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It seems ‘stimulus payments’ are on everyone’s mind at present but are you aware of other tax rebates or benefits that you may have been entitled to before we heard of the ‘Global Financial Crisis’?

In this C&J Client Bulletin we endeavour to explain some common benefits that may be obtained via the tax system or alternatively, direct, from Centrelink or the Family Assistance Office. These include;

Family Tax Benefit

click on a benefit to find out the facts

Family Tax Benefit is a payment you can receive to help with the cost of raising your dependent children. FTB has two parts. You or your spouse may be eligible for FTB Part A or FTB Part B, or both.

What is Family Tax Benefit Part A?

Family Tax Benefit Part A is an annual tax benefit to help families with the cost of raising children. Guardians, including foster parents and grandparents, responsible for the day-to-day care of children/grandchildren may be eligible for Family Assistance.

Who is eligible for Family Tax Benefit Part A? To be eligible for Family Tax Benefit Part A you need to meet the following criteria:

have a dependent child under 21 (including a foster child), in your care for at least 35% of the time, or
have a dependent full time student aged 21–24 in your care for at least 35% of the time, and
have adjustable taxable income (ATI) under a certain amount as recommended below.

Family ATI limit at which FTB Part A stops

Number of Dependent Children Aged 18 to 24 Years

0
1

2

3

Number of dependent children aged 0 to 17 years
0

$99,244

$110,595

$122,823

1
$97,845

$109,196

$121,424

$133,651

2
$107,797

$120,025

$132,252

$144,480

3
$118,625

$130,853

$143,080

$155,308

you are either an Australian citizen, this means you have been living in Australia on a permanent basis and you are either:

an Australian citizen, or
the holder of a permanent resident visa, or
the holder of Special Category Visa - someone who arrived on a NZ passport, or
you hold one of the following temporary visas: 070, 309, 310, 447, 451, 695, 785, 786, 787, 820 or 826

How do I claim Family Tax Benefit?

There are two ways that you can make a claim for Family Tax Benefit Part A.

You can download and fill in claim forms from the Family Assistance Office (FAO) website at www.familyassist.gov.au/ or phone the FAO on 13 61 50 between 8.00am and 8.00pm (local time), Monday to Friday.
You claim your FTB from the Australian Tax Office (ATO) you will need to complete a separate form, the Family tax benefit (FTB) tax claim 2009 and then lodge it with your Income Tax Return 2008-2009.

You can choose how your Family Tax Benefit is paid to you. It can be made fortnightly, as a lump sum payment at the end of the financial year, or as a lump sum payment through the tax system as part of the annual tax return.

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Family Tax Benefit Part B (FTB Part B)

What is FTB Part B?

Family Tax Benefit Part B provides extra assistance to single parent families and families with one main income where 1 parent chooses to stay at home or balance some paid work with caring for their children. Thus for 2 parent families it is the income of secondary earner (the partner earning the lesser amount) that is crucial in determining an entitlement of FTB Part B. However from 1 July 2008, FTB Part B is also limited to families with an adjusted taxable income of $ 150,000 or less.

Who is eligible for FTB Part B?

You may be eligible until your youngest child turns 16 (or until the end of the calendar year in which they turn 18 if they are a full-time student).
Family Tax Benefit Part B is payable to families where the primary income earner in a couple, or a single parent family, has an income of $150,000 per annum or less.
You should be an Australian resident

How do you claim FTB Part B?

There are two ways that you can make a claim for Family Tax Benefit Part A.

You can download and fill in claim forms from the Family Assistance Office (FAO) website at www.familyassist.gov.au/ or phone the FAO on 13 61 50 between 8.00am and 8.00pm (local time), Monday to Friday.
You claim your FTB from the Australian Tax Office (ATO) you will need to complete a separate form, the Family tax benefit (FTB) tax claim 2009 and then lodge it with your Income Tax Return 2008-2009.

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The senior Australians tax offset allows eligible people to earn more income before they pay tax and the Medicare levy. In some cases it will result in a person no longer having to lodge a tax return. Eligibility depends on certain conditions that relate to age, income and eligibility for Commonwealth pensions and similar payments.

