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Private School Fees and Family Tax Benefit anomolies

If the payer, having been assessed as liable for half of the fees or simply having agreed to be liable, agreed to pay their half directly to the school, rather than as an add on to child support, and the payee agreed to have private school fees taken back

These are some thoughts on what I think is an anomaly in Family Tax Benefit (FTB) rules as they apply to private school fees added to a formula assessment of child support through a change of assessment process rather than paid directly to the school by the parents.

If school fees are assessed by change of assessment and added to a formula assessment they reduce FTB without making any difference to the contribution made by the payer.

The payee, on the other hand, also pays half but loses another quarter of the cost (50 cents per dollar paid by the payer) through reduced FTB, so effectively being out of pocket for ¾ of the cost of the fees, even though the payer has also paid half.

This is purely a consequence of having the fees added to a formula assessment.

If the payer, having been assessed as liable for half of the fees or simply having agreed to be liable, agreed to pay their half directly to the school, rather than as an add on to child support, and the payee agreed to have private school fees taken back off the assessment, there would be no FTB penalty to the payee and no additional cost to the payer. Each parent would genuinely pay half of the fees.



very astute my friend, and in fact the whole of the CSScheme started from a case in 1983 called Tingley where this exact thing happened

Strauss J made a big deal (dissenting) while Barblett DCJ, Simpson J turned a blind eye

but Govt stepped in

you will need to go to FCA library to get this case as it is unpublished on web
LifeInsight said
Are you saying that when both parents agree and work things out together, they both benefit? ;)
  Thanks LifeInsight, that is what I am saying, but you have found a flaw in my arguement.

To rephrase, both parents and the children benefit in the only situation I fully understand - 100% care.

Maybe others could comment, as you have, on how it works in other arrangements.

Thanks for the pointer.

As a PS, why would anyone limit income because of FTB? If you  lose less than a dollar per dollar for earning extra, isn't it better to earn the extra?



BriarRose said
As a PS, why would anyone limit income because of FTB?  If you less lose than a dollar per dollar for earning extra, isn't it better to earn the extra?
  Some, I guess, would see having to do the extra work to earn that extra dollar as an incentive to get that less than a dollar for doing the nothing.
MikeT said
BriarRose said
As a PS, why would anyone limit income because of FTB? If you lose less than a dollar per dollar for earning extra, isn't it better to earn the extra?
 Some, I guess, would see having to do the extra work to earn that extra dollar as an incentive to get that less than a dollar for doing the nothing.
 
 Therein lies the dilemma.

 If you do nothing, you don't get less than a dollar for doing nothing, you get the whole dollar for doing nothing (the FTB dollar). But that is all you get.

 If you do something, you get the whole dollar you earned (the work dollar) and the part dollar for doing nothing (the part FTB penalized dollar).

 So, a dollar for nothing or a dollar and a bit for doing something?



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