Family Compensation System And Family Payment System

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Question 1(500 words)
The Australian tax system is defined under the act called Income Tax Assessment Act 1997 which provides the basic formula to calculate income tax liability for individuals and entities i.e.
Income Tax = (Taxable Income x Tax Rate) - Tax offsets [S4-10(3) of ITAA 1997]
Whereas Taxable Income = Assessable Income – Deductions [S4-15(1) of ITAA 1997]
Whereas Assessable Income = Ordinary Income + (Statutory Income – Exempt Income) [S6-5(1) of ITAA 1997]
The act also provides the categories under which income of the individual and entities is assessed and simultaneously taxed.
The categories defined are:-
1. Income from Personal services and employment
2. Income from Property
3. Income from Business
There are mainly two Income
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Family payment system includes mainly three tax benefits. They are Family Tax benefit Part A, Family Tax benefit Part B, and last is the Child Care benefit. Family Tax benefit (FTB) is defined under Division 1 of Part 3 (and includes any amount under section 58AA) .
Family Tax Benefit (FTB) Part A
The FTB Part A is paid for each dependent child if certain conditions are fulfilled. They are:
a) Aged 0 to 15 years, or
b) Aged 16-19 years, this is paid until end of the calendar year until they turn 19. Furthermore income test should be satisfied in order to claim FTB Part A, should be able to meet residence requirements and should be caring the child for at least 35 percent of the time.
Family Tax Benefit FTB Part B
The FTB Part B on the other hand gives a more help to families and single parents with the condition that one parent is working full-time and another parent care for the child at home.

Conditions for FTB Part B:
1. Under 16 years of age [Dependent

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