Another ATO Tax Refund Email Scam

The Tax Office is again warning people about a fraudulent email being circulated that claims to offer a refund from the Tax Office.

The email is similar to previous scams from March, June and October which fraudulently uses the Tax Office logo and the words ‘Australian Taxation Office – Notification’ or ‘Australian Taxation Office – Please Read This’ in the subject line.

There may also be more variations to these subject headings.

The email asks people to click on a link which redirects them to a bogus website that looks similar to the Tax Office website and asks for credit card and personal details.

The email and website are not affiliated with the Tax Office in any way.

Acting Second Commissioner Bill Gibson said anyone who receives the email should delete it immediately.

“People should be wary of unsolicited emails claiming to be from the Tax Office.

“The Tax Office will never send emails to people asking them to provide personal information including credit card details.

“As an extra precaution we recommend you type internet addresses directly into your internet browser rather than clicking on hyperlinks embedded in emails,” Mr Gibson said.

If people have entered their credit card information on the website, they should contact their credit card provider as soon as possible and report a possible compromise.

Tax Deadline Approaching

REMINDER:

If you are doing your own tax return this year, you have just days left to lodge it with the ATO before the October 31 deadline.

Online Guide for Young Employees

Today sees the launch of the Workplace Authority's "What's the deal with workplace agreements?" interactive tutorial.

The head of Workplace Authority, Barbara Bennett, says "'What's the deal with workplace agreements?' is a versatile product that advises and supports young employees, be they at school and working on the weekend or working full time as an apprentice. It cuts out the jargon and gives young employees the facts through realistic situations so that they know where they stand when they enter a workplace agreement."

The guide provides factual information about agreement making, rights of young employees, as well as the responsibilities of their employers. It is best suited for 14-22 year olds and their parents.

You can access or download the interactive guide at http://www.workplace.gov.au/

740 New Places to Boost Uni Entry in NSW

University students in New South Wales will benefit from 740 new Commonwealth supported places announced today by the Minister for Education, Science and Training.

“Places have been allocated for areas of skills need and student demand. New South Wales will receive 2,006 additional places by 2011,” Minister Bishop said.

“The new student places will provide for the training of 225 engineers, 200 nurses, 120 science professionals, 120 teachers, 50 health professionals including Indigenous health professionals, 10 business and IT professionals and 15 places for Indigenous education pathways.”

“Nationally the Australian Government has allocated more than 2,300 new Commonwealth supported places to help meet student demand for higher education,” Minister Bishop said.

More to Receive Higher Pensions

More than two million age pensioners will receive increases in their pension payments from 20 September 2007 and an estimated 300,000 older Australians will be able to access the pension for the first time or get a higher rate of pension.

Minister for Families, Community Services and Indigenous Affairs, Mal Brough, yesterday announced that pensions would once again rise above inflation.

The Minister said the adjustments from 20 September also applied to people receiving the full range of Centrelink payments, such as Disability Support pension and Newstart payments.

You can access a full summary of changes online here.

Elements of a Super Payout

From 1 July this year, Super payouts are made up of two components - a tax-free and a taxable component.

A tax-free component does not count towards your taxable income.

A taxable component is the part of the payment which is taxable. This will usually be broken up again into "taxed" and "untaxed" elements.

The taxed element had already had tax paid on it in the fund. It may or may not need to have additional tax paid on it once it is paid out. How much tax you may still need to pay on the taxed portion depends on the type of payout and your age when taking it. If you are 60 or over, you pay no tax on the taxed element of your payout.

The untaxed element is the part of your payout that hasn’t had any tax paid on it in the fund. It is still taxable so needs to included in your tax return as income. How much tax you will need to pay on the untaxed element depends on the type of payout and your age.

When you receive your payout, your super fund will send you a payment summary which will show the components (including any untaxed and taxed elements) and the tax withheld.

If the taxable component includes both taxed and untaxed elements, each is taxed separately according to different rules. For more detiled information, visit the ATO page How Your Super Is Taxed.

Thousands of Apprentices Gain New Benefits

According to a government media release this morning, thousands more Australians have today become eligible for a wide range of incentives to encourage the take up of apprenticeships in areas of skills shortages.

Backdated to 1 July 2007, Aircraft Maintenance Engineers, Binders and Finishers, Butchers, Flat Glass Trades, Furniture Finishers, Locksmiths, Optical Mechanics, Painters and Decorators, Picture Framers, Printing Machinists, Screen Printers, Shearers, Signwriters, Tree Surgeons, Vehicle Trimmers and Wood Machinists, will now join 38 trades previously eligible to access a range of Australian Government apprenticeship incentives including:

* $2,000 Apprenticeship Wage Top-Up;
* $1,000 Apprenticeship Training (FEE) Vouchers;
* $800 Tool Kit;
* $13,000 Wage Subsidy for Apprentices over 30 yrs;
* $1,000 Commonwealth Trade Learning Scholarship; and
* $1,000 Rural and Regional Skills Shortage Employer Incentives.

For more information contact the Australian Apprenticeships referral line on 13 38 73 or check out the website at http://www.australianapprenticeships.gov.au/.

Q&A: Allowances and Deductions

Question: I received a laundry allowance from my employer. Does this mean I have been reimbursed and can't claim a tax deduction for laundry?

Answer: Receiving an allowance from your employer (as shown on your payment summary) is not the same as being reimbursed. The allowance is taxable income and included on your tax return along with your regular wages. You can and should still claim a tax deduction for your actual laundry expenses in order to reduce your income (which now includes the allowance you received).

Payment of 2006/07 Child Care Rebate

The Family Asistance Office have reported that payments of the 2007 30% Child Care Rebate will be made from September.

Remember, this is the only year where you could receive two lots of the rebate; the 2005/06 child care rebate on your tax return and also 2006/07 rebate from the FAO. From next year, the rebate will only be paid through the Family Assistance Office.

