Minimum family tax credits are mainly available to low income earners. Minimum family tax credit is a payment made to families with dependent children aged 18 or younger, so they have a minimum income of $438 a week after tax ($22,776 p.a. from 1-4-2014).

Basically if you have dependent children and earning less than $22k after tax then then your income will topped up by the shortfall.

For example if someone is earning $15 an hour for 30 hours a week and have dependent children and his partner is not working then his income in hand will be topped up to $22,776.

In practical terms this tax credit will vary for selective people. As the threshold is too low.

Requirements for getting Minimum Family Tax Credit as below:

1.      Solo parent will need to work at least 20 hours per week or couple will need to work at least 30 hours a week(collectively)

2.      If one is receiving an income-tested benefit (any kind of benefit) or parent’s allowance during some weeks, the minimum family tax credit is not available for those weeks. The mechanism is to encourage parents to work. 

3.      If one receives shareholder employee income from a company (10% or more shareholding) this tax credit is also not available. As the income can be manipulated.

4.      If one has only worked part year then his income will be annualised to see how much they would have earned.

The calculation is as follows.

Net family scheme income = (Net income*52/entitlement weeks)-maintenance payments

MFTC = (22,776-Net family scheme income)*Entitled weeks/52