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Innocent families to be slugged with Coalition's family tax debts.

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Wayne Swan - Innocent Families To Be Slugged With Coalition's Family Tax Debts Tuesday, 03 July 2001

Innocent Families To Be Slugged With Coalition's Family Tax Debts Wayne Swan - Shadow Minister for Family and Community Services

Media Statement - 28 June 2001

Families will be slugged with the Coalition's family tax debts despite fulfilling all obligations to notify the Government of changes in earnings that may affect their family payments.

In what could only be described as a debt trap, the payment system introduced as part of the GST will still generate debts for families even when they immediately advise Centrelink of changed earnings.

Families are hit with the debts because the system raises a retrospective debt.

An example is explained vividly in the attached letter from a family that has been told they will have to pay back around $2,400 despite immediately advising Centrelink of one parent's decision to take up some casual work.

In an even more extraordinary instance of the Coalition's family debt trap, an example was provided in Question Time today of a family which was advised of a likely $1300 debt even though its income was estimated to fall.

The family in question decided to swap parenting roles during the course of the year, but because of the new family payment system's income test they were denied Family Tax Benefit part B that is normally provided to single income families.

Minister Anthony confirmed that there would be a debt for the family, but said it was fair arguing that the Family Tax Benefit B was to provide for the tax free threshold usually lost by single income families.

The Minister has had poor advice - while he was right about the debt his reasoning for it was wrong.

The predecessor of Family Tax Benefit - B (originally the Home Child Care Allowance then Basic Partnered Parenting Payment) was not introduced to compensate for the loss of an additional tax-free threshold.

It was specifically introduced to provide support for parents while out of the workforce caring for

children and would have been penalised by the annual income test that applied to the dependent spouse tax rebate.

It is disappointing that both Ministers' Anthony and Vanstone have tried to defend this family debt policy by making claims that are just plain wrong. But the fact the Coalition is trying to defend saddling average families with massive debts shows how out of touch it really is. Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.

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