We're overweight, marrying less and buying more

According to an Australian Bureau of Statistics (ABS) publication released last week, we're more likely to be overweight, less likely to marry, and consuming more goods and services. A few titbits include:

• The latest figures show that around 7.4 million Australian adults (54%) were overweight or obese. This was an increase of more than 2 million adults from 1995.

• The probability of marrying has declined. If current rates were to continue, 31% of men and 26% of women would never marry.

• The Australian labour force participation rate for women of child-bearing age (15–44 years) rose from 59% to 71% between 1980 and 2005.

• While many goods and services have become more affordable others, such as education and hospital and medical services, have become less affordable because price rises for these services have outpaced increases in income and wealth.

• As our household income has increased so has household spending. The largest increases have been on communication services and goods for recreation and culture.

ASIC warns Aboriginal communities of get rich quick schemes

Source: ASIC Media Release - CA07-13

ASIC has urged consumers from Aboriginal communities to look out for potential scams following concern over an investment scheme that appeared to target communities on the south coast of New South Wales.

ASIC’s warning follows the unearthing of a scheme that proposed investors join a revolving wealth creation scheme that would see them divided up into groups to invest funds every week for three months, then each take turns to dip into the accumulated money pool. Promises made by the scheme included turning ten dollars into $1000 or more.

ASIC viewed this proposed scheme as being illegal under the Corporations Act as each ‘membership’ would have amounted to a unit in an unregistered managed investment scheme. ASIC’s enquiries found that the scheme never got off the ground but we are concerned that Aboriginal communities may be especially vulnerable to promoters of illegal schemes who promise large returns from affordable weekly contributions’, ASIC Executive Director of Consumer Protection, Mr Greg Tanzer said.

'ASIC is committed to ensuring that any investment schemes or scams targeting particular community groups are stopped before any investors join up.’ ASIC encourages all potential investors to carry out safety checks before investing their money. If the investment does not pass the test then these schemes should be reported to ASIC.The safety checks are:

- Search ASIC’s database to see if the company managing the investment holds an Australian financial services licence and is registered.

- Check ASIC’s list of illegal investments available at http://www.fido.gov.au/.

- Ask the seller for their product disclosure statement. This document must clearly and concisely set out information about the product.

Further, ASIC has established a toll free number (1300 365 957) to assist Indigenous consumers with any queries.

Additional information for Indigenous consumers and investors as well more information regarding scams and illegal investments schemes can be found at ASIC’s consumer website, http://www.fido.gov.au/.

Understanding Benefits: Multiple Birth Allowance

Multiple Birth Allowance is an extra payment to help you if you have a multiple birth.

Who Qualifies?
You can get Multiple Birth Allowance if you have three or more children who are born during the same birth for whom you receive Family Tax Benefit.

How much is it?
The Allowance can be added to your Family Tax Benefit. The Australian Government has announced that from 1 January 2008, families will remain eligible until the children turn 16 years of age, or for fulltime students, until the end of the calendar year in which they turn 18.

Parents of triplets will receive an additional $3,179.15 extra per year ($121.94 fortnightly).

Parents of quads or more are entitled to an additional $4237.65 each year ($162.54 p.f).

How to apply?
You do not need to make a separate claim for Multiple Birth Allowance, as it will be paid as part of your FTB.

Family Tax Benefit Adjustments in your Tax

This year, FTB reconcilations (top-ups or overpayments) are included in the Notice of Assessment from the ATO and refunds adjusted accordingly.

If you have over-estimated your taxable income, your Family Assistance top-up will arrive in the same payment as your tax refund.

Receiving a nice lump sum can feel like quite a windfall!

However, persons who have been overpaid family assistance throughout the year may be disappointed. FTB overpayments will be deducted from any tax refund due.

While the new way saves waiting for the Family Assistance Office to get around to paying top-ups, unfortunately it doesn't give recipients a clear break-up of the FTB payments included in the reconcilation.

Can you claim Work Skills Vouchers?

Did you know...?

If you are 25 years and over and do not have Year 12 or equivalent or certificate level II or higher qualification, you are probably eligible for Work Skills vouchers to help improve your qualifications.

The vouchers can be used in public, private or community colleges and are worth up to $3,000.

Unskilled workers and those returning to the workforce (such as parents, carers, etc) will get priority according to the latest information.

You can check your eligibility for a voucher through the Australian Skills Vouchers Program website.

Instant Rebate with Medicare Easyclaim

I have to admit, I like the idea of getting a rebate immediately and without a trip to a Medicare office.

If you normally pay to see your doctor, Medicare Easyclaim lets you claim your Medicare rebate on the spot, using the EFTPOS terminal in the doctor’s surgery. Your rebate is paid directly into your cheque or savings account almost immediately.

For more information on the new Medicare Easyclaim visit the Patient Information Page.

$15 Million paid to assist local storm victims

The Australian Government has distributed more than $15 million in emergency assistance to people affected by the Hunter and Central Coast floods, Minister for Human Services, Senator Chris Ellison said today.

Senator Ellison said Centrelink has paid nearly 13,000 claims for the Australian Government Disaster Recovery Payment – totalling $15.67 million - since the assistance package was announced on 10 June.

“The damage and impact of the floods has been widespread across the Hunter and Central Coast region and Centrelink staff have been working tirelessly to get help to those in need,” he said.

“Along with staff from the Red Cross, Samaritans and the NSW Government, Centrelink workers door-knocked houses in affected areas to check on residents’ wellbeing and ensure they’re aware of help available. In addition, staff at the Wallsend processing centre are still working well into the night to process claims as quickly as possible.”

Senator Ellison said he had heard some remarkable stories from the floods. “One story I heard was of a staff member whose roof collapsed while she was in bed, flooding her entire house and destroying most of her clothes and possessions,” he said.

“She showed up for work on Tuesday following the floods at Newcastle Centrelink wanting to help people who were worse off than her.

“30 Centrelink staff flew in from around Australia to help with the recovery effort, many of whom were involved in helping Innisfail rebuild after Cyclone Larry last year. I commend Centrelink staff and their colleagues from the NSW Government and community organisations for getting help to people when they needed it.”

