Explanation of terms

INDIVIDUALS SEGMENT PARENTS AUDIENCE NAT 4108A–6.2008 PRODUCT ID Explanation of terms Terms used in the instructions for the Family tax benefit (FTB) tax claim 2008 and the Family tax benefit (FTB) short tax claim 2008 Lodge online. ■ Use e-tax to prepare and lodge your tax return online. ■ Most refunds are issued within 14 days. ■ Go to www.ato.gov.au ABBREVIATIONS ATI FAO FTB adjusted taxable income Family Assistance Office family tax benefit LFS MBA TFN large-family supplement multiple birth allowance tax file number EXPLANATION OF TERMS CONTENTS ADJUSTED FRINGE BENEFITS ADJUSTED TAXABLE INCOME ASSESSMENT PERIOD ATI AUSTRALIAN RESIDENT FOR FAMILY ASSISTANCE PURPOSES BEREAVEMENT BLENDED FAMILY CAPITALISED MAINTENANCE CARE CHILD INCOME CHILD MAINTENANCE CLAIM PERIOD CURRENT SPOUSE DATES OF PERIODS YOU WERE OVERSEAS DATES OF PERIODS YOUR CHILD WAS OVERSEAS DEDUCTIBLE CHILD MAINTENANCE EXPENDITURE DEPENDENT CHILD DEPENDENT CHILD’S ADJUSTED TAXABLE INCOME FAMILY ADJUSTED TAXABLE INCOME FAMILY ATI FAMILY PROFILE FULL CARE INCOME SUPPORT PAYMENTS INCOME YEAR LARGE-FAMILY SUPPLEMENT MAINTENANCE ACTION – EXEMPTIONS Violence or fear of violence Harmful or disruptive effect Trauma associated with proving paternity The father is unknown Unsuccessfully tried to prove paternity Conception through artificial insemination procedures Cultural considerations Other exceptional circumstances Review of exemption MAINTENANCE ACTION MAINTENANCE – CAPITALISED MAINTENANCE – NON-CASH 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 MAINTENANCE – RELEVANT PERIOD Payer More than one payer Start of the relevant period End of the relevant period Gaps in the relevant period MAINTENANCE INCOME FREE AREA MULTIPLE BIRTH ALLOWANCE NET RENTAL PROPERTY LOSSES OTHER EMPLOYMENT-RELATED INCOME PAYMENT UNDER A LABOUR MARKET PROGRAM PERIODS PRIOR TO SEPARATION PRESCRIBED EDUCATIONAL SCHEME PRESUMPTION OF PATERNITY RECONCILIATION REDUCED WITHHOLDINGS REPORTABLE FRINGE BENEFIT RESIDENCY SHARED CARE Shared-care percentage SHORT-TERM ABSENCE SPOUSE Current spouse SPOUSE’S TAX FILE NUMBER EXEMPTIONS Indefinite TFN exemption Temporary TFN exemption STUDYING FULL TIME Secondary students Tertiary students SUPPLEMENT TARGET FOREIGN INCOME TAXABLE INCOME TAX-FREE PENSIONS OR BENEFITS WAIVER OF FAMILY TAX BENEFIT ELIGIBILITY WITHHOLDINGS – REDUCED FAMILY ASSISTANCE OFFICE (FAO) – CONTACT INFORMATION 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 10 10 10 10 10 2 www.ato.gov.au EXPLANATION OF TERMS ADJUSTED FRINGE BENEFITS An adjusted fringe benefit amount is a reportable fringe benefit amount ‘grossed down’. If you have any reportable fringe benefits they will appear on your payment summary. The Family Assistance Office will automatically reduce any amounts that appear on your payment summary to the adjusted amount. It is the reportable fringe benefits amount that you write on your family tax benefit tax claim or on your tax return. To get your adjusted fringe benefit amount use the following formula: adjusted fringe benefits = reportable fringe benefits amount × 0.535 BEREAVEMENT If your dependent child died during the 2007–08 income year, you may receive a bereavement payment. The bereavement payment is payable for 14 weeks from the date of death; other eligibility rules apply. For example, if your dependent child would have turned 21 years during the bereavement period and was not studying full time, or was studying full time and would have turned 25 years, you will be paid until the day before that birthday. EXPLANATION OF TERMS BLENDED FAMILY A blended family is a family where there are two or more dependent children, and ■ at least one of the children is a child of one member of the couple from a previous relationship, and ■ at least one of the other children is – a child of the other member of the couple from a previous relationship, or – a child of the couple. ADJUSTED TAXABLE INCOME A number of factors are included in calculating your adjusted taxable income (ATI). ATI is calculated as an annual amount. The components included in calculating your ATI are: ■ taxable income ■ adjusted fringe benefits ■ net rental property losses ■ tax-free pensions or benefits ■ target foreign income ■ child maintenance you paid to another person (deductible child maintenance expenditure). Each of these components is described in detail under separate headings. CAPITALISED MAINTENANCE (See Maintenance – capitalised.) CARE Care means that you had responsibility for the day-to-day care, welfare and development of the child. Generally, day-to-day care includes physical care. You can still care for your dependent children if they are being educated away from your home, for example, at university. (See also Full care and Shared care.) ASSESSMENT PERIOD An assessment period is used to calculate your shared-care percentage. An assessment period begins on the latest of: ■ the day on which the care