Single Parents Guide To The 2012 Federal Budget

More cash for kids – but single mums could lose $60pw

Wayne Swan’s 2012 federal budget, delivered yesterday, pumps money into millions of middle income families but takes money from the poorest single parent families.

In addition to Carbon Tax compensation payments, which will arrive in the bank accounts of parents next week and income tax cuts, the government is rolling out new family payments funded from the Minerals Resource Rent Tax.

“Many working Australians are struggling and feel it is harder for them to make ends meet,” said Wayne Swan in a statement emailed to singlemum.com.au today. “This Labor budget puts in place a package of measures to help people make ends meet.

• A new school-kids bonus to help with the costs of educating kids;
• A major cost of living package for families under pressure,
• Triple the tax-free threshold so that over a million workers will pay no tax at all and won’t have to lodge a tax return.”

“The major blight on this year’s Budget is the unnecessary attack on 100,000 single parents who’ll be left worse off…”

Dr Cassandra Goldie, the chief executive of the Australian Council of Social Service said the changes to parenting payment will put some single parent families into poverty.

“The major blight on this year’s Budget is the unnecessary attack on 100,000 single parents who’ll be left worse off. The surplus could have been achieved without leaving some of the most disadvantaged families and their children in deficit.”

“Spreading the benefits of the boom” is the name the government has given to its package of increased family payments. One and half million families will welcome increases in Family Tax Benefit Part A but these won’t be introduced until July 2013.

Families on the maximum rate of FTB Part A will see their payments rise by $300 per year per child to a maximum of $600 per year. Families on the base rate of FTB will get $100 per child up to a maximum of $200.

However the age limit for family tax benefits has been lowered, again. 53,000 families will lose their family tax benefits for their children over 18 years old and not in school. Currently the age limit for Family Tax Benefits is 21 years and was 25 years under the Howard government but that will be slashed to 18 years as recommended by the Henry Tax review. 5,500 of those kids will be able to move to youth allowance but the rest will lose money.

Single mums will also benefit from the new Schoolkids’ Bonus which replaces the Education Tax refund in January 2013. Under the new scheme, families don’t have to collect receipts and will get $820 for a high school student and $410 for a primary school student, if they have an income below $112,000 per year.

Cassandra Goldie also welcomed new funding for dental health which will benefit those on public waiting lists. Teenagers are already eligible for annual check-ups and most dentists can access Medicare vouchers electronically even if families have lost their paper copy.

Most single mums will benefit from changes in income tax rates…

Most single mums will benefit from changes in income tax rates. The tax-free threshold jumps from $6,000 to $18,200 on the 1st of July 2012, meaning many part time workers will pay no tax at all next year and won’t even have to file a tax return.

Tax rates for incomes over $18,200 go up slightly but with the much higher tax free threshold, almost everyone will pay less tax next year. For example, people with an income of $25,000 per year, will save $600 per year on their tax bill or $11.54 per week. At $50,000, the tax savings will equal $303 per year or $5.83 per week. At $75,000, the savings will be $253 per year or $4.87 per week.

More than 400,000 single mums on Parenting Payment Single will benefit from an additional yearly “Supplementary Allowance” of $210 to be paid in two lumps sums of $105. The first payment will arrive in March 2013.

“People on Parenting Payments will be left around $60 a week poorer by being forced off their current payment onto the lower paying Newstart Allowance…

However 100,000 single parents with kids over the age of the eight will be forced off Parenting Payment Single and onto Newstart.

“People on Parenting Payments will be left around $60 a week poorer by being forced off their current payment ($324 a week) onto the lower paying Newstart Allowance ($265 per week) when their youngest child turns eight,” said Cassandra Goldie. “This is not a work incentive measure – in fact the financial returns from employment are less than those available under Parenting Payment.”

You can question Wayne Swan directly about the budget in a Twitter forum from 11am eastern time this Friday the 11th of May. Join in the conversation by following @SwannyDPM and the #FairGo hashtag.

Jason Bryce is also on Twitter – @jasonbryce
Business & Finance Specialist