Senator Ellison said the disaster recovery payments offered $1000 per adult and $400 per child for the destruction of their principal place of residence, where homes had been rendered uninhabitable for 48 hours or more as a result of storm or flood damage, or in cases of serious hospitalisation.

“Anyone still seeking assistance should contact the Australian Government Storms Assistance Hotline on 180 2211 which is still available 24 hours a day, or visit their local Centrelink office,” he said.

More than 15,500 enquiries have been answered by the hotline and staff are still receiving hundreds of calls a day. The Commonwealth and New South Wales governments have also contributed $500,000 each to community recovery funds and recovery grants of up to $15,000 for eligible small businesses and primary producers. Further information is available by calling 1800 678 593.

Source: Media Release, Department of Human Services.

Boosting Minimum Wages for Aussies

A decision by the Australian Fair Pay Commission confirms Australia’s status as the nation with the second highest minimum wage in the developed world.

The decision means low paid workers receive an extra $10.26 a week taking the minimum wage from October 1 2007 to $522.12 a week.

With the cost of living being what it is, even with the increase to minumum wages, it still appears pretty rough. As frugal as our household is, I couldn't imagine feeding and housing a family on minimum wage. Still, let's not forget the additional social support available to Aussie families.

The recent report released by the Australian Bureau of Statistics confirms that after families receive government benefits, principally family tax benefit, only 40 per cent of households pay any net tax — that is, they get more back in family tax benefits than they actually pay in tax.

In my opinion, we really do live in the lucky country. Without a doubt, we have one of the most generous social support systems in the world. Unfortunately, generosity is open to abuse and can lead to a sense of entitlement or a cycle of dependency.

What do you think? Should we have minimum wage laws? Is it better to leave the labour market sort itself? Does the welfare system need to toughen up on some recipients? Who and how?

The Paperwork that Protects You

Statements are sent to you by investment funds, by companies you hold shares in, by your superannuation fund for your protection. Always get the originals sent to you personally. If you cannot look after your own affairs, get them sent to a person you trust (but not your adviser), so there is always a pair of independent eyes looking after you. Love your paperwork!

The importance of this is illustrated by the case of a financial planner and tax agent based in Newcastle. Stuart Forsythe is his name and ASIC's investigation gathered the evidence that had him sent to gaol for six years.

The people who went to see Mr Forsythe were elderly people with superannuation money and savings, and they wanted him to help them choose appropriate investments to see them through their retirement. The first part of the process went well enough when Forsythe put their money into solid funds with a reasonable track record.

Then he made these people what sounded like a really sensible and attractive offer. He arranged for the funds to send all clients statements direct to him at his office. He told them that when he does their tax, he would have all the paperwork handy and that it would easier than them searching around at home to find them. Needless to say, some his clients agreed to this, because it seemed such a good idea.

But here's the trick. Because Forsthye received the clients' statements, he was now in a position to make withdrawals from their investment accounts without their knowledge. He then forged the clients' signatures on withdrawal requests from their various investment accounts and helped himself to their money. They had no idea what he was up to.

Forsythe eventually came unstuck but his victims are still trying to sort out the mess.

As you can see this was a really simple fraud that could easily have been prevented.

All the clients had to do was say no. They should have received the original statements themselves to check what was happening with their money. If they wanted Forsythe to do their tax, they could have sent him the copies whenever they got a statement.

© Australian Securities & Investments Commission. Reproduced with permission.

The Income of Minors and Taxation - Part 3

What rate of tax applies to the income of minors?

The tax rates given below apply in 2006–07 for minors who:

• are residents of Australia
• are not excepted persons, and
• have no excepted income.

Rates

$0 - $416 other income = Nil tax

$417 - $1307 other income = Nil + 66% of the excess over $416

Over $1307 other income = 45% of the total amount of income that is not excepted income.

If the minor’s taxable income is less than $40,000, they will get the low income tax offset. The maximum tax offset of $600 applies if their taxable income is $25,000 or less. This amount is reduced by four cents for each dollar over $25,000.

Example:

Kris is 15 years old. She has no excepted income and $900 in other income. The tax payable on her income is:

Excess over $416 = $900 – 416 = $484
66% of the excess = $484 x 66% = $319.44

As Kris’s taxable income is less than $25,000, she gets the maximum tax offset of $600. The net amount payable by Kris is $0 ($319.44 - $600).

What if the application of the special rules results in serious financial hardship?

If a minor faces serious financial hardship as a result of the application of the special rules, they may get a tax offset of some or all of the extra tax payable if we consider there is serious hardship due to higher tax rates applying rather than ordinary tax rates.

If you are in this situation, you will need to provide information stating the reasons for your hardship when you lodge your income tax return.

Source: Australian Taxation Office

The Income of Minors and Taxation - Part 2

Are all types of income received by minors covered by the special rules?

No. Even though a minor may not be an excepted person, ordinary rates of tax still apply to certain types of income. Such income is called excepted income.


Excepted income includes:

• employment income
• taxable pensions or payments from Centrelink or the Department of Veterans’ Affairs
• compensation, superannuation or pension fund benefits
• income from a deceased person's estate
• income from property transferred to the minor as a result of the death of another person or family breakdown, or income in the form of damages for an injury they suffer
• income from their own business
• income from a partnership in which they were an active partner
• net capital gains from the disposal of any property or investments listed above, and
• income from the investment of any of the amounts listed above.

Excepted net income – that is, excepted income minus deductions relating to that income – is taxed at ordinary rates. All other income of a minor who is not an excepted person will be taxed at higher rates.

Source: Australian Taxation Office

The Income of Minors and Taxation - Part 1

Income of minors
A minor is a person who is under 18 years of age. Special rules apply to the income of minors.

Under these rules, certain types of income received by minors may be taxed at higher rates.

However, minors who are residents of Australia do not have to lodge a tax return if they earn less than $1,334 in 2006-07. This is because the low income tax offset of $600 offsets the tax payable on income less than $1,334.

Why do special rules apply to income of minors?

