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All you need to know about Family Tax Benefit

All you need to know about Family Tax Benefit

Recently, the Australian government has launched a new scheme for the tax benefit of Australian families. This scheme intends to reduce the financial burden of Australian families while raising their children. There are several such schemes that are already in effect but in this blog, we are going to talk about the Family Tax Benefit in detail.

There are two types of it:

  1. Payment is made per family.
  2. Payment is made per child.

No matter which plans you choose, you are free to select the mode of getting the payments: either on a fortnight basis or at the end of the year.

Let us talk about the first plan:

Before going further, you should know that this plan is income tested. The annual income of your family will decide whether you are eligible for this plan or not. If you are eligible for this scheme, the amount of money that you will receive depends on how many children you have and the ages of those children along with how much time you give to your children. The table below will give you an idea about the money you should expect from this scheme:

Payment for each childFor each fortnight
0-12 years$189.56
13-15 years$246.54
16-19 years$246.54
0-19 years$60.90

 

In case your family income is less than $80,000 and you are eligible for this scheme, you will receive an amount of $781.10 at the end of each financial year. Here are some points you should care about if you want to get the benefits of this scheme:

  • If you apply for this scheme, your child should meet the Healthy Start for School requirements. As per the immunizations listed by the National Immunization Program Schedule, your child should be up to date with the immunizations.
  • If you want to apply for this scheme, you should lodge your tax return with ATO so that your income details would be verified.

Now the second plan:

This plan has been designed especially for single parents, and the carers of children who are non-parent. Look at the table below to know about the money you can get from this scheme:

Age of the childThe money you can receive per fortnight
0-5 years$161.14
5-18 years$112.56

 

From this scheme, the eligible candidates can get a financial supplement of up to $379.60.

Eligibility criteria for this scheme:

You will be eligible for the first plan if you have a dependent child aged 0-15 years. In case your child is 16-19 years old, you are eligible for this scheme only if your child is in full-time secondary education.

Here are the eligibility criteria for the second plan:

  • All those are eligible for this scheme if they are non-parent carers of a child or a single parent and their child is below 18 years of age.
  • Those who are a couple with one main income and their dependent child is under 13 years of age.

The income test:

For the first plan:

  • Maximum rate of this plan would be paid to those parents who are earning less than $55,626.
  • If your earning lies between $55,626 to $ 98,988, the rate of money you receive reduces by 20 cents for every dollar that you earn above $55,626.
  • For those who are earning more than $98,988, the rate reduces by 30 cents for each dollar above $98,988.

For the second plan:

  • The main person who is earning should have an income of less than $100,000.
  • The annual income for the secondary earner should be less than $5,767. The rate gets reduced by 20 cents for every dollar earned above $5,767.

Conclusion:

You can’t take the benefits of Parental Leave Pay and the second plan for Family Tax Benefit. All those who are planning to apply for this scheme should spend at least 35% of their time with their children.

Work from home expense deduction extended till the end of the year

It was a temporary method that was introduced to reduce the tax by up to 80% for those who are working from home. But now this method has been extended till 31 December 2020. This method was introduced in March but it has been further extended because a lot of workers are still working from home and the government is yet to open all the offices like earlier days.

As per the latest report from the ATO, December 31 is not the final date to end this rule, based on the situation of that time, this rule can be extended further than that.

Jon Jeffreys said in a statement that the government took care of the situation as the workers will not face a sudden burden of paying a tax that is double than what they were paying for the last 5-6 months.

Some people think that they can get all the other benefits like desktop, etc, along with this tax deduction which is not true. They will not get any other facility as mentioned above if they apply for the tax deduction. Anyone living in Australia who is working from home is eligible for only one of these services.

All such persons are advised to keep a proper record of these working hours. It is unlikely that ATO will audit this situation but you should keep the record nonetheless.

The shortcut that we are talking about is supplementary to the fixed-rate method of 52% and the real rate of calculating daily expenses. Based on one’s situation, you can choose which method to opt for.

Are you eligible for JobKeeper?

This information is for all those who have applied for JobKeeper. It is time for them to check whether you are eligible for this scheme any more.

A business participant is eligible for this scheme if he is not employed in your business but is active in one of your business’s operation. He might be a person who can manage the sales of your business or he has a say in making the strategy for your business.

Here are all the details of the business participants who is eligible for JobKeeper:

  • He should be a non-bankrupt sole trader.
  • He should be a shareholder in a firm or a director of a company.
  • He should be a partner in a partnership.
  • He should be an adult beneficiary but not a trustee.

And you have to keep in mind that the individual who has been engaged in the business from March 1, 2020, and he should also be active in the fortnight for which the Jobkeeper payment is being claimed. There were some changes introduced in the JobKeeper on July 20, 2020. As per those changes those who are active in child care services can’t claim JobKeeper payments for business participants.

