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.

Superannuation Co-Contributions: Myths, Facts & Tips #4

Myth
You have to apply to receive the Super Co-Contribution.

Fact
There is no application process for Super Co-Contribution – it is paid automatically to eligible people who make a personal contribution to their super.

Tip
To make sure you receive any co-contribution you are eligible for, make sure your fund has your tax file number and your contribution is with your fund before 30 June. The Super Co-contribution will be pain into your super fund after you lodge your income tax return.

Superannuation Co-Contributions: Myths, Facts & Tips #3

Myth
Everyone can get a Super Co-Contribution of $1.50 for every $1 they contribute to super, regardless of how much they contribute and earn.

Fact
The maximum Super Co-Contribution people can receive is $1,500 per year. People earning $28,000 or less per year receive $1.50 for every $1 they contribute up to a maximum co-contribution of $1,500 per year.

The amount of co-contribution paid for each dollar of personal contribution made by people earning more than $28,000 but less than $58,000 a year reduces on a sliding scale.

Tip
Use the ATO calculator to work out how much co-contribution you could receive.

Superannuation Co-Contributions: Myths, Facts & Tips #2

Myth
I never have $1,000 to contribute at any one time so I miss out on the Super Co-contribution.

Fact
You can contribute small amounts of personal contributions over the whole year.

Tip
If you are eligible, Super Co-contributions are paid into your super fund automatically once you do your tax return

Superannuation Co-Contributions: 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.

Super Co-contributions

Myth
Contributions that come out of my salary or wages before tax has been taken out count towards getting the Super Co-contribution.

Fact
One of the rules for the Super Co-contribution is that you have to make personal contributions and do not claim an income tax deduction for the contribution. Most employees will not be able to claim a deduction for personal contributions they make. From 1 July 2007 the Super Co-contribution is being extended to the self employed.

Tip
You don’t need to wait until the end of the financial year to make one big contribution. You can also make small regular contributions to take advantage of the Super Co-contribution.

Data Matching and Capital Gains

The Tax Office will continue to focus on capital gains tax (CGT) this year and people who do not report capital gains for the sale or disposal of shares, property and other assets.

A recent A.T.O media release states the Tax Office will be matching data yet again to identify sales that involve capital gains.

Information will be gathered from state and territory revenue offices, managed funds, the stock exchange (ASX) and share registries to match against tax return information.

If you have disposed of assets during the year, be sure to let your accountant know.

Your Tax Return and Share Buy-Backs

During the 2006-07 financial year, listed companies in Australia bought back over 350 million shares according to the A.T.O. This amount to over $5 billion.

Shareholders who have participated in these buy-backs will need to work out any capital gain or loss and include this in their 2007 tax return.

Remember, dividends paid as part of any share buy-back must also be declared in your tax return.

Home Affordability Deteriorates Further

The Age lifestyle blogger, Alex May, recently wrote:

The great Australian dream of home ownership now takes years of saving, two good incomes and the ability to not break out in a rash when staring at the six-figure mortgage required to buy your own patch of paradise.

According to the latest Housing Industry Association affordability report, the average monthly mortgage repayment has hit $2,986 a month in Sydney.

"It's even worse than when interest rates were up at 17 per cent," according to HIA chief economist Simon Tennent.

"The days of paying a mortgage on a single income are well and truly over," Tennent says. "House prices have stretched beyond any increases we've had in incomes."

Even property investing experts like John Edwards are asking if it is worth the sacrifices for first-home buyers to get into the market. "When a large percentage of young people allow themselves to borrow to the poverty line just to own a house, you've got to wonder what it's all about," he says. "Life is short. Does it really matter if you rent?"

To most Australians, it does matter... but at what cost?

Superannuation & Your Tax File Number

From 1 July 2007 super funds or retirement savings accounts without their member's tax file number (TFN's) will be unable to accept personal contributions.

Some people will have received reminders about this from the A.T.O or their fund. If you haven't received a letter yet and are unsure, check your latest member contribution statement to see if your fund has your TFN.