The special rules were introduced to discourage adults from splitting their income and diverting it to their children.


Are all minors covered by the special rules?

No. Several categories of minors are excluded from the special rules. These minors are called excepted persons.

A minor is an excepted person if on 30 June 2007:

• they were working full-time, or had worked full-time for three months or more in 2006-07 (ignoring full-time work that was followed by full-time study)
• intending to work full-time for most or all of 2007-08, and
  not intending to study full-time in 2007-08.
• they were entitled to a disability support pension or rehabilitation allowance, or someone was entitled to a carer allowance to care for them
• they were permanently blind
• they were disabled and were likely to suffer from that disability permanently or for an extended period
• they were entitled to a double orphan pension and received little or no financial support from relatives, or
• they were unable to work full-time because of a permanent mental or physical disability and received little or no financial support from relatives.

Ordinary rates of tax apply to all the income of an excepted person.



Continued in Part 2

Source: Australian Tax Office

Understanding Benefits: Rent Assistance

What is it?

Rent Assistance gives extra help to you if you receive more than the base rate of Family Tax Benefit Part A, and pay rent to private landlords.

Who is eligible?

You may also be able to get help if you pay:

• lodging, or board and lodging;
• site fees (eg. caravan, mobile home);
• mooring fees for a boat or vessel that you live in.

Rent Assistance is generally not paid to people who pay rent to a government housing authority (such as a Housing Commission), own or are buying the home in which they live (except for mobile and relocatable homes), are getting Incentive Allowance, or pay less than the threshold amount of rent.

How much is it?

Rent Assistance is paid at the rate of 75 cents for each dollar of rent paid above the rent threshold, up to specified maximum rates. The rate of Rent Assistance depends on how many children you have, and whether you are partnered or single.

Maximum fortnightly payments range from $122.22 for a single person with one child up to $138.18 for a couple with 3 or more children. These rates are a guide only. For an estimate on how much you may be able to claim, use the online Family Assistance Estimator.

How do I get it?

Rent Assistance is paid along with your Family Tax Benefit. You can choose to get your Rent Assistance as fortnightly payments even if you choose to defer all of your Family Tax Benefit until after the end of the income (financial) year.

Rent Assistance cannot be paid through the tax system.

In order to claim rent assistance, you'll need to supply the Family Assistance Office with a copy of your current lease or tenancy agreement.

Source: Family Assistance Office

Starting a New Job? Claiming the tax-free threshold

When you start a job, your payer (employer) will give you a Tax file number declaration form to complete. Centrelink is also a payer and they will give you this form if you apply for payments.

You tell your payer you want to claim the tax-free threshold by printing X in the Yes box at ‘question 9 - Do you wish to claim the tax-free threshold from this payer?’

You have 28 days to give your payer a completed Tax file number declaration form with your tax file number (TFN) on it or to claim an exemption from quoting a TFN. An exemption may be claimed if you do not earn enough income to pay tax and you are under 18 years of age.

After that time, they must start taking tax out of your pay at a rate of 46.5%.

If you don’t have or have forgotten your TFN, you can indicate on the Tax file number declaration form that you are making an application or enquiry to get your TFN. This will mean your payer will tax you at the normal rates for 28 days.

However, if you have not provided your TFN at the end of the 28 days, they must start taking tax out of your pay at a rate of 46.5%.

What if you have more than one payer?

You cannot claim the tax-free threshold from more than one payer at a time. If you do, it will result in you not paying enough tax for the income year. This may result in a large tax bill when you lodge your tax return.

If you have more than one payer, you need to choose which one to claim the tax-free threshold from. Generally, it is best to claim the threshold from the payer who pays you the most.

You have more than one payer if:

• you have a part-time job and also receive Centrelink payments, or
• you have two (or more) jobs.

Once you have selected the payer you want to claim the tax-free threshold from, print X in the No box at question 9 with your other payers.

If your circumstances change, you can fill out new Tax file number declaration to ensure you continue to claim the tax-free threshold from the payer who pays you the most. However you must always make certain that you are not claiming the tax-free threshold from more than one payer at a time otherwise you may end up with a tax debt at the end of the income year.

© Commonwealth of Australia. Source: Australian Taxation Office

Choosing an Income Protection Insurance Policy - Part 3

How much will you receive?

Income protection policies have a formula for calculating how much you will be paid. It may depend on your income at the time you took out the policy or your income over a number of years. The schedule attached to your policy will tell you how much you will receive every month.

The insurer may not check that you have correctly stated your income at the time you take out the policy. They may only check it when you make a claim. If, for example, you are self-employed, make sure you can produce tax returns, invoices or other documents establishing your income. Otherwise, the insurer could pay you less.

For further information on income protection insurance, visit ASIC's page on Insuring Your Income.

See Part 1
See Part 2

© Australian Securities & Investments Commission. Reproduced with permission.

Choosing an Income Protection Insurance Policy - Part 2

What kind of cover do you want?

Once you've decided you want to take out cover, you need to consider how comprehensive you want the cover to be. The more comprehensive the cover, the more expensive it will be.

1. Do you want to receive a benefit if your disability is: - partial (eg you can return to work part time) or total

- permanent or temporary

2. Do you want to be covered if you are "disabled" in a broad or narrow sense? Different policies will consider that you are disabled if you are unable to do:
- your usual occupation
- any occupation to which you are suited by education and training or
- any occupation at all.

3. Do you want to receive a benefit for a disability that is the result of:
- an accidental injury
- sickness or illness or
- both?

4. If the policy covers sickness or illness, does it cover "pre-existing" illnesses?

A pre-existing illness is one that you:
- may have had before you took out the policy (even if you have recovered) or
- one that you had symptoms or treatment for (even if it was not severe enough to prevent you working).

This is particularly important if you are taking out a new policy each year (instead of paying an annual premium to continue an existing policy). The insurer may have the right to refuse a claim if you contracted an illness under one policy, but were not disabled until after you had taken out the new policy. The illness becomes "pre-existing" and is therefore not covered under the new policy.

