3.10 Determining the SIFS Rate
The SIFS will provide assistance of up to $300 a year to individuals or couples who have a qualifying child (2.11.2), where the main income earner has a taxable income (1.1.T.50) between $68,000 and $150,000. If there is a secondary earner in the family, their income needs to be below $18,000.
- The annual rate of SIFS is calculated based on taxable income.
- For couples, there is a primary earner income test and a secondary earner income test.
- For sole parents, there is only a primary earner income test.
- There will be no indexation (1.1.I.80) of the maximum rate or income threshold amounts.
Primary earner income test
The primary earner in a couple is the member whose taxable income is the higher.
The rate of SIFS is nil for taxable income of $68,000 or less.
For each dollar above $68,000, SIFS entitlement increases by $0.025 until the maximum rate of $300 is reached at $80,000.
The SIFS rate then stays at $300 between $80,000 and $120,000.
For each dollar above $120,000, the SIFS rate decreases by $0.01 until it is reduced to nil at $150,000.
Secondary earner income test
The secondary earner is the member of a couple whose taxable income is the lower.
If the SIFS rate payable after the primary earner income test (the provisional rate) is more than zero, the secondary earner income test is then applied to work out any reduction of the provisional rate.
There is no SIFS reduction where the secondary earner's taxable income is $16,000 or less.
For each dollar above $16,000, the SIFS rate decreases by $0.15 until the provisional rate is reduced to nil.
The income level at which the provisional rate is reduced to nil varies depending on the amount of the provisional rate.
If the provisional rate is the maximum rate of $300, the provisional rate would be reduced to nil at $18,000.
If a couple has the same taxable income, the same amount of taxable income is used in the primary earner income test and the secondary earner income test. As the primary earner test phases in at $68,000 and the secondary earner text phases out at $18,000, if the incomes were the same, only one condition would be met and accordingly the resulting rate is nil.
Determining the rate of SIFS
An individual's entitlement to FTB based on at least one FTB child or an individual's effective claim for SIFS would result in a SIFS determination after the end of the particular income year. However, a determination would not be made in relation to a period in the income year until an assessment has been made of the taxable income for that income year of:
- the individual entitled to FTB or claiming SIFS if the individual is required to lodge an income tax return for that year, and
- the individual's partner in that period if the partner is required to lodge an income tax return for that year. (This refers to the individual's partner at any time during that year).
Method of determining rate of SIFS
FA(Admin)Act subsection 84(G)4 sets out the method statement that applies where the main income earner's taxable income (rounded down to the nearest dollar) is more than $68,000 and less than $150,000.
Step 1 requires working out the main income earner's taxable income.
Step 2 provides that the main income earner's taxable income is reduced by $68,000.
Step 3 multiplies the amount established in Step 2 by 0.025.
Step 4 provides that, if the amount in step 3 is less than or equal to $300, this is the individual's provisional component.
Step 5 provides that, if the amount in step 3 is greater than $300, the provisional component is $300 if the main income earner's taxable income exceeds $80,000 but does not exceed $120,000, or, if their taxable income exceeds $120,000, the provisional component is $300 less $0.01 for each dollar of the excess.
Step 6 provides that, if the individual is not a member of a couple, the annual rate of SIFS is the provisional component.
Step 7 provides that, if the individual is a member of a couple, then the annual rate is the provisional component less any reduction under step 8.
Step 8 provides that, if the low income earner's taxable income (rounded down to the nearest dollar) is greater than $16,000, the provisional component is reduced by $0.15 for each dollar of the excess.
Example: George has one qualifying child. George was a member of a couple with Mildred from 1 July until 25 December (178 days). George was not a member of a couple from 26 December until 30 June (187 days). George has a taxable income of $125,000 and is the primary income earner. Mildred had a taxable income of $17,000 and was the secondary income earner during their partnership.
Determination of rate:
- Step 1: main income earner = $125,000
- Step 2: $125,000 - $68,000 = $57,000
- Step 3: $57,000 x 0.025 = $1,425
- Step 4: provisional amount = $300 (because $1450 is greater than $300)
- Step 5: main income earner's taxable income of $125,000 exceeds $120,000 by $5,000
- $5,000 x $0.01 = $50
- $300 - $50 = $250
- Provisional component = $250
- $250/365 days = $0.69
- 187 days x $0.69 = $129.03 (for the period when George was single)
- Step 6: as the secondary income earner's taxable income of $17,000 is greater than $16,000 by $1,000, this reduces the provisional component by:
- $1,000 x $0.15 = $150
- Step 7: annual rate is the provisional component of $250 less reduction under step 6:
- $250 - $150 = $100
- $100/365 days = $0.28
- 178 days x $0.28 = $49.84 (for the period when George was partnered)
- Total SIFS payment to George = $129.03 + $49.84 = $178.87
Daily rate of SIFS
An annual rate of SIFS is calculated and then converted to a daily rate by dividing by 365, always rounding up to the nearest cent.
An individual's SIFS payment is then the sum of the daily SIFS rates for the applicable days in the relevant financial year, as calculated above.
Where more than one adult has care of a qualifying SIFS child for at least 35% of the time, this child is in a shared care relationship (22.214.171.124). Each individual's percentage of care does not affect their rate of SIFS. This means that SIFS is paid at the appropriate income tested rate regardless of shared care. The maximum amount of SIFS an individual can receive per relevant period is up to around $300, however a singular child may be the qualifying SIFS child for more than one customer.
Where a couple in a blended family (1.1.B.30) is eligible for SIFS, each member is eligible to receive a percentage of the total SIFS payment attracted by the family.
The total SIFS payment attracted by the family is split according to the blended family percentages that applied daily throughout the relevant financial year using existing family assistance blended family rules.
The total maximum SIFS payment received by a blended family in a given financial year is up to around $300.
Act reference: FAAct section 57G When an individual is eligible for SIFS in normal circumstances, section 84G Rate of SIFS
FA(Admin)Act section 65K Need for a claim, section 65KA How to claim, section 65KB Tax file number requirement to be satisfied for claims for a past period, section 65KK Determination of past period entitlement claim, section 65KP Payment of single income family supplement-no claim required, section 65KQ Payment of single income family supplement-claim required, section 65KR Secretary's power to request tax file numbers