EzTax Knowledge

Remember, you cannot automatically claim a deduction just because you received an allowance. For a summary of deductions specific to IT professionals see our post ==> Tax Deduction Finder for My Job.

IT workers commonly get the following types of allowances:

• motor vehicle allowances (based on a cents-per-kilometre basis)

If any allowance is shown as a separate amount on your payment summary, include it as income at item 2 on your tax return. You must include the whole amount of any award transport payment you received.

Receipt of an allowance does not automatically mean that a corresponding tax deduction can be claimed, even if your work might be considered unpleasant, special or dangerous.

Remember, you cannot automatically claim a deduction just because you received an allowance. For a summary of deductions specific to Electricians see our post ==> Tax Deduction Finder for My Job.

Electricians commonly get the following types of allowances:

• motor vehicle allowances (based on a cents-per-kilometre basis)
• tool allowances.

If any allowance is shown as a separate amount on your payment summary, include it as income at item 2 on your tax return. You must include the whole amount of any award transport payment you received.

Receipt of an allowance does not automatically mean that a corresponding tax deduction can be claimed, even if your work might be considered unpleasant, special or dangerous.

Remember, you cannot automatically claim a deduction just because you received an allowance. For a summary of deductions specific to Mechanics see our post ==> Tax Deduction Finder for My Job.

Mechanics commonly get the following types of allowances:

• motor vehicle allowances (based on a cents-per-kilometre basis)
• tool allowances.

If any allowance is shown as a separate amount on your payment summary, include it as income at item 2 on your tax return. You must include the whole amount of any award transport payment you received.

Receipt of an allowance does not automatically mean that a corresponding tax deduction can be claimed, even if your work might be considered unpleasant, special or dangerous.

What is Child Care Benefit?

Child Care Benefit is a payment from the Australian Government that helps you with the cost of your child care.

Who can get Child Care Benefit?

You can get Child Care Benefit if you are a parent, foster parent or grandparent with a child in your care who is attending child care services approved by, or registered with, the Government.
You can get Child Care Benefit if:

• you have a child in your care who meets the immunisation requirements (or have an exemption)
• you or your partner (if you have one) meet residency requirements (or have an exemption)
• your child attends approved or registered care and you have the liability to pay for the cost of your child care
• you meet the income test

Please note: If your employer contributes towards some or all of your child care costs through salary sacrificing or salary packaging, you will need to determine who has the liability for the costs. The issue of liability depends on who is obligated to pay for the child care fees.

How much Child Care Benefit can I get?

The amount you get depends on your circumstances:

• the type of care you use (approved or registered)
• your income
• the amount of care you use
• the reason you are using care and
• the number of children you have in care.

Child Care Benefit rates of payment.

How can I get Child Care Benefit?

You can claim Child Care Benefit by completing and lodging a claim form at any Family Assistance Office, located at Centrelink Customer Service Centres and Medicare Australia shopfronts or by using online services
If you receive Family Tax Benefit as a fortnightly payment, you can lodge a claim for Child Care Benefit by calling 13 6150.
For more information regarding how Child Care Benefit can be paid, see payment options.

(Source: Family Assistance Office)

From January 2010, you may no longer receive your Family Tax Benefit on a fortnightly basis if you and/or your partner do not lodge your income tax return or advise the Family Assistance Office you are not required to do so within the required time frame.

Although you may remain eligible for Family Tax Benefit, the only payment method available will be a lump sum through the Family Assistance Office once you and/or your partner’s actual annual income has been verified.

This may also apply for any outstanding income tax returns you have failed to lodge for past years you were in receipt of Family Tax Benefit. You will be contacted by the Family Assistance Office if you could be affected by this change.

Blended Families

If you are in a blended family situation and either you and/or your partner have not lodged your income tax return in the required timeframe you will both be unable to receive your Family Tax Benefits on a fortnightly basis, until your tax returns are lodged.

This applies regardless of whether you are a new blended family and your new partner is an FTB customer receiving FTB by instalments for children of their previous relationship.

