Family tax benefit rules are up the creek

here's a fact... if you have no income just a loss from neg gearing of say $100k, Centrelink not only deem you to have nil income, they say that your income is actually $100,000

how's that for insulting, not only have you lost $100,000 but the govt is saying you have a big fat income?!
 
They changed the rules about negative gearing I think maybe 12 months ago. Centrelink have these amazing rules that even defy the ATO legislation. eg Trust Income (to determine Youth Allowance) is determined to be paid for 12 months from the date of the Trust Minutes in monthly increments! Yet from a Tax perspective, any actual monies received were accounted for in the financial year before that. It sucks.
 
Yep,
Just had my tax done and missed the lot FTB A, ETR. All becausecentresink adds back losses. Cruel but true.

Project 1080.

The project: 10 IPs in 80 mths.
 
NOTHING about centerlink matches the ATO.

I have (yet another) 6 page form sitting here. A profit and loss statement, very involved stuff. The period it covers ends on the 31st of August, have to get it back within 14 days of the letter - the 31st August.

All well and good but I get paid out on the 31st of each month and Australia post isn't *that* fast. Its in $USD so I never know the exact amount until the day I get paid because of exchange rate fluctuations so I can't fill it out in advance.

The ATO just wants what I've earnt through the year in my tax return, the family tax people just want an estimate and sort it out at tax time, but centerlink wants my accountant's phone number (I don't have one) , balance sheet (don't have one), depreciation schedule (don't have one) and DNA.

Centerlink also can't comprehend passive income - you don't work hours, you don't own any shares, but magic money appears monthly. They don't have a form for it, hence profit and loss statement ...
 
I believe this year they will also add extra super contributions to calculate your "adjusted taxable income"
 
As a shift worker my yearly wage can change depending on rostered weekend work etc, some pay weeks are quiet different to others. I stopped claiming family assistance, and worked it out at the end of the year. I had to pay them back one year due to this, so now i do not bother. Hate paying back!!
 
"Negative gearing" losses from real estate investment have been "added back" when calculating certain benefits for many years - the anomaly previously was that similar losses from investing in other asset classes ie shares, were not. The last federal budget moved to change this so that all losses generated by such investments would be "added back", evening things up a bit. This also includes salary sacrificing into super. Curiously enough, I think tax deductible charity donations get added back on too.

This affects not only calculations for eligibility for FTB, but can also impact child support payments, and things like Medicare surcharge levy and thresholds for eligibility for health insurance rebates.

The really stupid bit is that when calculating FTB you can only have a starting point of zero income. Even if you had an overall loss for taxation purposes. Then the loss generated by investment gets added back on. Sheer lunacy.

There are some legitimate ways around this though.
 
Centrelink incude Vet Affairs pension and Vet Affairs pharmacutical allowance as income if you elect to be paid your "compensation" as a f/n pmt. BUT if you take your payment as a lump sum it is not inlcuded in anyone's calculations.

The ATO does not consider either the pension or the allowance as income so it is not assessed. Go figure. :confused:
 
Agree, these gov departments all have different rules, it sucks. We didn't want the FTB paid fortnightly but wanted it paid after we did our tax, the only way their computer system would let us do this is to state an income above the payment levels so we didn't get paid and then work it out after tax, but with the GOV handouts this would mean we miss out so we change it to a very low income and got paid fortnightly and got our $900 x 5.

It's all a game and you need to keep on top of the rule changes. Even got our $900 as we got the tax done submitted JUNE 30 and accountant worked it so we had to pay $1000 tax each therefore we got $900 back, nice. But the wife then misses out on the FTB a/b which ever bit relates to not working. Oh well, can't win all the time, especially when you only have 1 ball and a dozen moveable goal posts.

It's all good fun, even if it's not logical.

