decision
To be eligible for FTB's, a taxpayer must pass an income test that takes into account income of the taxpayer's family. Family income for FTB purposes is known as ATI.
Clause 2 in Schedule 3 of the Family Assistance Act provides that the ATI is the sum of: • taxable income; • adjusted fringe benefits; • target foreign source; • net rental property losses; and • tax free pension or benefits;
minus half the annual amount of any child support or child maintenance the taxpayer or their partner pays.
Parenting payment is an assessable social security payment, with the exception of any supplementary amounts paid for rental assistance, remote area allowance, pharmaceutical allowance and incentive allowance.
Taxpayers who choose to receive fortnightly payments of FTB will generally provide an estimate of their ATI for the current financial year to the Family Assistance Office Centrelink. This estimate will be used to work out the rate of FTB the taxpayer is entitled to receive. However, an estimate does not need to be provided by a single parent who is in receipt of an income support payment from Centrelink, such as Parenting Payment (single).
The taxpayer is in receipt of Parenting Payment (single) which is included in the ATI for the purposes of calculating entitlement to the FBT. However, the taxpayer is not required to provide an estimate of their ATI as they are in receipt of Parenting Payment (single).