Dividends: Franked v Unfranked

One common area of confusion seems to be the difference between franked dividends and unfranked dividends.

What is a dividend?

A dividend is the part of a company's profit which is distributed to shareholders. If you own shares in a public company, you probably have dividend income to declare.

What does it mean by 'franked'?

The franked portion of your dividend has already been taxed; the company has already paid tax on this profit at the 30% company tax rate. The good news for you is that you can claim an imputation credit of 30% of the franked amount (that way, the ATO is not double-dipping).

What about 'unfranked'?

The unfranked portion of dividends has not yet been taxed. This is treated the same as any other revenue, ie. it becomes a part of your taxable income.

Thinking of Starting a Business?

Alan posted a short article at Dollars & Sense for Small Business yesterday titled, "So you want to start a business?"

This will be the first in a series of contributions on starting a small business - something most of us consider at some time.

I mention the article here is it links to several handy free resources for those of you contemplating a small business venture.

You might also be interested in the interactive New To Business Checklist available as a PDF download from our site.

Investment property tips - depreciation

Wanting to capitalise on the rental property that you own? A lot of people hold rental properties for a two-fold reason: to negative-gear (reduce their current taxable income) and to obtain capital growth from the property in future years.

To maximise negative gearing it is advisable to obtain a quantity surveyor's report to utilise the maximum depreciation possible. The surveyor will look at all fixtures and fittings on the property and assign a value to each from which depreciation can be calculated.

If the building was constructed after 17 July 1985 (for residential properties) the quantity surveyor can estimate the cost of building the premises and a capital works deduction of 2.5% can be claimed on that.

This may not seem like much but you may be surprised at how much it can increase your deductions. If you consider a building that cost $110,000 to build at a rate of 2.5%, that will be $2,750 in deductions claimable. Now add to that items such as carpets, curtains, blinds, hot water systems, ovens, stoves, dishwashers, light fittings, security systems, air conditioners/heaters etc, the claimable depreciation amount could rise to around $6,000.

When you consider that kind of deduction with an income of $80,000 it will give you a tax saving of $2490... each year! Even on a lower income between $30,000 to $75,000 you would still receive a tax benefit of $1,890 per year.

A quality surveyor will provide a report on the property giving a breakdown of the fixtures and fittings as well as the capital works amount in depreciation schedules tailoring to prime cost, diminishing value and low-value pools. Armed with this, you can give it to your tax agent when you do your next tax return.

You can find quality surveyors in the phone book and their prices usually range from $600 to $800 which can be written off over a period of five years. All-in-all it's not a bad investment.

Frugal Family: Prepackaged Play Lunches

Roll-ups, muesli bars, multi-pak chips, le snacks, fruit jelly cups and overpriced cheese sticks. No, no, no! As appealing as they may be to your kids and as convenient for you, these prepackaged snacks are going to quickly run up the grocery bill.

In a perfect world a fresh supply of fruit would always be on hand and your children would love nothing more than a healthy crisp apple for recess. The reality is we are busy and the kids want to eat rubbish and use the fruit you pack as a cricket ball.

Buy Bulk, Package Yourself
A significant cost-saver I have found is buying or making the foods the kids want and packing them myself.

An example of this was sultanas. All three of our kids loved those little boxes of sultanas and would consume at least 2 x 6 packs a week.

Before: Buying Coles Farmland brand I could purchase a 6 x 40g sultana packs for $2.03.

Now: Buying a 1kg bag of sultanas at Aldi for around $3.70, I can make 25 x 40g packs. To get 25 prepacked boxes would come at a cost of $8.46!

Result: We saved almost $5 just on sultana boxes by buying bulk and putting them ourselves into small re-usable plastic containers. It takes barely any effort.

I like to package my own recess snacks on Sunday night for the week so they are just as convenient to grab and pack in the mornings.

This also works well for items such as:

• dried fruits
• tiny teddies (again, go for the box and make your own 'packs' using cheap zip-lock bags)
• BBQ shapes and like products
• Popcorn (make it yourself for next to nothing)
• Pretzels (big bag for around $2.50 makes around 15 small zip-bags)
• Jelly cups (as opposed to $1.00 each, you can make these for under 10c in your own container)
• Cheese sticks (buy bulk and cut them yourself)

... and the list goes on and on.

