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