5. How long do you want to receive benefits?

For example, benefits for temporary disability will usually be limited to a period of one or two years only.

6. Do you want to receive an insurance payment even if you are receiving other money?

Some policies will not make payments (or will reduce the amount they pay) if you are getting money from another source as a result of the accident or illness. For example, if you are getting workers' compensation or disability payments through Centrelink, the insurer could pay you less or not pay you anything.

7. Does your policy cover you if you aren't working when the disability occurs? For example, you may be between jobs or a seasonal worker moving from job to job.

See Part 1

See Part 3

© Australian Securities & Investments Commission. Reproduced with permission.

Choosing an Income Protection Insurance Policy - Part 1

Most people only read their policy from cover to cover when they need to make a claim. Unfortunately, by this time it's often too late.

In 60% of cases involving disputes over unpaid claims during 1999, consumers did not have the insurance they thought they did. Make sure you know up front what to expect from your policy. Courtesy of ASIC'S comsumer site FIDO, here's what to look out for so you get the cover you need:

Is Insurance Part of Your Superannuation Package?

Before deciding whether to insure yourself against loss of income, check if you already have disability insurance through any superannuation fund you contribute to. If you do, check what sort of insurance it is and when it will pay.

Superannuation funds commonly offer insurance that pays benefits if you become permanently disabled and cannot return to work (to replace at least some of the income you would have earned if you were still employed). It is usually (though not always) cheaper than a policy you take out yourself. Your super fund's product disclosure statement (PDS) tells you about your insurance coverage. Ask you super fund for a copy of your PDS.

See Part 2

See Part 3

© Australian Securities & Investments Commission. Reproduced with permission.

Know Your Tax Offsets: Baby Bonus

I am still talking to women who were/are eligible for the Baby Bonus and had no idea! Don't miss out... know your tax entitlements or talk to someone who does.

What is it?

The baby bonus is a payment from the Tax Office you may be entitled to if you had a baby or gained legal responsibility for a child aged under five, between 1 July 2001 and 30 June 2004.

The baby bonus is a refundable tax offset – even if you do not pay tax, do not have any income or do not have to lodge a tax return you can still claim it. The baby bonus is paid whether or not you currently get any other family benefits.

Who qualifies?

If you had a baby or you gained legal responsibility of a child aged under five (for example, through adoption), after 30 June 2001 and before 1 July 2004 – whether or not you already have other children – you could receive the baby bonus. Usually, it is paid to the mother of the child. If you had a baby or you gained legal responsibility of a child aged under five (for example, through adoption), after 30 June 2004, you are not eligible for the baby bonus. You may be eligible for the new Maternity Payment which is administered by Centrelink.

How much is it?

How much baby bonus you get depends on your own taxable income each year. If your taxable income is $25,000 or less you will be entitled to an annual amount of $500. The ATO have an online calculator to help you work out your baby bonus.

Do I need to Lodge a Tax Return?

Typically you will need to lodge a tax return if:

• you have paid income tax during the financial year
• your taxable income is above the tax-free threshold of $6,000 and you did not receive Centrelink payment,
• you received a Centrelink payment, had other income, and your taxable income was above the threshold amount listed in TaxPack.

Other reasons you need to lodge a tax return include such things as:

• you are the liable prent under a child support assesment,
• You have a reportable fringe benefits amount,
• you are entitled to the private health insurance offset,
• you carried on a business,
• you made aloss or claim claim a loss you made in a previous year

... along with a host of other reasons.

If you are unsure, it is worth getting in touch with your accountant or tax agent to clarify your obligation. Did you know the ATO now have an online tax tool to help you determine if you need to lodge?

If you are not required to lodge a return this year, you should submit a non-lodgement advice to the ATO (this is included in TaxPack 2007). If you are registered under a tax agent, they will inform the Tax Office for you.

Tax Office warns of illegal early access to superannuation

In like vein to yesterday's post on early withdrawal of super, the ATO has recently released a media alert warning people to beware of shonky schemes:

The Tax Office has warned people from non-English speaking backgrounds to beware of schemes offering access to superannuation benefits before retirement.

Deputy Tax Commissioner Raelene Vivian said schemes offering early access to superannuation for a fee are illegal and anyone involved faces the loss of their super benefits, legal penalties and a hefty tax bill.

“We have detected promoters offering early access schemes to people from non-English speaking backgrounds in western Sydney.

“Anyone who is offered a scheme which, for a fee, arranges access to their superannuation before they retire, should contact the Tax Office on 13 10 20 without delay.”

Ms Vivian said promoters are misusing self managed superannuation funds they have established or that they establish for their clients, to access superannuation benefits.

She said they are charging fees of up to 20% or more of the fund’s assets for their services.

“They then claim the client can withdraw the money to pay off debts or to fund the purchase of a home, to buy a car, a boat, pay for a holiday or other purposes.

“Involvement in early access to superannuation schemes as either a client or a promoter is illegal and attracts significant legal and financial penalties.”

Ms Vivian said early access to superannuation is only granted in cases of severe financial hardship or on compassionate grounds with approval from the Australian Prudential Regulation Authority.

“In these situations people do not need the services of a promoter and no fee is required.”

Q & A: Early Release of Superannuation

This weeks question is another common query; can you withdraw the money in your superannuation early?

This seems to be one of the first 'solutions' to pop into the mind of a lot of people when really it should be considered only as a last resort.

By law, you generally get your super only when you:
- permanently retire from the workforce, and also
- reach the minimum age set by law, called your 'preservation age' (this is typically between 55 and 60 depending when you were born).

You can get your super earlier only if you:
- suffer permanent incapacity for work, or
- possibly in cases of severe financial hardship, or
- on 'compassionate grounds'.

Severe financial hardship

Contact your fund. If the rules allow early release of benefits, you must satisfy the trustee that you have been receiving a Commonwealth income support payment for a continuous period of 26 weeks and you cannot meet your reasonable and immediate family living expenses.