When you need the convenience without the cost, consider packaging your own play lunch foods.

New Series: The Frugal Family

Financial straight-talker Dave Ramsey tells people to "live like nobody else (now) so that you can live like nobody else (later)."

The truth is that life is filled with wealthy individuals on meagre income aswell as those households struggling despite bringing in impressive amounts of cash. In most cases, it really isn't a matter of what you have so much as what you do with it.

In a future series, I'll be dealing with creating and managing a household budget - that balance between how much you earn and how much you actually need. For now, I've decided to start with the simple and practical things you can do today to cut back living expenses.

Baby steps can make a difference. A little effort and planning has helped our family cut almost $100 each week off the grocery bill alone. That's a whopping $5,200 saving each year just at the supermarket! I'll be using the frugal Family series to share the everyday hints, tips, recipes and ideas we used to accomplish that goal and others.

Not Long Now - Time to Get Organised

Do not be one of the thousands of taxpayers who is missing out on deductions they are entitled to this year. It's time to do some tax housekeeping and dig out those receipts.

I read a frightening statistic earlier today. Apparently new research shows that 80% of Australians are paying too much tax because they are simply unorganised or unaware of their entitlements.

"Many people could be missing out," says Tony Greco, CEO of Taxpayers Australia. "Understanding tax can be pretty daunting. Not everyone would be motivated to do all the research and they could be missing out on eligible deductions."

This is where a tax agent can be of enormous benefit. Their job is to know and apply the tax rulings to get you the maximum possible return. The thing is, they can only work with the information and records you provide them. A little organising now can make a big difference when it's time to lodge that return.

Understanding Benefits: Pensioner Education Supplement

The Pensioner Education Supplement is a fortnightly payment designed to assist people to improve their chances of finding a job through study.

Who can get it?

You may qualify for the Pensioner Education Supplement if you are studying and receiving a certain Centrelink payments such as parenting payment (single), carer payment, disability support pension, widow pension, or sole parent on special benefit.

How much study do I need to do?

To receive Pensioner Education Supplement, you must be enrolled in and undertaking an approved course of secondary or tertiary study.

To qualify for the part rate of payment (that is the payment you would receive if you were considered to be a part-time student) you must be undertaking at least 25 per cent of the normal full-time study load for your course.

To receive the full rate of payment (that is the payment you would receive if you were considered a full-time student) you must be studying full-time—that is, at least 75 per cent of the full-time study load or qualify for the 66 per cent study load concession.

How much is it?

Pensioner Education Supplement is paid at two rates. How much you receive depends on your study load and the payment you are on from Centrelink or Veterans Affairs. The maximum payment rate is $62.40 per fortnight or $31.20 at the part-time rate.

You may also be able to receive an Education Entry Payment. This is a one-off payment of $208 to help you with the up-front costs of taking up study.

Pensioner Education Supplement is NOT taxed and is paid over holidays so long as you continue with your studies.

How do I get it?

When you claim Pensioner Education Supplement, you will need to show Centrelink proof from the institution where you are going to study that you are enrolled as a student such as your student number, the name and details of your course, etc. Usually you will get paid when your studies start. Your claim must be lodged:

- before 31 March (for semester one) for full-year study, or
- before 31 July (for semester two) for full-year study, or
- within four weeks of either commencing study or otherwise becoming qualified for Pensioner Education Supplement.

To find out more or to apply for the Pensioner Education Supplement you should contact yor local Centrelink office. After you first contact Centrelink, you usually have 14 days to put in your claim.

7 Tips to Help Your Kids Manage Money

Teaching your kids how to manage their money is an important skill that will help them through life.

Children need to understand that money is a limited resource and does not simply "grow on trees" or materialise from holes in the wall.

FIDO has compiled a list of 7 tips for parents to help their kids manage money and start their financial lives with good habits.