What if I am not required to lodge a tax return

If you and/or your partner are not required to lodge a tax return you will need to notify the Family Assistance Office.

(Source: FAO)

It has been reported that up to 22000  people have signed up for the class action against Australia’s banks over $5 billion of penalty fees charged during the last six years.

With the bank fee legal action gathering steam, it is estimated businesses will have claims of up to $5000. But where do these businesses stand with the tax office if the legal action is successful? Will the tax office be lining up for its share of the money?

The Income Tax Assessment Act (ITAA) 1997 specifically makes assessable any “recoupment” of a loss or outgoing – ie. recoupment of an expenses previously claimed as an allowable deduction (Subdiv 20-A).

For Subdiv 20-A to operate, there must be an “assessable recoupment” (s 20-20). “Recoupment” of a loss or outgoing is broadly defined to include any kind of reimbursement, refund, insurance, indemnity or recovery, or a grant in respect of the loss or outgoing (s 20-25(1)). The concept of “indemnity” covers an adjustment in the vendor’s favour for council and water rates and land taxes in a contract for the sale of a business or of real property (Goldsbrough Mort & Co 76 ATC 4343). A taxpayer is also taken to receive a recoupment if another entity pays an amount on the taxpayer’s behalf, or if the taxpayer receives an amount for disposing of the right to receive a recoupment (s 20-25(2), (3)).

Accordingly, a recoupment of bank fees received by way of the intended legal action against the banks will be an “assessable recoupment” and taxed at marginal rates of tax in the income year it is received.

Expenses incurred in recovering such expenses would be an allowable deduction against the recoupment of bank fees. An invoice or summay from any legal firm acting on behalf of a business relating to such expense would need to be obtained to support the claim and or detail the amount received and the bases of it’s calculation.

Private:

Of course, if the bank fees related to recoupment of an expenses on “private” account – ie, not related to an income earning/business activity and not previously deducted as an expenses in relation to an income earning activity, then the recoupment provisions under Subdiv 20-A will not apply and such monies would be non-assessable – ie. tax free.

By David Maynard

Contractors are paid for the result they achieve rather than the time they work. Contractors do not normally have to work during hours set by an agreement or award and the employer does not provide them with the tools to do their work or direct their work.

If you are an employee, then your employer must withhold tax from any salary, wages, commissions, bonuses or allowances they pay you.

Your employer may also have Superannuation Guarantee Surcharge (SGS)obligations – see this post:

==> Superannuation Guarantee Surcharge & Contractors.

(Source: ATO)

Employers must pay super contributions to a complying super fund for all eligible employees by the quarterly deadlines. These contributions are in addition to the employees’ salaries and wages, and must be calculated based on ordinary time earnings.

Employers also need to pay super contributions for contractors you pay under a contract for labour, because they are considered employees for the purpose of super guarantee. This includes contractors who quote an Australian business number (ABN).

The also have a range of publications, tools and calculators to help you understand and meet your tax and super obligations:

==> Employers Superannuation Essentials.

Some commentators are calling this budget “boring”. In many ways it is.

• Increase to Low Income Offset, effectively raising the tax free threshold from $14000 to $16000 for salaries up to $30,000
• Increase in 30% tax threshold from 35001 to $37001
• 38% tax rate will be reduced to 37%

• System will work on an opt in basis – ie so workers can still claim expenses above the standard deduction.
• For y/e 30 June 2013 taxpayers will have the option of a $500 standard deduction for work‑related expenses and the cost of managing tax affairs to simplify their tax returns. $500 in deductions
• For y/e 30 June 2014 this will increase to $1000 deductions

4.  Increase in threshold for medical expenses tax offset from $1500 to $2000

You can also check this post ==> Paid Parental Leave commencing 1 January 2011
You can also check this post ==> How much is the new Paid Parental Leave payment?
You can also check this post ==> Paid Parental Leave and Employer Provided Maternatiy Leave
You can also check this post ==> Paid Parental Leave and Baby Bonus

In the 2009-10 Budget, the Australian Government announced that it will introduce a comprehensive Paid Parental Leave scheme.