of the dependent child starts to be shared ■ the day on which care arrangements for the dependent child change or ■ 1 July in the income year of the claim. An assessment period ends on the earlier of: ■ 30 June of the income year in which the period began ■ the day before the day on which the care arrangements of the dependent child changed or ■ the day on which the care of the dependent child stopped. The assessment period is not affected if there are short-term absences (see page 8) or minor variations to your shared-care arrangements, for example, if a child who normally stays with your ex-spouse for a weekend does not do so because of illness. CHILD INCOME (See Dependent child’s adjusted taxable income.) CHILD MAINTENANCE Child maintenance (also known as child support) is the amount you are required to pay to another person to maintain your natural or adopted child. (See Deductible child’s maintenance expenditure.) CLAIM PERIOD A claim period is the time during this income year for which you are claiming family tax benefit (FTB) through the tax system. It does not include periods you are not claiming FTB or periods that you claimed fortnightly payments of FTB. CURRENT SPOUSE (See Spouse.) ATI (See Adjusted taxable income.) AUSTRALIAN RESIDENT FOR FAMILY ASSISTANCE PURPOSES Having a tax file number does not necessarily mean you meet the residency requirement for family assistance. (See Residency.) EXPLANATION OF TERMS www.ato.gov.au 3 DATES OF PERIODS YOU WERE OVERSEAS If you leave Australia permanently you are not eligible for family tax benefit (FTB) from the day you leave Australia. You may claim FTB up to the date of your departure. If you leave Australia temporarily, you can continue to receive FTB Part A and FTB Part B benefits for the first 13 weeks of your overseas absence. However, if you stay away for longer than 13 weeks, FTB Part B payments cease and, if your FTB Part A payment was more than the base rate, it reduces to the base rate. If you are outside Australia for longer than three years, FTB Part A payments will also cease. If you are outside Australia for more than 13 weeks but less than three years, return to Australia and leave again within 13 weeks, for instance, you take a two-week holiday overseas, your rate while you are overseas reverts to what you were being paid before you came back to Australia, that is, the FTB Part A base rate. If you are outside Australia for more than three years, return to Australia and leave again within 13 weeks you are not eligible for FTB at any time during the later absence. If you were temporarily outside Australia for longer than 13 weeks and were prevented from returning to Australia because of a crisis or emergency situation, contact the Family Assistance Office (FAO) – see the contact details on page 10. DEDUCTIBLE CHILD MAINTENANCE EXPENDITURE Deductible child maintenance expenditure is the amount of child maintenance (also known as child support) you are required to pay to another person to maintain your natural or adopted child. To work out your adjusted taxable income (ATI), deduct this amount from the total of all the other ATI amounts. EXPLANATION OF TERMS DEPENDENT CHILD To be a dependant for family assistance purposes, a child must: ■ be aged under 21 years or be a full-time student aged 21 to 24 years ■ be in your care and, if the child is aged under 21 years, you must be responsible (whether alone or jointly with someone else) for their day-to-day care, welfare and development ■ be an Australian resident, a special category visa holder residing in Australia or be living with you ■ have resided in Australia for some of the period 1 July 2004 to 30 June 2008 ■ have had an adjusted taxable income (ATI) in 2007–08 equal to or less than the ATI limits. Refer to table 1 page 4 in Family tax benefits (FTB) tax claim instructions 2008, and ■ not be your partner. NOTE Special rules apply to people who go overseas for more than 13 weeks as part of the Medical Treatment Overseas Program, and for certain individuals who are deployed overseas as part of the Australian Defence Force and Australian Federal Police. If you fall into any of these categories, contact the FAO – see the contact details on page 10. DEPENDENT CHILD’S ADJUSTED TAXABLE INCOME Your child’s adjusted taxable income (ATI) limits for the 2007–08 income year are listed in Family tax benefit (FTB) tax claim instructions 2008. If their ATI is equal to or more than the relevant limit stated, they are not considered a dependent child and you cannot claim FTB for them. FAMILY ADJUSTED TAXABLE INCOME A family adjusted taxable income (ATI) is the combined amount of your ATI and your spouse’s ATI, if you had a spouse. Family ATI is calculated from your whole year ATI and your spouse’s whole year ATI for the period or periods you were together. If you didn’t have a spouse for any part of the year, your ATI is your family ATI. The components of ATI are: ■ taxable income ■ adjusted fringe benefits ■ net rental property losses ■ tax-free pensions or benefits ■ target foreign income ■ child maintenance you paid to another person (deductible child maintenance expenditure). Each of these components is explained in detail under separate headings. DATES OF PERIODS YOUR CHILD WAS OVERSEAS If your child leaves Australia permanently you are not eligible for family tax benefit (FTB) for this dependant from the day they leave Australia. You may claim FTB up to the date of their departure. If your child leaves Australia temporarily, you can continue to receive FTB Part A and FTB Part B benefits for the first 13 weeks of their overseas absence. However, if your child stays away for longer than 13 weeks, FTB Part B payments cease and, if your FTB Part A payment was more than the base rate, it reduces to the base rate. If your child is outside Australia for longer than three years, FTB Part A payments will also cease. If your child is outside Australia for more than 13 weeks but less than three years, returns to Australia and leaves again within 13 weeks, for instance, they take a two-week holiday overseas, your rate while they are away reverts to what you were getting for that child before they came back, that is, the FTB Part A base rate. If your child is outside Australia for more than three years, returns to Australia and leaves again within 13 weeks you are not eligible for FTB at any time during their later absence. FAMILY ATI (See Family adjusted taxable income.) FAMILY PROFILE This is the make-up or composition of your family at a point in time during the family tax benefit (FTB) claim period. You may have more than one family profile during the FTB claim period. For example, your family profile would have changed if you began or ceased a relationship with a spouse during the year. NOTE If your dependent child was temporarily outside Australia for longer than 13 weeks and was prevented from returning to Australia because of a crisis or emergency situation, contact the Family Assistance Office – see the contact details on page 10. FULL CARE You had full care of your children if you or your current spouse, or both of you cared for your children for the whole assessment period and you are claiming family tax benefit on behalf of your family. (See also Care and Shared care.) 4 www.ato.gov.au EXPLANATION OF TERMS INCOME SUPPORT PAYMENTS The following payments are income support payments: ■ newstart allowance ■ disability support pension ■ disability support pension (blind) ■ parenting payment ■ partner allowance ■ wife pension ■ widow allowance ■ youth allowance ■ age pension ■ austudy payment ■ widow B pension ■ sickness allowance ■ special benefit ■ mature age allowance ■ mature age partner allowance ■ carer payment ■ Department of Veterans’ Affairs service pension ■ Department of Veterans’ Affairs income support supplement ■ Department of Veterans’ Affairs invalidity pension ■ Department of Veterans’ Affairs language, literacy and numeracy supplement ■ bereavement allowance ■ Community Development Employment Project participant supplement ■ special needs pension. Unsuccessfully tried to prove paternity You are exempt where: ■ a court has said the man is not the father ■ Legal Aid will not fund the paternity case, or ■ the man’s whereabouts remain unknown and you have taken reasonable steps to locate him. Conception through artificial insemination procedures If a child was conceived through artificial insemination procedures, you may claim an exemption if, at the time of artificial insemination, the mother was: ■ not partnered ■ in a marriage-like relationship with a person of the same sex, or ■ married but underwent the procedure without the consent of her spouse. EXPLANATION OF TERMS Cultural considerations You may be exempt if cultural considerations indicate that maintenance action would cause hardship to you or your community. Other exceptional circumstances There may be other situations where it is inappropriate for you to take maintenance action. For further information, contact the Family Assistance Office (FAO) – see the contact details on page 10. INCOME YEAR The claims in this package relate to the 1 July 2007 to 30 June 2008 income year. Review of exemption The FAO may conduct a review of your exemption. The review may take the form of a phone call to confirm that your circumstances have not changed. LARGE-FAMILY SUPPLEMENT The large-family supplement (LFS) is an amount that is added to the FTB Part A rate for families with three or more dependent children. The LFS rate is $262.80 for the third and each subsequent dependent child after the third. MAINTENANCE ACTION For the purposes of the maintenance action test, your dependant must be a child whose: ■ parents separated ■ parents never lived together, or ■ full brother or sister was born on or after 1 October 1989. You must complete and lodge an assessment form