1. Encourage them to think about what they want, what they need, and to identify their savings goals.

2. Help them decide what they really want, and to focus on their most important goals.

3. Remind them to regularly set aside a specific amount of their pocket money towards the items they are saving for.

4. Help them to control impulse buying by reminding them of their savings goals when they get tempted to buy things that aren’t on the list.

5. Encourage them to put loose change into a savings jar at the end of each day and to use this little pot of ready cash to cover small personal expenses.

6. Tell them about lay-by and encourage them to use this an alternative to credit.

7. Use pre-paid cards for your children’s mobile phones and make your kids top up the card themselves if they spend them too fast.

So, what exactly is a "tax offset"?

A tax offset is different to a tax deduction. You'll remember from a previous post I explained how a tax deduction is taken off your income before tax is calculated.

With tax offsets (previously known as rebates), the offset is taken off the amount of tax you have to pay.

The ATO has identified three types of tax offsets – those that:

• provide tax relief for personal circumstances – for example, offsets for senior Australians and people living in remote areas.


• give you a credit for an amount of tax that has effectively already been paid – such as credits for franked dividends and foreign tax, and


• provide an incentive – for example, the tax offset for mature age workers and the private health insurance rebate.

In most cases an offset can only reduce the amount you have to pay to zero. If your offsets total more than your tax payable, you typically don't get a refund for the difference. Offsets which do provide a refund are the private health insurance rebate, franking tax offset and the baby bonus.

Alan provides a more detailed explanation and list of tax offsets available in his post at Dollars & Sense for Small Business.

Q & A: Can I claim my TAFE fees?

I was asked earlier today a question I often hear: Can I claim my TAFE fees as a tax deduction? The answer really depends on your individual situation.

You can claim self-education expenses only if they are directly related to your CURRENT employment (such as a secretary taking a Business Administration certificate).

Typically, the person asking is attending TAFE in order to change careers or get back into the workforce. Unfortunately both of these circumstances would not allow them to claim a deduction for their TAFE fees.

Beware: Common errors in rental property claims

The ATO has stated it will continue to closely scrutinise rental property expense claims for the 2007 income year.

Some of the areas of concern identified by the ATO in recent compliance activities include:

- Claiming deductions during a period where the property is not genuinely available for rent;

- Claiming full deductions when the property was available for rent only part of the year.

- Claiming initial repair and or renovation costs as repair and maintenance costs (these should be attributed to the base cost of the property under the CGT rules);

- Incorrectly allocating deductions related to private borrowings or travel; and

- Incorrectly claiming deductions for legal expenses for things such as costs associated with buying and selling a property or defending title.

I'll be detailing some of these issues in more detail in future posts.

SOURCE: National Tax and Accountants' Association Tax Schools Seminar 2007

Forgotten Tax Deduction: Income Protection

While life insurance is not tax deductible, income protection insurance is.

Payments are typically made monthly on these policies but can usually be paid up to a year in advance.

June is a great time to maximise your tax deductions. If you pay your annual premium now as a lump sum, you can then claim a tax deduction for the full amount in this years tax return.

Family Tax Benefit A Supplement

I've received a few queries recently about the Family Tax Benefit Supplement. It is coming to that time of year again when families begin to anticipate this payment and are wondering just how much it will be and when it will be paid.

What is it?
The Family Tax Benefit Part A Supplement is an increase in the annual rate of Family Tax Benefit Part A to be paid as a lump sum after the end of the financial year.

How much?
For the 2006-07 financial year, the payment will amount to $646.05 per child. If you have a child for part of the year or share care, the amount will be proportional to the period or percentage of care.

Who is eligible?
The Supplement is available to all Family Tax Benefit Part A eligible families. Please note that if an overpayment has occurred during the year, the Supplement will be used first to offset outstanding overpayments.

When will it be paid?
Families will be paid the Supplement after family tax returns have been lodged and FTB payments have been balanced for the for the financial year. If you or your partner are not required to lodge a tax return, be sure to notify the Family Assistance Office of this so as not to delay payment.