This scheme will only apply to you if your child is born or adopted on or after 1 January 2011.

The proposed Paid Parental Leave scheme is subject to Parliament passing the required legislation.

• Will I get Paid Parental Leave?
• Will I be eligible for the Paid Parental Leave scheme?
• Will the Baby Bonus still exist?
• Will I be able to get the Baby Bonus and other family payments as well as Paid Parental Leave?
• Will there be an income test?
• Will I be able to get both Paid Parental Leave and employer-provided maternity leave?
• Will employers stop providing their paid maternity leave schemes?
• How much will I get and for how long?
• When can I apply for Paid Parental Leave?
• Where can I get more information?

Will I get Paid Parental Leave?

You will be able to get Paid Parental Leave if your child is born or adopted on or after 1 January 2011.

Will I be eligible for the Paid Parental Leave scheme?

Generally, Paid Parental Leave will be for mothers of a newborn child or the parent of an adopted child. To be eligible for Paid Parental Leave, you must be the child’s primary carer and:

• have worked continuously for at least 10 of the previous 13 months prior to the expected birth/adoption
• have worked at least 330 hours in that 10 month period (an average of 7.6 hours per week)
• your income must have been $150,000 or less in the previous financial year.
• meet the scheme’s residence requirements.

The scheme will cover employees including casual workers, the self-employed and contractors.

Will the Baby Bonus still exist?

Yes. The Baby Bonus will be available for people who do not get Paid Parental Leave, subject to the usual income test.
If you get Paid Parental Leave, you will not be able to get the Baby Bonus, unless you have twins or a multiple birth (e.g. triplets). In the case of twins or a multiple birth, you can get Paid Parental Leave for the first child plus the Baby Bonus for the second and subsequent children.

Will I be able to get the Baby Bonus and other family payments as well as Paid Parental Leave?

If you receive Paid Parental Leave, you will not receive the Baby Bonus (except in the case of twins or multiple births).
You will also not receive Family Tax Benefit Part B while you are getting Paid Parental Leave.
Otherwise, you will continue to receive Family Tax Benefit. Paid Parental Leave will be treated as taxable income and may affect entitlement to family assistance and child support.
An online estimator will be available to help you decide whether to take Paid Parental Leave or the Baby Bonus.

Will there be an income test?

Yes. You will be able to receive Paid Parental Leave if your adjusted taxable income in the previous financial year was $150,000 or less.

Will I be able to get both Paid Parental Leave and employer-provided maternity leave?

Yes, you will be able to get both employer-provided maternity leave and Paid Parental Leave.
You can take Paid Parental Leave before or after employer-provided paid leave, such as recreation leave and employer-provided maternity leave. You can also take Paid Parental Leave at the same time as employer-provided leave.

Will employers stop providing their paid maternity leave schemes?

Employers who provide paid maternity leave through an industrial agreement cannot withdraw that entitlement for the life of that agreement.
During bargaining for a new agreement, employers may negotiate with employees to amend existing paid maternity leave provisions in the light of the introduction of the new Paid Parental Leave scheme.

How much will I get and for how long?

An eligible parent can get taxable Paid Parental Leave at the level of the National Minimum Wage (currently $543.78 a week) for a maximum period of 18 weeks. Paid Parental Leave must be used within one year of the child’s birth or adoption.

When can I apply for Paid Parental Leave?

You can apply for Paid Parental Leave up to three months before your child is due to be born or adopted.
The first claims for Paid Parental Leave can be made on 1 October 2010, for children due to be born or adopted on 1 January 2011.

Where can I get more information?

You can download a copy of the booklet on the Australian Government’s Paid Parental Leave scheme, which contains major decisions about the scheme. Further details will become available as the scheme is implemented.

More information about how the scheme will operate will be available in mid 2010.

(Source Family Assistance Office)