with the Child Support Agency (CSA) and: ■ have your child maintenance collected by the CSA ■ privately collect 100% of the child maintenance under your child support assessment, or ■ lodge a child support agreement. MAINTENANCE ACTION – EXEMPTIONS You may be eligible for an exemption from taking maintenance action if any of the following circumstances apply to you. Violence or fear of violence It may be inappropriate for you to take maintenance action where: ■ there is a history of violence towards you or your immediate family by the other parent, or ■ the other parent has stated that violence will occur if you take maintenance action. MAINTENANCE – CAPITALISED Capitalised maintenance is a term used to refer to maintenance that is received in the form of a capital item worth more than $1,500, for example, a car, and covers a specified period. Capitalised maintenance income is not: ■ a periodic amount, or ■ a benefit provided on a periodic basis. Harmful or disruptive effect You are exempt where it would be very emotionally traumatic for you to pursue child maintenance, for example, in cases of rape or incest. Trauma associated with proving paternity You may be exempt if you consider that it would be emotionally traumatic for you to pursue proof of paternity in cases where the father has not: ■ put his name on the birth certificate, or ■ acknowledged that he is the father of the dependent child. MAINTENANCE – NON-CASH For the purposes of family tax benefit, non-cash maintenance includes payments or benefits to a person or their child, for the maintenance of either, and received from: ■ a parent of the child, or ■ the spouse or former spouse of a parent of the child. Non-cash maintenance includes non-cash support or payments made to a third party. The father is unknown You may be exempt if the father of the dependent child is unknown. If you know who the father is and the grounds for presumption of paternity (see page 7 for an explanation of this term) are not met, you must take legal action to seek proof. EXPLANATION OF TERMS www.ato.gov.au 5 EXPLANATION OF TERMS Examples of non-cash maintenance are: ■ food ■ clothing ■ household items and repairs ■ mortgage payments, rent and free lodging ■ health insurance and medical expenses ■ loan, credit card and store account repayments ■ child care fees ■ general education expenses, including school and tuition fees ■ sporting club costs including fees, equipment, related travel and accommodation ■ travel or holiday expenses ■ utility bills, such as electricity, gas, phone and heating ■ rates, such as council, water and sewerage ■ motor vehicle expenses. Gaps in the relevant period The number of days in a relevant period is not reduced by a gap between a period of voluntary maintenance and a period where a maintenance liability exists. MAINTENANCE INCOME FREE AREA The maintenance income free area is the amount of child support (maintenance) you can receive before your family tax benefit (FTB) Part A payment is reduced. Maintenance income above the free area reduces your FTB Part A payment by 50 cents in the dollar until the base rate of FTB Part A is reached. The maintenance income free area is made up of a basic amount for the first child and a supplementary amount for each subsequent child. The maintenance income free areas for 2007–08 are shown below. Individual’s situation Basic amount (one child) $1,259.25 $2,518.50 $1,259.25 For each additional child, add $419.75 $419.75 $419.75 MAINTENANCE – RELEVANT PERIOD For the purposes of family tax benefit (FTB), the relevant period for the assessment of maintenance income is the period that a claimant is eligible to receive maintenance during an income year. Generally, the relevant period is the income year for which FTB is being paid. However, if you separated from or reconciled with your spouse, or gained care of a dependent child during the income year, the relevant period is the period during which you are eligible for maintenance for your dependent child. Single A couple and both have maintenance income A couple but only one has maintenance income EXAMPLE Jane has two children from two previous relationships. Jane is claiming FTB from 1 July 2007. On 3 September 2007 Jane reconciled with Dave, the father of her younger child. Terry, the father of her older child, died in an accident on 1 May 2008. There are two relevant periods in the 2007–08 income year for Jane’s child maintenance eligibility: from 1 July to 2 September 2007 for Dave, and from 1 July 2007 to 30 April 2008 for Terry. If you need the maintenance income free areas for previous income years, contact the Family Assistance Office – see the contact details on page 10. MULTIPLE BIRTH ALLOWANCE The multiple birth allowance (MBA) is an additional amount that is added to the FTB Part A rate for families who care for three or more children from the same multiple birth, that is, triplets or greater, up until their