Issue #15
An amusing side effect of the Government’s Nation Building and Stimulus Packages is the flurry of calls to tax agents to get 2008 tax returns lodged ASAP.
In addition to the much discussed ‘working Australians‘ payment (which could well be paid to a non-working Australian) there are a number of other initiatives in particular those relating to investment allowances that will be of great interest to individuals and businesses alike.
In this edition of The Assessment we provide a snapshot of the current status of the initiatives unveiled in the Nation Building and Stimulus Packages.
Background
There have in fact been two separate announcements:
- Nation Building on 12 December 2008; and
- What is referred to as ‘The Stimulus Package’ on 3 February 2009.
The key initiatives from the combination of these announcements are:
1. $900 Tax Bonus for ‘Working Australians’;
2. $900 ‘Single Income Family’ Bonus;
3. $950 ‘Farmers Hardship’ Bonus;
4. $950 ‘Training/Learning’ Bonus;
5. $950 ‘Back to School’ Bonus;
6. $950 ‘Education Entry Payment Supplement’;
7. Investment Allowance Tax Breaks;
8. The ‘Energy Efficient Homes Program’;
9. School Building Upgrades;
10. New Social and Defence Housing Program; and
11. Increased funding for local community infrastructure projects.
With the exception of the Investment Allowance Tax Breaks, the legislation for all of the above initiatives has been passed by Parliament. At the date of publishing, draft legislation for the investment allowance announcements is yet to be introduced into Parliament.
By way of update, we have set out below more information relating to the first seven items of the above list.
Stimulus Package Payments
1. Tax Bonus for ‘Working Australians’
As a result of the Senate enquiry, the payment is now only up to $900 (originally the announced payment was up to $950).
Contrary to the title of the relevant legislation (see below) eligibility does not rely on an individual actually being a ‘working Australian’. Eligibility criteria for payment, based on the 2007/2008 income year, are that:
- you must be an individual;
- you must be an Australian resident;
- you have an adjusted tax liability of greater than ‘nil’ (including the Medicare Levy but net of all ‘tax offsets’);
- your taxable income does not exceed $100,000; and
- you lodge your 2008 tax return before 30 June 2009 (or by the due date if the ATO has granted you an extension beyond 30 June 2009).
Note: In relation to the last bullet point above, the extension to lodge also needs to be provided before the date of Royal Assent of the Bill.
Persons under 18 will also be eligible for the payment provided they are an ‘excepted person’ (e.g. in full time employment) or are in receipt of ‘excepted assessable income’ (e.g. income from employment).
The payment is scaled based on the individuals’ taxable income:
|
Taxable Income |
Bonus/Payment |
|
Up to $80,000 |
$900 |
|
above $80,000 but below $90,001 |
$600 |
|
above $90,000 but below $100,001 |
$250 |
Individuals do not need to apply for payment – the Government will pay the bonus directly to eligible individuals.
The terms of this payment are made under the Tax Bonus for Working Australians Bill (No 2) 2009.
Initial indications are that accountants are being asked to complete tax returns well in advance of 30 June 2009 as individuals are keen to determine if they are eligible for this payment or not.
This payment will be treated as ‘non-assessable non-exempt income’.
2. ‘Single Income Family’ Bonus
This is a one‑off payment of (generally) $900 per family.
To be eligible an individual must be entitled to Family Tax Benefit Part B (FTB‑B), irrespective of the number of children.
The payment will be made by Centrelink in the fortnight commencing 11 March 2009 for families who receive their family assistance as fortnightly instalments. For families who receive their family payments as a lump sum at the end of the financial year, the payment will be made with the rest of their FTB‑B payment.
3. ‘Farmers Hardship’ Bonus
The Farmer’s Hardship Bonus is a one-off bonus of $950 to be paid to eligible households, irrespective of whether the eligible payment they receive is paid at a single or couple rate.
Eligible recipients will be those who on 3 February 2009 are in receipt of:
- Exceptional Circumstances Relief Payment for Farmers;
- Interim Income Support for Farmers;
- Exceptional Circumstances Relief Payment for Small Business;
- Interim Income Support for Small Business;
- Transitional Income Support; and
- Farm Help Income Support.
The payment will be made automatically by Centrelink in the fortnight commencing 24 March 2009.
4. ‘Training/Learning’ Bonus
The Training and Learning Bonus is a one-off payment of $950.
Eligible recipients will be paid by Centrelink in the fortnight beginning 24 March 2009.
Eligible recipients are those that at 3 February 2009 receive: Youth Allowance (student and apprentices); Austudy; ABSTUDY and other student and related payments (Sickness Allowance and Special Benefit (under age pension age)).
