The following table shows the steps involved in applying the FAMT.
|
Step |
Action |
|
1 |
Determine whether the customer has a designated parent. |
|
2 |
Determine the appropriate tax year. The base tax year should be used for a FAMT assessment and the current tax year in the calendar year that the customer claims should be used for the current FAMT. A base tax year FAMT assessment MUST be completed before a current FAMT is applied. |
|
3 |
Determine the family that will be assessed for the base tax year. It is important to note that the current family situation at the time of the claim should be taken into consideration for the FAMT. For example if a sibling was 22 years of age in the base tax year and in receipt of ABSTUDY (dependent full-time student or Australian Apprentice), BUT is currently in full-time employment and not in receipt of ABSTUDY, the sibling would not be included as a family member for the FAMT. Therefore spending and savings for the sibling would not be mentioned in the FAMT for the base tax year. |
|
4 |
Determine the actual means of the customer's family. |
|
5 |
Determine whether the family have any deductions or exemptions from the FAMT. |
|
6 |
Determine the customer's family actual means free area. |
|
7 |
Determine the customer's reduction for family actual means. |
The formula for determining a family's actual means is as follows. The below equation works by taking the family's actual means (spending + savings - deductions) and halving, and then applying the marginal tax rate and Medicare levy to this amount, which is then doubled. Net passive business loss (NPBL) is added. This gives the family an equivalent family income that will be used for assessment purposes. The formula for determining a family's actual means is as follows:
|
2[(GAM/2) + TNITML] + NPBL |
|
when: |
|
|
GAM |
Gross actual means is the actual means for all family members that year. |
|
TNITML |
Total notional income tax/Medicare levy is the sum of the amount of Medicare levy and income tax that is notionally payable by the parents. |
|
NPBL |
The net passive business loss (if any) of each parent. |
Every $4 of family actual means above the family actual means free area reduces the rate of ABSTUDY by $1. If the fortnightly ABSTUDY rate is reduced to between zero and $1, ABSTUDY entitlement is $1. A customer's reduction for family actual means is worked out using the following formula:
|
Fortnightly reduction for family actual means = |
(family actual means - actual means free area)/26
4 |
The result of the division by 4 is rounded DOWN to the nearest dollar. If as a result of calculating the maximum fortnightly rate of ABSTUDY Living Allowance is less than $1 and more than zero, entitlement would be $1.
|
Fortnightly entitlement = |
Maximum fortnightly rate of ABSTUDY – fortnightly reduction for family actual means |