Compassionate grounds

Contact your fund. If the rules allow early release of benefits, the 'compassionate grounds' are set out in the law. The Australian Prudential Regulation Authority (APRA) must consider your application first, before your fund trustee can make a final decision.

Compassionate grounds involve medical treatment for serious conditions that is not readily available through the public health system, transport for medical treatment, changes to a home or vehicle because of a severe disability, palliative care, funeral and burial expenses, or to prevent the forced sale of your home by your mortgagee.

Illegal early access

Avoid illegal schemes that try to get your super money out early, and save yourself from getting cheated and from heavy tax and legal penalties. These schemes are sometimes promoted by word of mouth or shady advertising.

Report to ASIC or the Australian Tax Office (ATO) anyone who tries to talk you into getting your preserved benefits early through a self-managed super fund or for a fee. AVOID THESE SCAMS and do not risk your money.

Source: Information for this response has been sourced from the Australian Securities and Investments Commission.

Lodge on Time and Don't Risk a Fine

A few people have asked when their returns must be done by so I thought it worth mentioning here.

You have until the 31 October 2007 to lodge your 2006-07 tax return.

Late fines range from $110 to $550 if you lodge within four months after the due date, and up to $2,750 after that period. Interest is also incurred on outstanding tax.

Individuals lodging their own return must do so by October 31, whereas those registered under a tax agent have longer.

One reason many people avoid lodging on time is the fear they will have to pay a tax debt. If this applies to you, be aware that:

• you have plenty of time before now and the first payment,


• the ATO can work with you to come up with a manageable payment plan, and


• the longer you leave it, the more fines and interest charges you will eventually have to pay.

The lesson here is lodge on time and don't risk the fines.

Understanding Benefits: Large Family Supplement

What is it?

Large Family Supplement is an extra payment to assist families with three or more children.

Who is eligible?

To be eligible for the Large Family Supplement you must have three or more children for whom you receive Family Tax Benefit.


How much is it?

You can receive a Large Family Supplement of $9.80 a fortnight (that's $255.50 per year) for each child after the second. This is paid on top of your Family Tax Benefit. Therefore four children equals an additional $19.60, five children $29.40, etc.


How do I apply?

You do not need to make a separate claim for Large Family Supplement, as it will be paid as part of your Family Tax Benefit. If you are eligible and are not already receiving Large Family Supplement as part of your Family Tax Benefit, you should contact the Family Assistance Office.





Source: Family Assistance Office

End of Month Practice Update

Well, it's the end of another month and the end of yet another financial year.

New-look Website
Visitors to our Home Page will notice an updated look and feel to the site. This is stage one of our long-term vision of developing an ultimate informational resource for clients and the public alike.

Plans over the next month include adding additional content and downloadable resources.

Business Planning
It would seem a lot of queries lately involve the nitty-gritty questions and confusion surrounding the start-up of a new business venture. I cannot stress enough the importance of proper planning and structure at this stage. Alan is always happy to meet with you and go over your business ideas to help you start out well informed and on the right foot.

This month, Alan is focused on adding content relevant to business planning and I'll be continuing to include MYOB tips and tutorials.

Client Promotion
We are always seeking ways to further support our clients. We hope to extend this service by offering 'client profiles' in the blog posts and bi-monthly newsletters. Additionally, I would love to help some of our business clients without a web presence to get their name online. I'm working on a plan to see this happen shortly.

Appointment Times
Alan is available after hours this tax season for face-to-face interviews. Appointments can be made to see Alan:

• Monday to Friday from 7:00 pm


• Saturday and Sunday from 9:30 am till late.

To make an appointment you can contact our office at any time on 02 43 904156. Evenings are already filling up so be sure to secure a preferred time as soon as you're ready.

Some people prefer to just drop off their stuff, have us collect it or mail it in. This is fine too although Alan will still need to contact you by phone to discuss your return before completion.

As always, your feedback and suggestions are more than welcome. Tell us, how can we serve you better?

Child Support Scheme Reforms

Significant changes are being made to the Child Support Scheme from 1 July 2008 and all child support payments will need to be reassessed.

The Child Support Agency (CSA) is currently running a campaign between now and the end of July 2007 to make sure they have the most up-to-date contact details for all parents.

The CSA needs all of their customers to update their contact details so they can let them know about the changes, and so CSA can make sure they get the new assessments right.

Child support and Family Assistance are linked - the amount of child support you pay or receive can affect how much Family Assistance you receive. If CSA can't contact you, your new child support assessment may be incorrect, which could also mean you do not receive the family assistance that you are entitled to.

For more information or to update your details go to www.australia.gov.au/csa or to update your contact details with the CSA, call 131 272.

You can register your email address to receive important updates about the changes to the Child Support Scheme directly to your inbox. You may also choose to take part in future email surveys, which will help CSA improve their service to you. To subscribe go to www.australia.gov.au/csa.


Source: Family Assistance Office

Some quirky Census facts

The ABS has recently released it's "quirky census facts" from the 2006 Census. Having worked as a census collector, I can assure you that "quirky" doesn't begin to cover some of what I encountered. Still, for fact junkies like myself, these might provide some interesting conversation fodder:

Locations with the highest proportion of high-income people

Canberra's suburb of Forrest is the statistical local area with the highest concentration of adults (aged 15 years and over) with gross personal incomes of $2000 or more per week (24%), closely followed by the Shire of Peppermint Grove in Perth (also 24%).

Uncommon ancestries

Among the smallest ancestry groups recorded in the Census were Hmong (2189 people), Manx (1853), Tatar (299), Mayan (127), and Masai (32). In some cases a person might have claimed one of these in combination with another ancestry.

Nil hours of housework

Just over 39% of males and almost 29% of females aged 15–19 years did no housework in the week prior to the Census. Of the people aged 15–19 who did nil hours of housework, 86% were dependent students or non-dependent children living with their parents.

Internet connection

The suburb of Pullenvale in Brisbane had the highest Internet connection rate of 92% for its occupied private dwellings, slightly ahead of the Canberra suburb of Fadden (91%) and the Brisbane suburb of Chapel Hill (91%).

