Family Tax Benefit (Order of Reduction) Determination 2013

Administered by Department of Social Services

Legislation au F2013L01196 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Summary

The Family Tax Benefit (Order of Reduction) Determination 2013 is made under subclause 29(2A) of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act).

The Determination determines a method for working out the extent to which Part B rates calculated under subclause 29(2) of Schedule 1 to the Family Assistance Act are attributable to the amounts referred to in step 1 of the method statement in that subclause.

Background

Prior to 1 July 2013, Family Tax Benefit (FTB) Part B had two components: the standard rate and the FTB Part B supplement. Where the Part B rate was to be reduced based on an individual’s adjusted taxable income, the method statement in subclause 29(2) of Schedule 1 to the Family Assistance Act provided for the reduction to be effected by taking away so much of the individual’s standard rate, and then so much (if any) of the individual’s FTB Part B supplement, as equals the reduction.

Part 2 of Schedule 2 to the Clean Energy (Household Assistance Amendments) Act 2011, which applies from 1 July 2013, introduced a third component to FTB Part B: the clean energy supplement (Part B). Those amendments also remove the wording in subclause 29(2) of Schedule 1 to the Family Assistance Act, which provided for the order in which components are reduced, and instead introduced an instrument making power to determine a method for attributing the reduced FTB Part B rate to the various components. The instrument making power is contained in subclause 29(2A) of Schedule 1 to the Family Assistance Act. This Determination determines the method for the purposes of subclause 29(2A).

Consultation

The Department of Families, Housing, Community Services and Indigenous Affairs has consulted with the Department of Human Services on this Determination.

Regulatory Impact Analysis

The Determination is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.

The measures in this legislative instrument affect entitlements to government payments and do not impose compliance costs on businesses, and do not require or encourage business to alter their behaviour.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

Where the FTB Part B rate is to be reduced, the reduction is first applied to the standard rate. If further reduction is required after the standard rate has been reduced to nil, the individual’s clean energy supplement (Part B) and then the individual’s FTB Part B supplement are reduced.

This Legislative Instrument does not change the total amount of an individual’s entitlement to FTB Part B, which will continue to be determined under current eligibility and income testing rules.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Explanation of the Provisions

Part 1 Preliminary

Section 1 Name of Determination

Section 1 states the name of the Determination.

Section 2 Commencement

Section 2 provides for the commencement of the Determination.

Section 3 Purpose

Section 3 states the purpose of the Determination.

Section 4 Interpretation

Section 4 contains definitions of key terms used in the Determination.

Section 5 Method for working out components of Part B rate

Where an individual’s FTB Part B rate is reduced due to income, this section determines, for the purposes of subclause 29(2A) of Schedule 1 to the Family Assistance Act, the method for attributing the reduced FTB Part B rate to the various components of the FTB Part B rate.

This section provides for the reduction to be first applied to the individual’s standard rate that is calculated under Division 2 of Part 4 of Schedule 1 to the Family Assistance Act.

If further reduction is required after the individual’s standard rate has been reduced to nil, the individual’s clean energy supplement (Part B) and then the individual’s FTB Part B supplement are reduced.

The wording used in this section reflects wording used in section 1210 of the Social Security Act, which provides for the order in which components of social security payments are reduced where the rate of payment is reduced due to the income or assets tests or due to compensation payments received.

Overview

The Family Tax Benefit (Order of Reduction) Determination 2013, enacted under subclause 29(2A) of Schedule 1 to the A New Tax System (Family Assistance) Act 1999, was introduced to address the gap left by the Clean Energy (Household Assistance Amendments) Act 2011, which removed the existing method for reducing Family Tax Benefit (FTB) Part B rates based on income. This gap arose due to the introduction of a third component to FTB Part B, the clean energy supplement (Part B), effective from 1 July 2013. The Determination was made by the Parliament of Australia to specify a new method for attributing the reduced FTB Part B rate to its components, ensuring that the total entitlement remains unchanged while adjusting the order of reductions to account for the new supplement. The primary policy objective of this legislation is to maintain the integrity and fairness of the FTB system amidst structural changes.

Scope and Application

The Family Tax Benefit (Order of Reduction) Determination 2013 applies to the calculation and reduction of Family Tax Benefit Part B rates for eligible individuals under the A New Tax System (Family Assistance) Act 1999. This Determination specifically governs the order in which components of the Part B rate, namely the standard rate, clean energy supplement (Part B), and FTB Part B supplement, are reduced when an individual’s adjusted taxable income warrants a decrease in their entitlement. It is applicable to all individuals who receive Family Tax Benefit Part B and whose income falls within the thresholds necessitating a reduction in their FTB Part B rate. The Determination is a Commonwealth instrument, thus it applies across Australia. There are no exclusions or exemptions specified within the Determination itself, though the applicability and specific calculations are inherently tied to the eligibility criteria and income thresholds outlined in the Family Assistance Act. The scope of this Determination is further extended or restricted through subordinate instruments as may be necessary to align with changes in the Family Assistance Act or other relevant legislation.

Key Provisions

The Family Tax Benefit (Order of Reduction) Determination 2013, established under the A New Tax System (Family Assistance) Act 1999, outlines the method for determining how the Family Tax Benefit (FTB) Part B rate is reduced based on an individual's adjusted taxable income. Specifically, section 5 of the Determination mandates that the reduction must first be applied to the individual's standard rate (section 29(2) of Schedule 1 to the Family Assistance Act). If the standard rate is exhausted, the reduction then applies to the clean energy supplement (Part B) and subsequently to the FTB Part B supplement. This method is intended to ensure a fair and systematic approach to reducing benefits in accordance with income levels. Under the Family Tax Benefit (Order of Reduction) Determination 2013, the primary obligation on the government and recipients is to adhere to the specified order of reduction when determining the FTB Part B rate. The government must apply the reduction to the standard rate first, followed by the clean energy supplement (Part B), and finally the FTB Part B supplement, ensuring that the total amount of FTB Part B entitlement remains consistent with current eligibility and income testing rules. Recipients must report their income accurately to ensure the correct application of these reductions. There are no specific offences, penalties, or civil/criminal consequences outlined in the Family Tax Benefit (Order of Reduction) Determination 2013. The primary focus of this Determination is to establish a clear method for the reduction of FTB Part B, rather than to impose sanctions for non-compliance. The consequences of failing to accurately report income or incorrectly applying the reduction method would likely be addressed under other provisions of the Family Assistance Act or related legislation, potentially involving the recovery of overpayments or administrative penalties. However, the Determination itself does not specify these penalties.

Area of Law: Taxation Law
Instrument: Statutory Instrument
Concepts: Definitions & Interpretation; Commencement Provisions; Regulatory Standards

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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