CLAIMING THE ONE OFF TAX BONUS

 

As part of the Federal Government’s revised $42 billion economic stimulus package, the following one-off cash bonus payments will be made:

 

• A Tax bonus of up to $900 subject to certain taxable income thresholds for the 2007/08 year and paid to individuals through the tax system.
• A Single-Income Family bonus of $900 for sole parent and two-parent families (irrespective of the number of children) who rely on one main income earner and are entitled to Family Tax Benefit Part B.
• A Back to school bonus of $950 per child to assist low-and middle-income families eligible for Family Tax Benefit A with school-age children (age 4 to 18) .  
• A Farmer's Hardship bonus of $950 paid to farmers and others receiving exceptional circumstances related income support.
• A Training and Learning bonus of $950 to assist students, those returning to study or training, and some income support recipients.

This article focuses on the tax bonus payment paid to individual taxpayers, including salary and wage earners, investors and business owners. Taxpayers must be Australian residents and have “paid tax” for the 2007/08 year, subject to the following taxable income thresholds:

 

• $900 bonus paid to taxpayers with taxable income up to and including $80,000.
• $600 bonus paid to taxpayers with income exceeding $80,000 to $90,000.
• $250 bonus paid to taxpayers with income exceeding $90,000 to and including $100,000.

The bonus applies on a per taxpayer basis. Therefore a couple who each have a taxable income of up to $100,000 will receive up to $900.  

 

Payments will begin to be made from early April 2009 for taxpayers who have already lodged their 2007/08 tax return. The bonus will be paid by cheque or electronic transfer where a bank account has been provided to the ATO. Taxpayers can update their bank account details before the middle of March.      

 

It is a requirement that taxpayers lodge their 2008 tax returns by 30 June 2009 in order to receive the bonus, unless the return is lodged later through a Tax Agent who has received a lodgement extension.

 

The tax bonus payment applies where the individual has “paid tax” for the 2007/08 year. This means a net tax liability after calculating:

 

• Tax payable on taxable income (“A”)
• Plus: medicare levy and medicare levy surcharge (“O”)
• Less: any tax offsets or imputation credits (“G”)

These items are set out on the taxpayer’s Notice of Assessment. If A + O - G on the assessment is greater then zero, the taxpayer is eligible for the tax bonus. It does not matter whether there is a net payment or refund on the assessment.     

 

On the basis of this formula, many individuals will not be entitled to the tax bonus including:

 

• Pensioners whose tax liability is reduced to Nil through either the senior Australians tax offset or the pensioner offset.
• Share investors who don’t have a tax liability due to offsetting imputation credits.
• Taxpayers that don’t pay income tax due to carry forward losses.
• Taxpayers with a taxable income of less than $11,000 during the 2007/08 year that don’t pay tax due to the low income tax offset.          

The bonus isn’t assessable or exempt income and will not be used by the ATO to offset any tax owing by the taxpayer.

 

If you have any queries please call one of the accountants at Wrights Chartered Accountants