Federal Budget 2014: Stay-at-home mums to lose $4171 a year in family tax benefits

WARNING – the age of entitlement is over, Joe Hockey has revealed stay-at-home mums will lose $4171-a-year in tax benefits under middle-class welfare cuts.

WARNING – the age of entitlement is over, Treasurer Joe Hockey has revealed stay at home mums will lose $4171-a-year in family tax benefits when their partner earns $100,000 or their youngest child turns six, under savage cuts to middle class welfare.

In a Budget that hits pensioners, self-funded retirees, high income earners and families, every parent currently securing payments under the Family Tax Benefit scheme will emerge worse off under the proposed changes.

Every Australian family currently securing Family Tax Benefit A or B – an estimated 1.7 million families – will face a two-year freeze on the indexation of cash payments.

But a new payment of $750 will be offered to single parents with children aged between six and 12 to soften the impact of the changes. Annual “supplements’’ worth up to $726 per family eligible for FTB A will be slashed to $600-a-year. Annual supplement payments for FTB B will also be reduced from $354 per family to $300.

Treasurer Joe Hockey’s tough medicine for families will slash payments to low and middle income parents by a staggering $6.9 billion over four years.

Calling for a “culture change’’, Mr Hockey said that future generations should not be expected to bear the cost of policies the nation could no longer afford.

“The age of entitlement is over. It has to be replaced, not with the age of austerity, but with an age of opportunity,’’ Mr Hockey said.

“As Australians, we must not leave our children worse off. That’s not fair. That’s not our way. We are a nation of lifters, not leaners.”

Stephanie and Adam Ross, and Eliza, 19 months, and Olivia, 5 months. Stephanie is a stay-at-home mum.

In the biggest changes to Family Tax Benefit B since it was devised by the Howard Government to support traditional, single breadwinner families, payments to families earning over $100,000 will be abolished.

The current threshold is $150,000 for the main breadwinner. The new income threshold will operate from July 1, 2015.

While Family Tax Benefit B payments are currently offered to children up to the age of 18, the payment will now be scrapped when your youngest child turns six in a move designed to encourage women to re-enter the workforce.

“Staying at home should be a parent’s choice, but there are limits on how much support a taxpayer can give,’’ Mr Hockey said.

“We must always remember that when one person receives an entitlement from the government it comes out of the pocket of another Australian.”

But for parents with children who are already over the age of six, a two-year grace period will apply before FTB B benefits are withdrawn. The large family supplement which is currently paid to families with three children will now be offered only to families with four children.

In a worst-case scenario, a family of three with a stay at home mum and a main breadwinner earning over $100,000 will lose $4844 a year according to departmental officials.

By slashing the income threshold for Family Tax Benefit B from $150,000 to $100,000, the Abbott Government will save $379 million next year alone. Over the next four years, the income threshold changes will slash $1.2 billion in payments to middle income families.

In the biggest change to Family Tax Benefit B since it was introduced by the Howard Government to support traditional, single breadwinner families, the payment will also be abolished for children over the age of six. Over time, the changes will hit 500,000 families with reduced payments and save the Abbott Government $1.9 billion.

The biggest savings under the reforms will be generated by a freeze on Family Tax Benefit A and B changes to millions of parents.

Originally published as Federal Budget 2014: Stay-at-home mums to lose $4171 a year in family tax benefits