If a student attracts the Government’s Back to School Bonus they are not eligible for the one-off $950 Learning and Training Bonus.
5. ‘Back to School’ Bonus
The Back to School Bonus is a one‑off lump sum payment of $950 per eligible child.
To be eligible, the child must be aged between 4 to 18 in a family receiving Family Tax Benefit Part A (FTB-A).
Payment is to be made by Centrelink from the fortnight commencing 11 March 2009.
6. ‘Education Entry Payment Supplement’
This payment is available to individuals that receive, or are eligible to receive an ‘education entry payment’. This is a payment made under the Social Security and Veterans’ Entitlements Acts to assist recipients with up-front costs of education and training.
The Government has relaxed the qualification criteria, and will provide an additional $950 payment as an ‘education entry payment supplement’.
Note: The ‘Single Income Family’, ‘Farmers Hardship’, ‘Training/Learning’, ‘Back to School’ and ‘Education Entry Payment Supplement’ payments are all dealt with under the Household Stimulus Package Bill (No 2) 2009. All of these bonuses/payments will be exempt from tax and will not be included for social security income‑testing purposes.
Investment Allowance Tax Breaks
The investment allowance tax breaks for all Australian businesses were initially announced on 12 December 2008. On 3 February 2009, eligibility for the investment allowance was broadened, particularly for small businesses.
To date, no draft legislation has been introduced to Parliament.
By way of summary an additional investment allowance tax deduction will be available for eligible assets. A summary of the rules announced are:
| Small Businesses (annual turnover $2m or less) | |||
|
Value of Asset: |
Date of Acquisition: |
Installed before: |
Investment Allowance: |
|
> $1,000 |
13 Dec 2008 to 30 Jun 2009 |
30 Jun 2010 |
30% |
|
> $1,000 |
1 Jul 2009 to 31 Dec 2009 |
31 Dec 2010 |
10% |
| All Other Businesses | |||
|
Value of Asset: |
Date of Acquisition: |
Installed before: |
Investment Allowance: |
|
> $10,000 |
13 Dec 2008 to 30 Jun 2009 |
30 Jun 2010 |
30% |
|
> $10,000 |
1 Jul 2009 to 31 Dec 2009 |
31 Dec 2010 |
10% |
The entitlement to investment allowance relates to assets for which a deduction is available under Division 40 (Capital Allowances) of ITAA 1997. The tax break comes in the form of the investment allowance being over and above the normal capital allowance (i.e. depreciation) for the asset. The additional deduction will be claimable in the income year in which the asset is first installed ready for use.
As there is no draft legislation, there has been some speculation regarding the definition of asset, including whether the investment allowance will be limited to new assets only or whether it will be available for all newly acquired assets (i.e. including newly acquired ‘second hand’ assets). Indications made to this office are that the allowance will be limited to ‘new’ assets only.
For more detailed information go to the various media releases and fact sheets, the Tax Bonus for Working Australians Bill, or the Household Stimulus Package Bill.
If you have any questions regarding this edition of The Assessment, or would like more information from us, please contact Simon Calabria simonc@webbmartinconsulting.com.au or Jeremy Khaw jeremyk@webbmartinconsulting.com.au .
February 25th, 2009 at 9:15 am
We have received inquiries from clients who are working and studying, both at uni & TAFE, & it is costing them a fortune. Will they be entitled to the: Training/Learning’ Bonus? And if not, then why? If they will qualify, then how do they go about registering for the Bonus?
March 5th, 2009 at 11:01 am
Gary
As stated in out edition of The Assessment, a person will be eligible to receive the Training/Learning Bonus if at 3 February 2009 they receive: Youth Allowance (student and apprentices); Austudy; ABSTUDY and other student and related payments (Sickness Allowance and Special Benefit (under age pension age)).
There is no requirement to register for the Bonus. Those persons that qualify will fall into two categories:
Category 1
· The lump-sum bonus is $950. It will be paid to eligible recipients by Centrelink in the fortnight beginning 24 March 2009.
Category 2
· Those eligible for the supplement through EdEP will receive $950 on top of the existing EdEP payment (currently $208). This means they will receive a total repayment of $1158.
· Those eligible for the EdEP bonus will receive it when they receive their EdEP payment. If you have already received your EdEP payment you will receive the supplement from 24 March 2009.
See the Treasurer’s fact sheet:
http://www.treasurer.gov.au/DisplayDocs.aspx?doc=factsheets/2009/003.htm&pageID=011&min=wms&Year=&DocType=3
March 12th, 2009 at 9:24 pm
Can you qualify for two stimulus payments??
For instance, I get a payment from centrelink as I am a full time student (austudy) , however I also work 3 jobs and earn under 80K a year?