Here are some key points to remember about this scheme:

  • If you have several persons in your company who meet the criteria of JobKeeper, only one person from your business is eligible for this scheme.
  • In case you have nominated one person from your business for this scheme, even if he leaves your business, you can’t nominate someone else who is working for your business.
  • You can nominate someone as an eligible employee or an eligible business participant but not both.
  • Only an individual can be eligible for this scheme.

In this blog, we try to provide all the essential information about accounting and taxation. You can visit our official website for more information.

Families using Granny Flat arrangements will get CGT exemptions

Now all the families living in Australia who wish to care about the elder people (parents) using the granny flat arrangements will get exemptions in capital gains tax.

This rule was introduced by Treasurer Josh Frydenberg. This exception from the capital tax gains will be valid for the written granny flat arrangements in the variation, termination, or creation of that arrangement. This scheme is for those who take care of elders or disabled persons.

This announcement has been made before the Federal budget and the rules described in this announcement will come into effect from 1 July 2021.

This change has been made to make the lives of elders and disabled comfortable. There is a risk that all such persons can face whenever there is a breakdown in the family. More than 3.9 million pensioners along with 4 million disabled Australians will take benefits from this scheme. But if you have some commercial rent arrangement with some elderly or disabled person, you will not get benefits from this scheme.

Last year, this decision was taken to exclude all the CGT from several services that are applicable to the Granny Flat Arrangement. John Jeffrey (Super Australia tax & tax counsel) said that further favorable changes will be introduced in the upcoming Federal budget.

This scheme is for all those who take care of elders in their families. But if some relative is living in your home and you sell your home, in this case, you have to pay the capital gains tax for the gains you just made.

Such exemptions are very necessary for encouraging people to avoid charging rent and informal arrangements. With the help of this latest exemptions, people will build flat for their elderly and stay close with their old age family members.

How can one lodge his tax return

Any tax return in Australia is for the entire year from 1 July of the last year to 30 June of the current year when you are filing your return. But this year is quite different as there is a pandemic situation going on around the world and in Australia. The people of Australia can file their tax returns until 31 October of this year. There are two ways an Australian can do it. They can file their return by themselves to the ATO or a tax agent can do it for them. Be wise in choosing a tax agent for this purpose.

When someone lodges a tax return, the ATO gets information about how much money that individual has earned throughout the fiscal year. Based on this information, the ATO decides how much tax you have to pay. In case you have paid more than the required amount, the extra amount will be refunded and if you have underpaid the amount of tax, the ATO will send you a tax bill for paying the remaining amount.

How to know whether you are eligible to lodge a return:

In case someone has taken out a specific amount of tax from some of his income, he should file a tax return. There are several other rules about this situation as well. You can easily check it by using the tool from ATO called “Do you need to lodge a tax return?” There are several online portals which are not authentic and can harm the interests of the citizens. You can avoid such fake services by linking your myGov account to ATO to check your eligibility. Then, in the list of online services offered by ATO, you will find the official version of Do I need to lodge a tax return? Here are the steps that you can follow to check whether you need to lodge or not?

  • Log in to your account of myGov and then, click on the online services.
  • A dropdown list will open on the screen and you have to select lodgements.
  • Now, click on the option Income tax.
  • Look for the heading outcomes, just under this heading, you will find the option Do I need to lodge? Click on it and select the year for which you want to check it.

How can you do it?

A number of options are available to file a tax return if you are a citizen. Selecting an option depends upon the convenience and situation of the person:

  • MyTax: You can file your tax return using myTax. This is a safe and quick way of filing your tax return. You can save a lot of time if you opt for this method.
  • Go to a tax agent: If you are unable to do it by yourself, you should go to a tax agent for this purpose. But make sure you have selected a registered tax agent.
  • Do it with the help of papers: You can also do it the old fashioned way, using the papers.

In case you don’t need to lodge your tax return, you have to provide some relevant information to complete this process.

Required information for filing your tax return:

  • Statement of income from all your employers.
  • Payment statement from Centrelink
  • Other relevant statements to claim some deductions.
  • Your bank account details.
  • If you are married, you have to include the income of your spouse.
  • Those who have private health insurance have to fill in this information too.

Last date:

There is a fixed date until which you can file your tax return. You can file your tax return before 31 October of this year. When 31 October is on a weekend, you have to file your return until the next working day. For those who have a tax agent for this purpose should provide all the relevant information to their tax agent before 31 October. Though there are some special rules that enable the registered tax agents to file tax returns even after 31 October but you should always contact your tax agent before 31 October.

Those who have difficulties in filing their tax return should contact the ATO immediately. There are several mediums that can help you connect with the ATO.

When you get a bill after lodging your tax return, you can do it before 21 November of the same year. This happens mostly with those who file their returns on their own.

When you have missed the last date of filing a tax return, you should do it as soon as possible. If you have filed your tax return before 31 October, you can pay the tax before 21 November. Whenever you have failed the last date, it is advised to contact the ATO immediately as they can work with you by understanding your situation.

Need help:

There is a free program for those who need help in this matter, but it is for all those who have an income of $60,000 or less. And those who are not eligible for this program can contact some registered tax agents.

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