3.5.2.40 Calculating the Approved Care Taxable Income Percentage

Taxable income percentage (1.1.T.30) calculation

The taxable income percentage is 100% for families who:

  • receive income support (1.1.I.50), or
  • are in an employment income nil rate period (a person is taken to be receiving (1.1.R.05) their social security pension or benefit during such a period), or
  • have an ATI (1.1.A.20) below $45,114.

If an individual's income is over $45,114, the percentage is determined using the following formula to calculate the taxable income percentage:

  • 100 − [weekly income excess (1.1.W.20) × taxable income taper percentage (1.1.T.40) ÷ maximum weekly benefit (1.1.M.27) × 100]

Example: Jeff and Jean both work full-time and have 2 children in full-time LDC. Their ATI is $80,000 per year. As they use LDC, their standard hourly rate is $4.30. As the family earns more than $45,114 per year, their weekly income excess is $670.88. With 2 children, their income taper percentage is 15%. Their MWB is $449.32.

Their taxable income percentage is calculated as follows:

100 − (670.88 × 15% ÷ 449.32) × 100

= 100 − (100.632 ÷ 449.32) × 100

= 100 − 22.396 = 77.60%

Act reference: FAAct Schedule 2 Part 4 Taxable income %

Policy reference: FA Guide 3.5.2.10 CCB Overall Rate Calculation - Approved Care, 3.5.2.30 Calculating the Approved Care CCB Percentage, 3.5.2.50 Calculating the Approved Care Multiple Child Percentage

SS Guide 3.1.12 Employment Income Nil Rate Period

Last reviewed: 3 July 2017