Will i get the
-training and learning bonus?
as well as the
-working australians bonus?
Your help would be much appreciated.
Many thanks Mathew
March 13th, 2009 at 3:18 pm
Matthew
If you satisfy the eligibility requirements for both the Tax Bonus for Working Australians and the Training and Learning Bonus, there does not appear to be anything in the law that would preclude you from being entitled to receive both payments. We do note, however, that the law does provide that if an individual is entitled to receive the Back to School Bonus they are not eligible for the Training and Learning Bonus.
March 15th, 2009 at 9:11 pm
Do my partner and I qualify for payment we did not place a tax return last year as we were travelling and had no income in Australia and have been back in the country since the start of the year
March 16th, 2009 at 2:46 pm
Danny
Your eligibility for the Tax Bonus for Working Australians and the potential amount you may be paid will be based on your individual 2007-08 tax return.
A person is eligible to receive the Tax Bonus if the following conditions are met:
* The person is an individual;
* The person is an Australian resident for tax purposes for the 2007-08 financial year;
* The person’s ‘adjusted tax liability’ for 2007-08 is greater than zero;
* The person’s 2007-08 ‘taxable income’ does not exceed $100,000;
* The person lodges their 2007-08 tax return by 30 June 2009 or by the deferred date granted by the Tax Office (unless you have been granted a deferred lodgment date by the Tax Office prior to 18 February 2009, you must lodge your 2007-08 tax return by 30 June 2009).
If you did not have an adjusted tax liability’ greater than zero for the 2007-08 income year, then you would not be eligible for the payment. In the event that you did earn enough income to generate a adjusted tax liability greater than zero for the 2007-08 year, you must also satisfy the other criteria listed above.
See the link to the ATO website for more details on working out your eligibility for the Tax Bonus:
http://www.ato.gov.au/corporate/content.asp?doc=/Content/00178930.htm&page=2&H2
March 24th, 2009 at 12:04 am
Hi,
I’m turning 18 at the end of this year.
In 07-08 I earnt close to $4000 from working.
I lodged my tax return last year and I recieved $75 back.
Am i eligible to receive the tax bonus ?
thanks
March 24th, 2009 at 12:33 pm
If I commenced full time study after the 3rd of February 2009 and am now on youth allowance am I still entitled to the training and learning bonus? If so how do i register?
March 31st, 2009 at 5:39 pm
http://www.news.com.au/heraldsun/story/0,21985,25209277-661,00.html
AAP March 19, 2009 08:22am
UPDATE 9.44am: PAYMENTS of $900 to 8.7 million Australians are in jeopardy after the High Court agreed to hear a legal challenge.
Has anyone heard an update on this legal challenge?
thanks
April 1st, 2009 at 10:38 am
Emma
One of the conditions of receiving the Tax Bonus for Working Australians is that you must have an ‘adjusted tax liability’ for 2007-08 greater than nil.
An adjusted tax liability occurs where a taxpayer’s basic income tax liability plus their Medicare levy for the year and their Medicare levy surcharge for the year (if any), less any tax offsets and franking credits for the year (if any), is greater than zero.
As you have earned less than the tax-free threshold amount in 2007-08, it is likely that you will have a nil adjusted tax liability for that year. This would mean that you will not be eligible to receive the Tax Bonus.
April 1st, 2009 at 10:41 am
Sarah
The Training and Learning Bonus consists of two categories:
Category 1
The one-off $950 bonus (for 2009 only) for recipients at 3 February 2009 of: Youth Allowance (student and apprentices); Austudy; ABSTUDY and other student and related payments (Sickness Allowance and Special Benefit (under age pension age)).
If a student attracts the Government’s Back to School Bonus they are not eligible for the one-off $950 Learning and Training Bonus.
Category 2 (Applies from 1 January 2009 to 30 June 2010)
A temporary supplement to the Education Entry Payment (EdEP) of $950. This is in addition to the existing EdEP payment of $208. EdEP is currently paid to a range of social security recipients who are commencing study, including Newstart Allowance and Parenting Payment Partnered recipients.
A temporary extension of EdEP to Youth Allowance (other) recipients and relaxation of eligibility to a one month qualifying period for all eligible recipients.
Whether you are eligible for the Training and Learning Bonus depends on whether you fall within one of the categories above. If you did not start receiving Youth Allowance until after 3 February 2009, it is likely that you will not be eligible under Category 1.
April 1st, 2009 at 11:00 am
The High Court challenge to the Tax Bonus for Working Australians brought by University of New England law lecturer and barrister Bryan Pape (Pape v The Commissioner of Taxation of the Commonwealth of Australia & Anor) has continued into its third day today, having originally been scheduled to be completed yesterday.