Are you eligible?

You must meet four following conditions to be eligible for SATO:

Pension age (male 65 years, female 63 years and 6 months old or more), or meet Veteran pension test.
Receive or be eligible to receive Australian Government age pension, or benefit from Veteran’s Affairs.
Satisfy income threshold test:

Singles – taxable income less than $ 43,707
Couples – combine taxable income less than $ 68, 992
Couples separated due to the illness – combine taxable income less than $ 81,840

Not in prison – you satisfy this condition unless you were in jail for the whole income year.

How much is the rebate?

For the 2008/09 financial year the maximum rebate under SATO is $2,230 for single aged person earning up to $28,867 and $3,204 for couples earning up to $49,360 combined (depending on the income earned by each member of the couple). If both members of the couple were eligible for the senior Australians tax offset, and one of you does not fully use your tax offset, the unused portion may be available for transfer to the other person. Note special limits apply if you are a couple and have to live apart due to illness or because one person needs to live in a nursing home.

The rebate is reduced by 12.5 cents for every dollar over these income levels with cut-offs shown in the following table.

SATO - 2008/09 Rates

Max Rebate Level $

Shade-out Threshold $

Cut-out Threshold $

$ 2,230

$ 28,867

$ 43,707

$ 1,602

$ 24,680

$ 49,360

$ 2,040

$ 24,600

$ 49,360

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The Education Tax Refund (ERT) is an incentive to encourage eligible parents of primary and secondary students and independent students to purchase educational items. Starting from 1 July 2008, education expenses which will be eligible for the refund of up to 50% include items such as computers and related equipment, school text books and prescribed trade tools. As this is an incentive to purchase education items, expenses such as school fees, tutoring and uniforms do not qualify for ERT.

Eligibility – If you receive FTB Part A (or you stopped receiving FTB Part A due to receiving another type of government payment) you are eligible.

How to claim - Through your personal tax return so don’t forget to keep your receipts and pass them onto Crispin & Jeffery when you send us your tax return information.

How much? – For each primary school student the maximum is $750 in expenses, resulting in a refund of $375.

For secondary students the maximum is $1,500, resulting in a refund of $750

If your education expenses are more than the maximum in one year the excess expenses can be carried forward to the next year providing you are still eligible.

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What is Economic Security Strategy Payment (FTB Part A)?

Payment of $1,000 for each eligible Family Tax Benefit Part A child;
It is non taxable item and is not considered income for social security or family assistance purposes; and
It is not ongoing.

Who is eligible for Economic Security Strategy Payment (FTB Part A)?

You are eligible for the payment if, on 14 October 2008:

You were receiving fortnightly payments of Family Tax Benefit Part A; or
You were entitled to Family Tax Benefit Part A, but you chose to defer your payment to the end of the year under a More Choice for Families option; or
You were receiving fortnightly payments of Youth Allowance, Abstudy or a Veterans' Children Education Scheme for a dependent child.

Please note: If Youth Allowance is paid directly to your child, the additional payment will also be paid directly to your child.

In case you share the care of your child or children and have at least 35 per cent care you may be entitled to a portion of the payment. The payment will be shared according to the Family Tax Benefit percentage of each child.

How is the payment made?

If you were receiving fortnightly payments of Family Tax Benefit Part A; then you would have been paid automatically in your bank account prior to 20 December 2008.
If you claim your Family Tax Benefit Part A as a lump sum at the end of the financial year (i.e. at the time of lodgment of 2009 FY Tax return), the payment will be made either:

At the same time as your Family Tax Benefit Part A payment.
Earlier if a request is made directly to the Family Assistance Office, a phone questionnaire may be required

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A tax offset of 20% - ie. 20 cents in the dollar - of net medical expenses over $1,500 can be claimed in your tax return. There is no upper limit on the amount that can be claimed. Net medical expenses are the medical expenses the taxpayer has paid less any refunds they got, or could get, from Medicare or a private health fund.

Who must the medical expenses be for?