sixth birthday, for the period 1 July 2007 to 31 December 2007. From 1 January 2008 changes to MBA mean that families with at least three children born in the same multiple birth (triplets or greater) will be eligible for MBA: ■ until the children are 16 years of age, or ■ until 31 December of the calendar year in which the first born of these children turns 18 years of age, if at least three of the children are in full-time study. There must be three eligible children from the same birth set to continue receiving this allowance. The MBA per year is $3,179.15 for triplets and $4,237.65 for quadruplets or more. EXCEPTION Capitalised maintenance income is assessed separately. The relevant capitalised maintenance period is used to calculate the amount of capitalised maintenance that must be included for this period. Payer For FTB purposes, a payer is anyone who has paid maintenance. More than one payer The relevant period applies in relation to each maintenance liability. Therefore, if you have children from more than one previous relationship, there will be a separate relevant period for each payer. NOTE Dependent children under 16 years of age are eligible whether they are in full-time study or not. The calculation rate for eligible dependants falling under the second age criteria effective from 1 January 2008 will be based on the actual number of dependants in full-time study. Start of the relevant period The relevant period begins on the latest of: ■ the date a maintenance liability begins ■ the date voluntary maintenance payments begin, or ■ the start of the income year. EXAMPLE For quadruplets over 16 years of age with only three in full-time study, the MBA would be $3,179.15 per year (triplets). For quadruplets over 16 years of age with all four in full-time study, the MBA would be $4,237.65 per year. End of the relevant period The relevant period ends on the earliest of: ■ the date a maintenance liability ceases ■ the date voluntary maintenance payments cease, or ■ the end of the income year. 6 www.ato.gov.au EXPLANATION OF TERMS NET RENTAL PROPERTY LOSSES If rental property expenses exceed gross rental property income the result is a net rental property loss. The net rental property loss is counted as income for adjusted taxable income (ATI) purposes. For example, if your taxable income is $35,000 and this included a net rental property loss of $2,500 and you had no other components of ATI, your ATI is as follows: Taxable income Net rental property loss ATI $35,000 $2,500 $37,500 PRESUMPTION OF PATERNITY For the purposes of family tax benefit, presumption of paternity is based on the assumption that the person being asked to provide child support is a parent of the child. For example, where a person is applying for an assessment of an ex-nuptial child, the child support registrar must be satisfied that the person being asked to provide child support is a parent of the child. RECONCILIATION Reconciliation is a process that compares your family adjusted taxable income (ATI) estimates with the actual amounts received and is done at the end of the income year. Reconciliation ensures you receive your correct family tax benefit (FTB) entitlement, whether you’ve been paid fortnightly or as a lump sum by the Family Assistance Office (FAO), or you are claiming through the Tax Office. If you have overestimated your own or your spouse’s ATI, you may receive a top-up of FTB. If you have underestimated your own or your spouse’s ATI and are overpaid, you will have to repay any excess money. If you received fortnightly payments of FTB for a part of the income year you would have estimated your own ATI (and your spouse’s – if applicable). If you or your spouse, or both of you, are required to lodge a tax return, reconciliation will occur after you have lodged your tax returns. Details of taxable income, reportable fringe benefits and net rental property losses are taken from your tax return and sent to the FAO for reconciliation purposes. If you claim FTB for the whole year through the tax system and you have estimated your spouse’s income, reconciliation will occur when your spouse lodges their tax return, if they are required to lodge one. Where your spouse’s estimated ATI indicates that they would not be required to lodge a tax return under Tax Office lodgment rules, reconciliation may be completed using the income information available to the FAO. You need to let the FAO know that your spouse is not required to lodge a tax return. The FAO compares the amount you have been paid, based on the estimates you provided, with the amount you should have received based on your actual income amounts. The reconciliation process could result in three possible outcomes: ■ underpayment – you have not received the full entitlement in the income year and you will receive a top-up payment ■ correct payment – you have received the correct entitlement and there is no need to make any adjustment