Pape has argued the Tax Bonus payments recently announced under the Government’s stimulus package are invalid, as they are not covered by the Government’s taxation power because they are a gift. Commonwealth Solicitor-General Stephen Gageler, on behalf of the Commonwealth Government, has said that the tax bonus was supported by numerous heads of power, including the taxation, appropriations, external affairs, and trade and commerce powers.
The High Court action has interrupted the Government’s plans to begin paying the bonuses in April as part of its multibillion-dollar economic stimulus package. The ATO has advised the High Court that, in order to proceed with its planned delivery of the bonus payments, it will need to know by close of business on Thursday if it can proceed with the payments.
There has been wide coverage of this case by the media, so I anticipate that the result will be reported as well.
April 1st, 2009 at 7:56 pm
Hi,
I am not an Australian resident but am classed as on for Tax Purposes, am I entitled to the payment?
I have been working in Australia for 4 years and have lodged all my tax returns to date.
Thanks
April 2nd, 2009 at 5:07 pm
http://www.news.com.au/heraldsun/story/0,21985,25278540-661,00.html
AAP
April 02, 2009 11:23am
MILLIONS of taxpayers will eventually receive cash bonus payments even if the High Court rules the stimulus measure invalid, a legal expert says.
The court is expected to rule on Friday whether the Rudd government exceeded constitutional powers in legislating for the payments – up to $900 each for eligible taxpayers – due to distributed from next Monday.
George Williams, a senior law lecturer at the University of New South Wales, says taxpayers will get their money “one way or another” because the government would use another vehicle to implement the measure.
“I don’t think people should be worried,” he told ABC Radio.
But they might not be receiving the cash bonus as quickly as next week if the High Court rules the payments invalid.
“It’s possible it would be delayed, maybe even quite significantly.”
If the court rules against the payments there would be a “massive shift of power and influence” away from the commonwealth to the states, Professor Williams said.
The academic who initiated the challenge agrees with Professor Williams that the tax bonus will be paid somehow.
“Tomorrow, if I’m successful the government could still give the bonus just through … giving a rebate and letting the money flow through the PAYG system,” Bryan Pape told ABC Radio.
April 3rd, 2009 at 1:46 pm
Holly
One of the conditions that must be met for an individual to be entitled to the Tax Bonus for Working Australians is that they must be an Australia resident for taxation purposes in the 2007-08 income year. If you are an Australian resident for taxation purposes and meet the other eligibility criteria, we see no reason why you will not be entitled to receive the Tax Bonus.
April 3rd, 2009 at 1:48 pm
The High Court has now ruled that the Tax Bonus for Working Australians was supported by one or more constitutional heads of power and that there had been a valid appropriation of the consolidated revenue fund. This means that the payments can now go ahead. The High Court has not yet published the reasons for its decision, but has published a media release on the case http://www.hcourt.gov.au/media/Pape.pdf
April 5th, 2009 at 1:05 pm
Thankyou for that update, wonderful.
April 22nd, 2009 at 2:50 pm
We do not have sufficient detail to answer your query. We have set out below the general rules applying to taxpayers under 18 years of age at 30 June 2008. If you require more specific information, we suggest that you contact your accountant.
In order to be eligible for the Tax Bonus, a taxpayer under 18 years of age at 30 June 2008 must:
- either be an ‘excepted person’ at that time or have received ‘excepted assessable income’ in relation to the 2007-08 income year; and
- meet all the other eligibility criteria.
A minor is an ‘excepted person’ if on 30 June 2008:
- they were:
o working full-time, or had worked full-time for three months or more in 2007-08 (ignoring full-time work that was followed by full-time study);
o intending to work full-time for most or all of 2008-09; and
o not intending to study full-time in 2008-09;
- they were entitled to a disability support pension or rehabilitation allowance, or someone was entitled to a carer allowance to care for them;
- they were permanently blind;
- they were disabled and were likely to suffer from that disability permanently or for an extended period;
- they were entitled to a double orphan pension and received little or no financial support from relatives; or
- they were unable to work full-time because of a permanent mental or physical disability and received little or no financial support from relatives.
‘Excepted income’ includes:
- employment income;
- taxable pensions or payments from Centrelink or the Department of Veterans’ Affairs;
- compensation, superannuation or pension fund benefits;
- income from a deceased person’s estate;
- income from property transferred to the minor as a result of the death of another person or family breakdown, or income in the form of damages for an injury they suffer;
- income from their own business;
- income from a partnership in which they were an active partner;
- net capital gains from the disposal of any property or investments listed above; and
- income from the investment of any of the amounts listed above.