The medical expenses must be for:

the taxpayer
the taxpayer's spouse - married or de facto - regardless of the spouse's income
their children who were aged under 21 years, including adopted and stepchildren, regardless of the children’s' income
any other child aged under 21 years - not a student - who the taxpayer maintained and whose separate net income (SNI) was less than $1,786 for the first child and less than $1,410 for the second child and any subsequent children
a student aged under 25 years who the taxpayer maintained and whose SNI was less than $1,786
a child-housekeeper but only if the taxpayer can claim a tax offset for them at item T1 on their tax return
An invalid relative, parent or spouse's parent but only if the taxpayer can claim a dependant tax offset at item T10.

The taxpayer and their dependants must be Australian residents for tax purposes but they can claim medical expenses paid while travelling overseas. They may also be able to include the medical expenses of certain dependants who have been approved to migrate to Australia.

The taxpayer can claim expenses relating to an illness or operation paid to legally qualified doctors, nurses or chemists and public or private hospitals. However, expenses for some cosmetic operations are excluded – see below.

Medical expenses which qualify for the tax offset also include payments for:

dentists, orthodontists or registered dental mechanics
opticians or optometrists, including the cost of prescription spectacles or contact lenses
a carer who looks after a person who is blind or permanently confined to a bed or wheelchair
therapeutic treatment under the direction of a doctor
medical aids prescribed by a doctor
artificial limbs or eyes and hearing aids
maintaining a properly trained dog for guiding or assisting people with a disability (but not for social therapy)
laser eye surgery, and
treatment under an in vitro fertilization program.

Expenses which do not qualify

Expenses which DO NOT qualify for the tax offset include payments for:

cosmetic operations for which a Medicare benefit is not payable
dental services or treatment that are solely cosmetic
therapeutic treatment where the patient is not formally referred by a doctor - a mere suggestion or recommendation by a doctor to the patient is not enough for the treatment to qualify; the patient must be referred to a particular person for specific treatment
chemist-type items - such as tablets for pain relief - purchased in retail outlets or health food stores
inoculations for overseas travel
non-prescribed vitamins or health foods
travel or accommodation expenses associated with medical treatment
contributions to a private health fund
purchases from a chemist that are not related to an illness or operation
life insurance medical examinations
ambulance charges and subscriptions, and
funeral expenses.

Residential aged care expenses

The taxpayer can claim payments made to nursing homes or hostels (not retirement homes) for an approved care recipient’s permanent or respite care if the payments were:

made to an approved care provider and
for personal or nursing care, not just for accommodation.

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The baby bonus is paid to families following the birth (including stillborn babies) or adoption of a child. It recognizes the extra costs incurred at the time of a new birth or adoption. The baby bonus is paid regardless of any other family benefits that you may also receive.

Who is eligible for this rebate?

You are eligible if:

your family income is $75,000 or less in the six months following the birth of your child or the child entering your care;
you are the parent of a dependent child, or you became the carer of a newborn child within 26 weeks of the child’s birth; and
you are an Australian resident at the time.

From 1 ^st January 2009, eligibility for the baby bonus will be extended to parents who adopt children under 16 years of age who enter your care on or after 1 ^st January 2009.

How much is the rebate?

Baby bonus is a one-off payment of $5,000 for each child and either paid in a lump sum or in 13 equal fortnightly instalments.

How do I apply for the baby bonus?

For children who are born or enter care before 1 ^st January 2009, your claim must be lodged within 26 weeks of the child’s birth, or in case of adoption, within 26 weeks of the adopted child coming into the adopting parent’s care. For children who are born or enter care after 1 ^st January 2009, your claim period is extended to 52 weeks.

You can lodge claims for new babies by using the Online Services of the Family Assistance Office. Alternatively, you can contact the Family Assistance Office on 13 6150 between 8am and 8pm (local time) Monday to Friday to request a claim form if you were not issued with a form at the time of birth.