Convents and monasteries

There were 581 convents, monasteries, and similar religious institutions counted in the 2006 Census. This was less than three quarters of the number counted in 1996 and less than half the number counted in 1986.

Recent arrivals: place of settlement

Of the 756,000 people who had arrived since 2001 to stay in Australia for one year or more, 31% settled in the statistical division (SD) of Sydney, 24% in Melbourne SD, 11% in both Perth SD and Brisbane SD, 5% in Adelaide SD and 3% in the Gold Coast SD.

Women dominate higher education

Of people attending TAFE institutions and university, 52% and 57% respectively were women.

Private and public schooling

In 2006, 35% of students in primary and secondary school attended private schools. In 1996 the proportion was 30%. One per cent of the increase can be attributed to attendance at Catholic schools and the remaining 4% to other non-government schools.

Source: ABS 2006 Census.

Census paints a picture of the average Australian family

• The 2006 Census showed that the most common family type in Australia was a couple with children. Just over 45% of all families, or 2.4 million families, fell into this group. The Australian Capital Territory and Victoria had the highest proportions of families in this group.
• Of all couple families with children, most were young families with children under 15 years (69%, or 1.6 million couple families). These families might also have included dependent students (aged 15–24 years) and non-dependent children still living with their parents.
• Couples families with children under 15 were the most common family type in every state and territory. The Northern Territory had the highest proportion, with 80% of all couple families with children falling into this group.
• The average number of children living in couple families with children under 15 was 2.16 children. Of the almost 4 million children living in Australia at the time of the 2006 Census, three-quarters (almost 3 million) were living in a couple family and almost all of these (2.7 million) were with both their natural or adoptive parents.
• Nine out of 10 couple families with young children lived in a separate house with an average of 4 bedrooms. Most of these families were paying off a mortgage – almost two-thirds across Australia. The exception was in the Northern Territory where 43% of young families were renting their home.
• The median monthly mortgage repayment for young families in a separate house was $1400. The lowest monthly repayments for young families were in Tasmania ($975 per month) and the highest in New South Wales ($1665 per month). The highest level of outright home ownership by young families in separate houses was in Victoria (18%).
• The 2006 Census also showed that couple families with young children have 2 cars on average.
• Exactly 83% of couple families with young children have some type of Internet connection at home. The lowest rates of connection were in the Northern Territory (66%) and the highest in the Australian Capital Territory (90%). In all states, broadband is the most common connection type. The highest use of broadband was in the Australian Capital Territory (69% of young families).

SOURCE: ABS Media Release, 27 June 2007

Job Search in Your Jammies

Gone are the days of travelling to the nearest CES and scouring the job boards for potential matches. Today's employers are posting vacancies online as are government agencies.

Australian Jobsearch is a Government initiative (almost like an online version of the old CES). The database is updated with thousands of new jobs each day. Additional information is readily accessed on career information and job search tips. If you register, you can create a job match profile and upload your resume online. Searching by location and/or occupation is quick and simple. If you are a job seeker, this is one site you will want to be visiting regularly.

Other popular general job search sites include Career One and Seek.

Don't feel limited to job bulletin sites in your search. Many businesses advertise positions vacant on their own websites. If you have a particular company in mind, be sure to check the 'careers' section of their site. Similarly, local councils and other government departments will advertise positions on their own little patch of cyberspace. I've personally picked up casual contract jobs by going directly to the Bureau of Statistics and the Electoral Commission sites and applying directly.

TIP: Today's employers often ask you to email your resume along with your application. Keep in mind that different software versions could change the look of your resume significantly. Keep any fancy formatting for paper versions and stick with a safe copy for emailing.

Happy job hunting in your jammies!

Your Student HELP Debt 2006-07

What is a HELP debt?
From 1 January 2005, the Higher Education Loan Programme (HELP) was introduced, replacing the Higher Education Contribution Scheme (HECS). You will be required to start repaying your HELP debt when your repayment income is above the minimum threshold for compulsory repayment. HELP includes:

• HECS-HELP
• FEE-HELP
• OS-HELP

When do you start repaying your debt?
You must start repaying your debt when your repayment income is above the minimum threshold for compulsory repayment. The repayment thresholds are adjusted each year to reflect any changes in average weekly earnings. For the 2005–06 income year the minimum threshold was $36,184 and for the 2006–07 income year it is $38,148.

Compulsory repayments are made through your income tax assessments.

You don’t have to provide HELP information in your tax return. If you have a debt, and your repayment income is above the minimum repayment threshold, the Tax Office will work out and include your compulsory repayment in your notice of assessment.

NOTE:

If your repayment income is above the minimum repayment threshold you must start repaying your debt, even if you are still studying.

Frugal Family: Make Lunches in Bulk. Save time. Save money.

It is astounding to me how many mothers complain about having to make lunches each morning while running late or forking out for lunch orders because they had nothing in the cupboards.

Anyone who knows me knows that I prefer the "a little organisation now saves a lot of stress later" approach to life. School lunches is no exception.

Sandwiches freeze well and stay fresh on a hot day to be nicely thawed by lunch. This was one area we were able to significantly cut back on food costs by planning ahead and making a single trip to collect everything on the one shopping day.

Why keep dashing out the store for bread at 7am at around $3.50 a loaf? Now I buy 6 loaves at Aldi for 99c each, a tub of Aldi margaring at 98c and go to the deli counter at Coles for the cold meat (devon, ham, chicken loaf, etc). You know, I used to buy little premium packs of ham and chicken loaf in the dairy section in cute 100 or 200g packs until I did the math - it works out almost triple the price of getting the same thing directly from the deli!

In a couple of hours, you can make up an entire fortnight's worth of school lunches. No more morning stress... no more overpriced canteen orders... no more complaints from the kids because you only have a choice that morning of vegemite or more vegemite. Simply good time and financial management.

Once you get into the habit, you'll wonder how you ever managed beforehand.... and you'll be surprised just how much of a cost-saver this can be.