to the payment ■ overpayment – you have received payments that amount to more than your entitlement, resulting in a debt. The debt is the difference between the payments received and the correct entitlement. You have to repay the overpayment. Your tax refund and your spouse’s tax refund, if they gave consent, can be used to recover FAO overpayments and debts. EXPLANATION OF TERMS If the rental property expenses are less than the gross income, do not include this amount as it is already included in your taxable income. OTHER EMPLOYMENT-RELATED INCOME Other employment-related income includes: ■ income earned as a result of being on paid leave (such as paid maternity leave) ■ a payment of compensation or a payment of insurance for an inability to earn, derive or receive income from paid work during the period, and ■ income that is derived from previous self-employment, such as from an interest or investment connected with your previous self-employment. PAYMENT UNDER A LABOUR MARKET PROGRAM For the purposes of family assistance, labour market programs are programs administered by government agencies and are designed to help meet the needs of job seekers while they look for and start employment. Examples of these programs and the responsible agencies are the Community Development Employment Project administered by the Department of Families, Housing, Community Services and Indigenous Affairs and the New Enterprise Incentive Scheme administered by the Department of Education, Employment and Workplace Relations. For further information, contact the Family Assistance Office – see the contact details on page 10. PERIODS PRIOR TO SEPARATION If you separate from your spouse during the family tax benefit (FTB) claim period, you are both eligible to claim FTB for the period you were together during the claim period (the period before the separation). You and your now ex-spouse can, for instance, agree to split the FTB payment between you, or you can agree that only one of you will claim it. PRESCRIBED EDUCATIONAL SCHEME A prescribed educational scheme is the: ■ ABSTUDY schooling scheme ■ ABSTUDY tertiary scheme ■ Student Financial Supplement Scheme ■ Veterans’ Children Education Scheme ■ Post-graduate Awards Scheme. EXPLANATION OF TERMS www.ato.gov.au 7 REDUCED WITHHOLDINGS If you claimed family tax benefit (FTB) by having a reduced amount of tax withheld by your employer throughout the 2007–08 year, you will still need to lodge an FTB tax claim with your tax return or you may incur a tax debt. From 1 July 2008 this option will no longer be available as the government has announced that all FTB claims must be lodged with the FAO. SHARED CARE Shared care is where you or your spouse, or both of you, care for a child for some of the time during the assessment period and someone else, for example, your ex-spouse, cares for the child for the rest of the time, such as on weekends or during school holidays. (See also Care and Full care.) Shared-care percentage Shared-care percentage is the amount of time during the assessment period that you care for a dependent child, expressed as a percentage of the assessment period. There are two ways to work out your care percentage: ■ If there is agreement on the actual care arrangements for the child these care arrangements can be used to determine your shared-care percentage. ■ Where there is no agreement on care arrangements for the child, use the number of nights you care for each individual child. If the number of nights does not accurately reflect the time a child is in your care, contact the Family Assistance Office – see the contact details on page 10. Work out your care percentage as follows: number of nights you or your spouse cared for the child in an assessment period number of nights in the assessment period To be eligible for FTB your shared-care percentage must be at least 10%. Any percentage greater than 10% should be rounded to the nearest whole percentage. Shared-care percentage should not be confused with agreed percentage. The latter is only relevant in the case of a blended family or a claim for a period before separation. EXPLANATION OF TERMS REPORTABLE FRINGE BENEFIT A reportable fringe benefit is the fringe benefit amount that is shown on your payment summary. For more information, phone the Tax Office on 13 28 61. (See also Adjusted fringe benefits.) RESIDENCY Residency for family assistance purposes is different from residency for tax or immigration purposes. For example, having a tax file number does not necessarily mean you meet the residency requirement for family assistance. Your residency status may be tested against data held by the Department of Immigration and Citizenship. To be an Australian resident for family assistance purposes you must reside in Australia and satisfy one of the following: ■ You are an Australian citizen. ■ You hold a permanent visa. ■ You are a New Zealand citizen who entered Australia