How the changes to family assistance will affect you
The changes to the Family Tax Benefit will affect most recipients in some way. Along with a change in “income” definition, from 1 July, some people may need to provide additional information to Centrelink to receive the right amount of family assistance.
Family Tax Benefit
The changes to Family Tax Benefit will affect everyone who receives Family Tax Benefit - Part A and Part B.
There are 3 main changes:
- Family Tax Benefit will automatically be adjusted when people notify the Family Assistance Office that their income estimate has changed;
- you can no longer able to claim Family Tax Benefit through the Australian Tax Office from 1 July 2009; and
- from 18 January 2010, some people may not be able to receive Family Tax Benefit fortnightly if outstanding income tax returns have not been lodged.
Income estimate
From 1 July, when you inform the Family Assistance Office that your income estimate has increased, the Family Tax Benefit payments for the rest of the financial year will be automatically adjusted.
Currently, you can choose whether or not to have payments adjusted, but this can cause cash-flow problems for families who then need to pay back Family Tax Benefit overpayments.
The mandatory automatic adjustment is aiming to reduce overpayments.
This automatic adjustment won’t apply to Child Care Benefit, but you can reduce the chance of overpayment here by telling the Family Assistance Office to adjust your Child Care Benefit to account for any increase in your income.
Claiming Family Tax Benefit
The options for claiming Family Tax Benefit through the Australian Tax Office are also changing.
Since 1 July last year, you have no longer been able to reduce Pay As You Go tax deductions in anticipation of the Family Tax Benefit entitlement. From 1 July this year, you won’t be able to lodge a lump sum claim for Family Tax Benefit through the Australian Tax Office. Instead, you will have to claim lump sums through the Family Assistance Office. (This change doesn’t affect those currently receiving fortnightly payments.)
Another change is that from 1 July 2009, your tax assessment notice won’t include Family Tax Benefit top-up payments.
You can still claim Family Tax Benefit through the Family Assistance Office, located at Medicare offices or Centrelink Customer Service Centres. There are 2 ways to claim Family Tax Benefit:
- lodge a claim online at www.familyassist.gov.au; or
- lodge a paper claim-form in person at a Medicare office or Centrelink Customer Service Centre.
You can receive Family Tax Benefit by:
- claiming fortnightly payments to be paid throughout the financial year, based on estimating your income; or
- lodging a lump sum claim after the end of the financial year, remembering that you won’t receive a payment until you and/or your partner have lodged your income tax return for the same financial year.
Tax returns
From 18 January 2010, you may no longer be entitled to receive Family Tax Benefit fortnightly if you or your partner don’t lodge a tax return, or advise the Family Assistance Office that you’re not required to do so, within the necessary time frame. Family Tax Benefit will only be available once outstanding returns have been lodged.
Lodging a tax return is necessary to balance the Family Tax Benefit entitlement you’re your actual annual income is known.
Income definition
The definition of income is also changing. This may affect you if you receive Family Tax Benefit, Baby Bonus or Child Care Benefit, and:
- you make Reportable Superannuation Contributions; and/or
- you own investments.
It is important to remember that what the Family Assistance Office defines as “assessable income” isn’t always the same as what the Australian Tax Office defines as taxable income.
Reportable Superannuation Contributions
Reportable Superannuation Contributions include “discretionary contributions”, also known as concessional or before-tax contributions. These may include voluntary salary-sacrificed contributions that your employer makes on your behalf, or the total superannuation contributions you make as a self-employed person, for which you can claim a tax deduction.
You must declare Reportable Superannuation Contributions to the Family Assistance Office as part of the family income estimate.
Financial investments
A change that will help families in this current economic climate is the inclusion of net losses from financial investments in calculating family assistance (from 1 July 2009). Note: this is the loss from investment earnings, not any capital losses.
If you expect to make a net financial investment loss, you must declare it as income for the family income estimate.
The Family Assistance Office already includes net losses from rental properties as income; together, net losses from rental properties and net losses from investment income are known as “total net investment losses”. (Also see the article “Income test reforms” in this issue.)
For more information about the changes to family assistance, visit www.centrelink.gov.au or www.familyassist.gov.au
Source: Financial Planning, April 2009
Tags: Family Tax Benefit, FTB