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 $41,026.

If an individual's income is over $41,026, the percentage is determined using the following formula to calculate the taxable income percentage:

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

Example: Jeff and Jean both work full-time and have 2 children in full-time LDC. Their ATI is $45,000 per year. As they use LDC, their standard hourly rate is $3.90. As the family earns more than $41,026 per year, their weekly income excess is $76.42. With 2 children, their income taper percentage is 15%. Their MWB is $407.53.

Their taxable income percentage is calculated as follows:

100 - (76.42 x 15% ÷ 407.53) x 100

= 100 - (11.463 ÷ 407.53) x 100

= 100 - 2.812799

= 97.19%

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

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Last reviewed: 2 July 2012