under a special category visa. ■ You hold one of the following temporary visas: 070, 309, 310, 447, 451, 695, 785, 786, 787, 820 or 826. ■ You hold a criminal justice stay visa specifically issued for the purpose of assisting in the administration of justice for the offence of people trafficking, sexual servitude or deceptive recruiting. To determine whether you reside in Australia you need to establish whether Australia is your place of residence. You should consider: ■ the nature of your accommodation ■ the nature and extent of your family relationship in Australia ■ the nature and extent of your employment, business or financial ties with Australia ■ the frequency and duration of your travel outside Australia, and ■ any other relevant matters. If you are not sure of your residency status, contact the Family Assistance Office – see the contact details on page 10. × 100 SHORT-TERM ABSENCE Whether family tax benefit (FTB) continues to be paid to a parent following a short-term absence of the child will depend on whether the absence is due to formal or informal care arrangements. In formal care (for example, foster care) where the change of care is legally sanctioned through a court order or other legal agreement, and involves a change in legal responsibility, FTB will normally be payable to the new carer immediately. In informal care, which is a private arrangement and does not involve a change in legal responsibility, FTB will still be payable to a parent during a short-term and temporary absence of the child where the intention is for the child to return to the care of the parent, and in such cases, the absence will generally not exceed four weeks. If it is clear from the outset that a child will be in ongoing care, then the new carer is eligible for FTB from the date the child enters their care. If you are not sure, contact the Family Assistance Office – see the contact details on page 10. 8 www.ato.gov.au EXPLANATION OF TERMS SPOUSE Your spouse is a person of the opposite sex, to whom you were legally married, or with whom you lived in a marriage-like relationship at any time during the claim period, provided you were not living separately and apart on a permanent or indefinite basis. You may have had more than one spouse during the claim period – for example, if you were married at the beginning of the claim period, then separated, then lived with a new spouse at the end of the claim period. STUDYING FULL TIME Secondary students If the student is studying at a secondary school, they must be attending the school full time or be undertaking a concessional study load. If the student is studying at an institution other than a secondary school or by correspondence or distance education, they must be enrolled in and studying at least three-quarters of the normal full-time study load for their course or undertaking a concessional study load. Full-time study is a set amount of work that is accepted by the school as being full time for any given period. EXPLANATION OF TERMS Current spouse Your spouse at 30 June 2008 is your current spouse. SPOUSE’S TAX FILE NUMBER EXEMPTIONS If you are separated from your spouse or it is not possible to quote your spouse’s tax file number (TFN), you may be exempted from providing your spouse’s TFN. You may be exempt from providing your ex-spouse’s TFN if: ■ you do not have access to their TFN, and ■ you are unable to obtain their TFN. There are two types of TFN exemptions – indefinite and temporary. Tertiary students For the purposes of family tax benefit, a child is studying full time if they are undertaking at least three-quarters of the standard full-time load for tertiary students. For a Higher Education Contribution Scheme (HECS) or Higher Education Loan Program (HELP) course, a full-time load is measured against the standard student study load for the course. A student is considered to be studying full time for the period that they had a HECS or HELP loading of 0.375 for a semester. Formal, regular consultation with supervisors can be included in the calculation of study load if it is a normal requirement of the course. Non-class work is not included in measuring study load. Indefinite TFN exemption An indefinite exemption from providing your spouse’s TFN may be granted where the reason you are unable to provide it is not likely to change in the foreseeable future. Possible reasons for an exemption include where your spouse is violent, imprisoned for life, seriously ill or disabled. To claim a spouse’s TFN exemption for violence you must have reason to believe that as a result of your request for the TFN, the spouse could become violent to you or a child, or there would be other concerns for your safety or a child’s safety or health. SUPPLEMENT Most FTB claimants receive their FTB payments from Centrelink. After they lodge their tax return, their actual and claimed incomes are reconciled for that income year. They then generally