Families Package (Income Tax and Benefits) Bill

  • enacted
22 New subpart MG inserted (Best Start tax credit)

After subpart MF, insert:

Subpart MG—Best Start tax credit

MG 1 Best Start tax credit entitlement
Best Start tax credit for dependent child

(1)

A person is entitled to a tax credit, the Best Start tax credit, for an entitlement period for a dependent child equal to an amount calculated using the formula in subsection (2), if—

(a)

the person qualifies under section MC 2 (Who qualifies for entitlements under family scheme?); and

(b)

the person is a principal caregiver for the dependent child during the entitlement period; and

(c)

the dependent child is aged less than 3 years old; and

(d)

the dependent child is born—

(i)

on or after 1 July 2018; or

(ii)

before 1 July 2018, but the expected due date for the child is on or after 1 July 2018.

Best Start tax credit formula

(2)

The formula is—

Best Start tax credit − credit abatement.

Definition of items in formula

(3)

In the formula,—

(a)

Best Start tax credit is the person’s Best Start tax credit for the entitlement period for the dependent child, calculated using the formula in section MG 2:

(b)

credit abatement is the person’s Best Start credit abatement, calculated using the formula in section MG 3.

Extra instalment

(4)

This section is overridden by section 80KW of the Tax Administration Act 1994.

Defined in this Act: Best Start credit abatement, Best Start tax credit, dependent child, entitlement period, principal caregiver

MG 2 Best Start tax credit
Best Start tax credit for dependent child

(1)

For the purposes of section MG 1(3)(a), the person’s Best Start tax credit for the entitlement period for the dependent child is calculated using the formula—

prescribed amount × days ÷ 365.

Definition of items in formula

(2)

In the formula,—

(a)

prescribed amount is, for the dependent child, $3,120:

(b)

days is the number of days in the entitlement period.

If dependent child dies during entitlement period

(3)

The person continues to be entitled to the Best Start tax credit for 4 weeks after the dependent child dies, if the person otherwise meets the requirements of section MG 1(1).

Order in Council increasing amount

(4)

The amount in subsection (2)(a) may be changed as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).

When another person cares for dependent child

(5)

A Best Start tax credit must be reduced in proportion to the time in the entitlement period that the dependent child spends in the exclusive care of another person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?).

Defined in this Act: amount, Best Start tax credit, dependent child, entitlement period

MG 3 Best Start credit abatement
When this section applies

(1)

For the purposes of section MG 1(3)(b) the person’s Best Start credit abatement for the entitlement period is calculated using the formula—

full-year abatement × days ÷ 365.

Definition of items in formula

(2)

In the formula,—

(a)

full-year abatement is,—

(i)

if the person has no spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income for the relationship period containing the entitlement period is more than $79,000, 21 cents for each complete dollar of the excess; or

(ii)

if the person has a spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for the relationship period containing the entitlement period is more than $79,000, 21 cents for each complete dollar of the excess:

(b)

days is the number of days in the entitlement period excluding—

(i)

the days on which the dependent child is less than 1 year old:

(ii)

the days of any calendar months in which the person receives protected Best Start tax credit as described in section MG 4.

Order in Council increasing amount

(3)

The amounts in subsection (2)(a) may be changed as prescribed by the Governor-General by Order in Council under section MF 7 (Orders in Council).

Defined in this Act: amount, Best Start credit abatement, Best Start tax credit, civil union partner, de facto partner, dependent child, entitlement period, family scheme income, income-tested benefit, protected Best Start tax credit, relationship period, spouse

MG 4 Person receiving protected Best Start tax credit
Requirements

(1)

For the purposes of section MG 3(2)(b)(ii), a person who receives protected Best Start tax credit for a calendar month in an entitlement period, is a person who, in the calendar month,—

(a)

has no spouse, civil union partner, or de facto partner, receives an income-tested benefit, and derives family scheme income that is less than the amount set out in section MG 3(2)(a)(i):

(b)

has a spouse, civil union partner, or de facto partner, receives an income-tested benefit, and derives family scheme income that together with the family scheme income of their spouse, civil union partner, or de facto partner is less than the amount set out in section MG 3(2)(a)(ii).

Annualised equivalent

(2)

Section MB 2 (Adjustment for period that is less or more than 1 year) applies to adjust the amount of family scheme income to provide an annualised equivalent.

Defined in this Act: amount, Best Start tax credit, civil union partner, de facto partner, entitlement period, family scheme income, income-tested benefit, protected Best Start tax credit, spouse