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(1) Superannuation Income Stream (Pension):

You may be entitled to a tax offset of 15% of all or part of your;

Superannuation Pension (from taxed complying Superannuation Fund) or
Annuity income (rolling over Eligible Termination Payments)

Normally you can only claim the offset on or after your 55 ^th birthday, unless the superannuation income stream was either:

a disability superannuation benefit, or
a death benefit income stream.

The tax offset is claimed in your tax return. A payment summary or statement should be provided.

(2) Superannuation Spouse Contribution:

You may be entitled to claim an 18% tax offset (maximum $540 each financial year) on contributions made on behalf of your:

Non-working or low income-earning (assessable income < $13,800 per year) spouse if:

You are both Australian residents & not living separately
The contributions are made to a complying super fund
You did not claim a tax deduction for the contributions

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What is Super co-contribution?

If you are eligible then the Government will pay up to $1.50 for every $ 1 you contribute to your super fund.
Government will pay up to a maximum of $1500 each year to eligible individuals (ie. the maximum is based on $1000 of after-tax contributions)
The super co-contribution started on 1 July 2003.

Who is eligible for super co-contribution?

You are eligible for the co-contribution in the 2008/2009 if :

Your total income is less than $ 60,342 inclusive of assessable income plus reportable fringe benefits.
You lodge an income tax return for the financial year
You are less than 70 years old at 30 June 2009.
You do not hold an ‘eligible temporary resident visa’ at any time during the year.
You have provided your TFN to super fund and your super fund receives personal contribution from you during the financial year.
You earned 10 per cent or more of your total income from eligible employment or as a self employed.

How much will you be entitled to?

You will be entitled for the maximum co-contribution if your income in 2008/2009 is less than $30,342. So if you contribute $1000 in your super fund than you will be entitled for $1500 from the government.
The maximum co-contribution will reduce by 5 cents for each dollar of income above $30,342 up to $ 60,342 when it phases out completely.

A temporary reduction of the maximum Government co-contribution from $1,500pa to $1,000pa has been announced in the recent budget. This will apply to eligible personal superannuation contributions made on or after 1 July 2009 (ie. the 2010 financial year).

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The Government announced in the 2008 Budget that the low income tax offset (LITO) will increase from $750 to $1,200 from 1 July 2008. The following table outlines the taxable income thresholds that determine your entitlement to the low income tax offset for the 2008-09 income year.

If your taxable income is...

then...

less than $30,001

you are entitled to the maximum tax offset of $1200.

more than $30,000 but less than $60,000

the maximum tax offset is reduced by 4 cents for every dollar of taxable income over $30,000.

more than $59,999

you are not entitled to any low income tax offset.

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10. Child Care Tax Rebate

You must meet certain requirements in order to be eligible for the Child Care Tax Rebate. You must have:

used approved child care during the year
been assessed as eligible for Child Care Benefit*
worked or had work related commitments at some time during the period. Information on work related commitment is available at the Child Care Benefit work, training, study test.

*Please Note: If you have been assessed as eligible for Child Care Benefit, but you receive a zero rate entitlement due to income, you are still eligible for the Child Care Tax Rebate.

How much Child Care Tax Rebate can I be paid?

If you meet the eligibility criteria, you can get 50 per cent of your out-of-pocket expenses for approved care up to a maximum of $7500 (indexed) per child per year. Out-of-pocket expenses are the total fees you had to pay for child care expenses for approved care, less the amount of Child Care Benefit you received.

How can I get paid?

The Child Care Tax Rebate claiming arrangements for 2008-09 onwards

From July 2008, the Child Care Tax Rebate can be paid quarterly rather than annually. At the end of the financial year, the Child Care Tax Rebate will be reconciled against your actual income and adjusted for the financial year. Payment of the last quarter of the Child Care Tax Rebate will be 'held' until Child Care Benefit reconciliation occurs (when your tax returns have been lodged and all your child care attendance information has been received). This will then be used in any adjustments as part of the reconciliation. The Child Care Tax Rebate entitlement is paid directly into your bank account by the Family Assistance Office.

Should you have any questions in relation to the above Government Benefits and / or your eligibility for them please contact your Crispin & Jeffery advisor.

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