Tax Office Warning on Educational or Scholarship Trust Schemes

ATO Media Release

The Tax Office today warned taxpayers to be cautious of arrangements that seek to reduce tax through 'education or scholarship trusts’ for a student who may be a family member of the person contributing to the trust.

Tax Commissioner Michael D’Ascenzo said he is concerned about whether taxpayers who enter into these arrangements are entitled to claim scholarship and bursary payments as tax free.

Under the arrangements taxpayers apply to the marketer of the scheme for the student to be accepted into an ‘education funding program’. Once the student is accepted into the program, the taxpayer who is usually a relative contributes money indirectly to an ‘individual scholarship trust’ and these funds are distributed to the student tax free.

“Under the law these types of payments are only tax free if they are received by a student who has won an award or been selected through an open process," Mr D'Ascenzo said.

“The Tax Office is looking at arrangements that do not appear to meet these requirements and whether tax should be paid on any distributions,” Mr D’Ascenzo said.

Further information about these arrangements can be found in Taxpayer Alert 2007/6 which is available from the Tax Office website.

Work Related Expenses Under the Microscope

Last year over 7 million people claimed deductions for work related expenses totalling a whopping $12 billion.

The Tax Office has said it will be looking at claims for work-related expenses very closely.

For the 2007 tax return, the A.T.O. will be paying particular attention to claims for motor vehicles, self-education, home-office and travel.

The following guidelines should help when working out your claim:

• you must have incurred the expense in the year you are claiming,


• the expense must be work-related and not private,


• if your employer has reimbursed you the expense cannot be claimed again,


• if deducting more than $300 in total, you'll need written evidence to support your claim.

Q & A: Claiming Everyday Bank Fees

Question: If my pay is made directly by my employer into an everday bank account, can I claim the bank fees and charges associated with that account?

Answer: In most cases, the answer will be no. Banks rarely charge for deposits into everday accounts and this would be the only portion you may have a claim for in regards to work.

Low income households gain most from government benefits and taxes

I'm a bit of a statistics geek and today's release from the ABS made for some interesting reading. For fact collectors like myself, here's the latest from the Bureau:

Australia's low income households received more cash benefits from the government than higher income households, while indirect benefits (provided in kind) were more evenly distributed, according to an Australian Bureau of Statistics (ABS) study released today.

During 2003-04, more than a quarter (27%) of government benefits went to people in the 20% of households in the low income group. These people received over a third (36%) of government benefits in cash, and 22% of benefits in kind through government services.

In comparison, the 20% of households in the highest income group only received 4% of cash benefits and 16% of the benefits in kind.

People in the low income group paid 5% of all personal income taxes, and 17% of taxes on production such as the GST. People in the high income group paid 54% of personal income taxes and 26% of taxes on production.

The study also found that, on average:

• Households comprising couples under 35 without children paid $534 per week in taxes and received $109 per week in benefits.
• Couple households with dependent children paid $519 per week in taxes, and received $501 per week in benefits.
• Couples with one person aged 65 or over paid $148 per week in taxes and received $586 per week in benefits.
• Households in the ACT received the lowest benefits ($318 per week) and paid the highest taxes ($478).
• Households in Tasmania received the highest benefits ($398) and paid the lowest taxes ($278).

Source: Australian Bureau of Stataistics. Media Release 12/06/07

Tax Help for NSW Flood Victims

ATO Media Release:

The Tax Office has assured people affected by the floods in New South Wales that they do not need to worry about their tax at this time.

Tax Commissioner Michael D’Ascenzo said this is a very difficult time for residents of the central coast and Hunter region, especially those who have suffered damage to their home or business.

“We understand that people have other priorities to sort out now and it may be some time before they are able to focus on tax matters.

“People who are having problems meeting their tax obligations because of the flood can call us on 13 11 42 to make arrangements that suit their individual circumstances,” Mr D’Ascenzo said.

Your tax agent can also talk to the Tax Office on your behalf.

The Tax Office can help by:

• fast tracking refunds for people impacted by the flood
  
• giving extra time to pay debts - without interest charges
  
• giving more time to meet BAS and other lodgement obligations – without penalties
  
• helping reconstruct tax records where documents have been destroyed, and
  
• offering personal visits from field officers to help reconcile lost records.

Superannuation Transitional Rules: Myths, Facts & Tips #1

In preparation for 'simpler super' the commissioner has released a series of factsheets to help people understand what is fact or fiction when it comes to superannuation.

Transitional rules:

Myth
Until 30 June this year an individual can borrow $1 million to put into their super and claim the interest as a deduction.

Fact
Interest is not deductible for individuals.
However, employers can continue to claim a deduction for interest on money they borrow to pay into super funds for their employees under the special business expense deduction rules.

Tip
If you are considering borrowing money to put into your own super we suggest you seek financial advice.

Superannuation Age Rules: Myths, Facts & Tips #2

Myth
I am over 60 and on a pension so I don’t have to lodge a tax return.

Fact
People getting a pension from taxed funds – which is most funds – and who have no other source of income will not need to lodge a tax return.

However, people with pensions from an untaxed fund, or who have income from other sources will still need to lodge a tax return.

Superannuation Age Rules: Myths, Facts & Tips #1

In preparation for 'simpler super' the commissioner has released a series of factsheets to help people understand what is fact or fiction when it comes to superannuation.

Age rules:

Myth
Everybody over 60 can take their money out of their super fund tax free and keep working.

Fact
This is only true for money taken out of taxed funds. It also depends on the type of fund and how you take the money out.

Tip
If you are over 60 and considering taking money out of your super but continuing to work seek financial advice or talk to your super fund.

Superannuation Co-Contributions: Myths, Facts & Tips #5

Myth
If you are over 70 and go back to work your employer has to pay Superannuation Guarantee (SG) for you.

Fact
If you are aged 70 or more you are not entitled to SG. However, your employer may continue to make contributions for you until just after you turn 75, but it is not compulsory for super guarantee purposes.