receive a lump sum called a supplement, which includes balancing adjustments. Those who claim FTB through the Tax Office receive a single lump sum. It includes all the payments they would have received if they had claimed through Centrelink, including any supplement. Temporary TFN exemption A temporary exemption from providing your spouse’s TFN may be granted where the reason you are unable to provide it is likely to change in the foreseeable future. Possible reasons for a temporary exemption include if your spouse is away from home for work or a holiday, or in prison with a known release date. For further information, contact the Family Assistance Office – see the contact details on page 10. TARGET FOREIGN INCOME Target foreign income is foreign income calculated in Australian dollars, from sources outside Australia. It does not include any amounts you have already included in your taxable income or any foreign income received in the form of a fringe benefit. If you received amounts of target foreign income throughout the income year, use the exchange rate applicable on 1 July 2007 to convert foreign amounts to Australian dollars. You will find the applicable exchange rates on the Family Assistance Office (FAO) website at www.familyassist.gov.au under ‘How to calculate income’ or you can contact the FAO – see the contact details on page 10. EXPLANATION OF TERMS www.ato.gov.au 9 TAXABLE INCOME Taxable income is assessable income less allowable deductions. It is the amount that you have written at TAXABLE INCOME OR LOSS on your Tax return for individuals 2008. A loss means your taxable income is zero for family assistance purposes. If you are completing your family tax benefit tax claim separately from your tax return, taxable income is also shown on your income tax notice of assessment issued by the Tax Office. NOTE The Military Rehabilitation and Compensation Commission payments can be fortnightly instalments or lump sums. Lump sums are deemed to be income only in the income year in which they are received. Tax-free pensions or benefits do not include bereavement payment, pharmaceutical allowance, rent assistance or remote area allowance, and language, literacy and numeracy supplement. EXPLANATION OF TERMS TAX-FREE PENSIONS OR BENEFITS Tax-free pensions or benefits are the amounts of any of the following payments that you receive through: WAIVER OF FAMILY TAX BENEFIT ELIGIBILITY If you care for a dependent child for between 10% and 30% of the time, you are able to waive your right to your share of family tax benefit (FTB) in favour of the dependent child’s other parent. You can cancel this waiver at any time. If you wish to waive your eligibility for FTB for any of your dependent children you need to complete an Application to waive family tax benefit/cancel a current waiver (FAO13). For more information, contact the Family Assistance Office – see the contact details on page 10. Centrelink ■ ■ ■ disability support pension paid to a person who is not old enough to receive the age pension carer payment where both the carer and the person being cared for are not old enough to receive the age pension wife pension where both the recipient and spouse, if applicable, are not old enough to receive the age pension. invalidity service pension where the recipient is not old enough to receive the age pension disability pension, war widows and war widowers pension partner service pension where both partners are under age-pension age and the veteran receives an invalidity service pension, or the veteran has died and was receiving an invalidity service pension at the time of death income support supplement paid on the grounds of invalidity if the person has not reached age-pension age Defence Force Income Support Allowance (DFISA), where DFISA is exempt from income tax. special rate disability pension safety net payment compensation for permanent impairment additional compensation for impairment from another service injury or disease interim compensation while waiting for compensation payment for permanent impairment or additional compensation payment for impairment from another service injury or disease compensation for an eligible widow partner. Department of Veterans’ Affairs (DVA) ■ ■ ■ WITHHOLDINGS – REDUCED (See Reduced withholdings.) FAMILY ASSISTANCE OFFICE (FAO) – CONTACT INFORMATION ■ ■ ■ ■ ■ Military Rehabilitation and Compensation Commission ■ ■ ■ ■ ■ ■ Visit its website at www.familyassist.gov.au Phone the FAO on 13 61 50 between 8.00am and 8.00pm (local time), Monday to Friday. Visit your nearest FAO. Offices are located in Medicare offices, Centrelink customer service centres and Tax Office shopfronts. Phone 13 12 02 if you do not speak English well. Use the teletypewriter (TTY) service 1800 810 586 (this service is only available via a teletypewriter machine) if you have a hearing or speech impairment. ■ 10 www.ato.gov.au EXPLANATION OF TERMS Explanation of terms 2008