Help please.....Dale?

[skater]

I just found out a couple of days ago that I have a debt to Centrelink for overpayment of Family Allowance to the tune of over $3500. This has been worked out over 2 years apparently 2001 - 2002 approx $1500, and 2002 - 2003 approx $2200.

Now I will try not to waffle on too much, but I knew there was an overpayment in 2001 - 2002, so they reduced my payments to get their money back. Then the same happened 2002 - 2003, so I thought the best thing would be to just cancel the Family Allowance, and I would get what was owing to me when I did my tax at the end of the year. They have now sent me a bill and I must pay in full within a month.

I went into the local Centrelink office to find out about this and found out that when they work out Family Allowance, they add losses back. This is fine when you are working and have your own income, but I have no income of my own. My loss was $10,000, so I would anticipate they would add minus $10k and positive $10k and I would have an income of zero. Instead, they start at zero and add $10k, so I have an income of $10k and therefore do not qualify for one of the parts of the Family Allowance (I get confused with part A and part B). This means they are in fact adding twice the amount back into my income and does not seem fair.

My question is this. I have a Partnership Business with my husband. Can I add the properties into the Partnership? If I can, can I back date this? Does it make any difference how many properties you have? If it does, I have 5 properties excluding PPOR that are held in joint names. Is not a partnership really only joint ownership anyway?

This comes about as question 14 on the form for Family Allowance states:

Net rental property losses

The value of any net rental property losses is counted as income.

What is a net rental property loss?

A net rental property loss is a loss that you expect to declare on your individual tax return for the 2003-2004 income (financial) year. It does not include a net loss from property that is part of a partnership (as recognised by the Australian Taxation Office), trust or company.

If the properties can be part of the partnership my Taxable Income remains the same, but it means I am then eligible to receive Family Allowance as well.

[agent 86]

Skater,

My brain switches off with anything to do with centrelink.
The complicated red tape is far too much for me but this thread i remember went into detail.
Hopefully this link may help.
http://www.somersoft.com/forums/showthread.php?t=12331&highlight=Brenda+centrelink

all the best,
A86

[Boyler_Room]

Typical clowns at CentreStink.

All they need is a big red nose, floppy shoes and a giant bright coloured curly wig. It's a circus over there.

Regards,
Boyler Room

[duncan_m]

My question is this. I have a Partnership Business with my husband. Can I add the properties into the Partnership? If I can, can I back date this? Does it make any difference how many properties you have? If it does, I have 5 properties excluding PPOR that are held in joint names. Is not a partnership really only joint ownership anyway?


Skater,

I've made comment on this little 'loophole' in the Family Tax Benefit 3-4 times on the forum. A husband/wife partnership for the 'business of property investing' is a great little mechanism if you have already acquired a lot of property in your personal names. Aside from the Famliy Tax Benefit it brings other goodies to the table.

After you've consulted a good accountant, this could well turn out to be beneficial to you also. But I'd say you have next to no chance of amending your past years Tax Returns to show that you were in fact in a partnership for your property business. Whilst you can amend the returns it would be both fraudulent and very likely to ring some loud alarm bells at both the ATO and Centrelink.

5 properties may or may not be enough to show that you are 'in business' and thus eligible to form a Partnership at General Law, the ATO will look to see the value of these assets, the extent of your involvement in their management, the 'way' in which you go about this business, the existence of things like a Business Plan, seperate accounts, minutes of meetings, a formal partnership agreement, how repetitiously you go about yuor business, prospect of a future profit, size, scale, permanency etc etc.

Whether you are 'in business' or not is a critical point that you need to discuss with your Accountant and which between yourselves you may choose to seek a Private Ruling from the ATO on.

Good luck!

[DaleGG]

Hi Skater

I'm afraid that I cannot add much or help a lot. However, a senior person at Centrelink once told me that you should always appeal a negative decision and keep appealing to higher authorities within the organisation until they either:

cancel the debt; or
reduce it significantly

how true this is, I cannot say, however, I would suggest you give it a try and appeal to your local membe rof parliament at the same time as you have nothing to lose and the method they use to calculate your income is certainly contrary to the concept of fairness.

Good luck and do keep us informed.

Dale

[skater]

Hi guys, thanks for the replys.

Now, if I get this straight, I should be able to have my properties put into the partnership for future years, but would be unwise to try and backdate this.

We have always kept different accounts for the properties and have tried to treat them as a separate business. All new purchases have been contained in a Family Trust, so they are quarantined, but the cost of transfering the original 5 is astronomical, so have left them alone. As far as the prospect of a future profit is concerned, it is quite good, it is only the depreciation that makes them negative as far as the ATO and Centrelink are concerned (that is, with the exception of 1 that was purchased as a PPOR then we didn't move there. This one is slightly NG).

I like the idea of appealing, but am a little concerned as when I stopped the FA Centrelink, unbeknown to me, have contracted the services of a debt collector to retrieve this debt, as I am no longer a client of theirs. Silly me thought it would just sort itself out at tax time (which is, of course, the logical asumption). I don't like the idea of their incompetancy affecting my credit rating.

Cheers

[DaleGG]

Hi

I would strongly recommend that you make an appointment with the Centrelink office responsible and see what can be done. Let them know that you are happy to pay any proper debt, but, that you believe that the debt is improper because of a mistake made by Centrelink staff in applying the rules. Let them know that you wish to vigourously appeal the results and the debt and that you wish all debt collection processes to cease immediately pending the result of the appeal.

I would also, as mentioned before, appeal to your local MP and see if they will do something for you.

Good luck and do NOT give in.

Dale

Hi guys, thanks for the replys.

I like the idea of appealing, but am a little concerned as when I stopped the FA Centrelink, unbeknown to me, have contracted the services of a debt collector to retrieve this debt, as I am no longer a client of theirs. Silly me thought it would just sort itself out at tax time (which is, of course, the logical asumption). I don't like the idea of their incompetancy affecting my credit rating.

Cheers