Cheers
Graeme
 
I guess I got a bit annoyed as when you speak to the help line you get comments such as "well it's only fair because you have had the benefit of the tax losses" - oh really? pray tell, what benefit has there been? A guy sitting on the dole with no property has less "income" under the rules than someone that is suffering real property losses.

I was determined to get one bloke to understand - finally it dawned on him. when I said I was going to change the ATO return and write off the losses in order to reduce her "income" I think the absurdity of it hit home
 
Care to elaborate??

Sorry. Got interrupted composing the post and didn't realise I hadn't finished it before posting...

Thing is, this doesn't help retrospectively. But it also kind of has the same effect as doing an income tax variation.

Salary sacrifice all cash investment expenses through your employer. Under the "otherwise deductible" provisions this therefore does not attract FBT. The 2008 Federal Budget shut the loophole where you could use this to pay both your "share" of the expenses and those of a low-income spouse/partner because of the way Fringe Benefits legislation viewed "associates". BUT...the otherwise deductible rules don't change.

And why should they? The NET effect of doing the above is nil, from a taxation point of view. All you are really doing is claiming the deduction upfront. Essentially it means that when you fill in your return, there will not be loss figures against certain labels that the FTB forms will ask about.

Note, this does not include things like depreciation. And you still need to record income from these investments at the appropriate sections.

I have have salary income of 80000, rental income of 10000, with interest/rates/insurance expenses of 12000 and depreciation of 3000, my taxable income would be 75000. But for FTB I would be seen as earning 80000 - the 5000 "loss" is added back.

But if I sacrifice the 12000 worth of cash expenses, I would have 68000 salary, 10000 rental income, 3000 depreciation. Taxable income still 75000, but there will not be a "loss" recorded at the investment property question in the return, so when FTB is calculated, you can use the 75000 figure.

Probably not a huge difference in total value of FTB received, but could make the difference when trying to keep under thresholds - VERY relevant recently when being over the threshold makes you ineligible for some of the stimulus payments from the past year.
 
OK, I may be missing something here as I have no knowledge of the FTBs, but are you really saying that a high income earner who chooses to negatively gear their investments, chooses to sacrifice $25k a year into super, thereby choosing to have less net income, should be subsidised by the welfare system?
 
OK, I may be missing something here as I have no knowledge of the FTBs, but are you really saying that a high income earner who chooses to negatively gear their investments, chooses to sacrifice $25k a year into super, thereby choosing to have less net income, should be subsidised by the welfare system?

I'm not. I am saying someone that has a loss of $100k and no income deserves at least the same treatment as someone that has no loss and no income.

to deny a loss is fine, but to add it back twice is just a stuff up in the rules surely
 
I don't think that they would see it as adding it back twice, so much as looking at your income from a different point in time. I guess at some stage you were paid $100k. I would prefer to be paid $100k and have the choice to negatively gear than to have zero income. I understand that from your viewpoint the end result is the same (if they were, in fact, all cash losses) - but the person with zero income is more entitled to payments because they did not have the luxury of the choice that you had. MHO, obviously.
 
I know where you are coming from Ausprop.

We are in the same boat.

The Government gives NO reward for trying to get ahead.

Even more so since Labor took the reigns.

It's not so much about not receiving anything, it's more the frustration that we know there are so many irresponsible people out there who get handouts for doing absolutely nothing to contribute to this society.

The only comfort you may take from this is none of your hard earned money is going to lazy bludgers who rely on Governemnt Welfare. It's all completely yours.:):)

Childcare payments have also been messed up and made more complicated. It has been made more difficult for not only parents, but the actual Centres are in a mountain of paperwork.

It now takes three months to receive any part payment.

Regards JO
 
I don't think that they would see it as adding it back twice, so much as looking at your income from a different point in time.

err no.... the only way to explain it is the loss is added back twice.

example. no earnings, loss of $100k. the rules say your income is nil, then we add back $100k = income of $100k. So from a position of losing $100k, they say you have an income of $100k... $200k difference

I guess at some stage you were paid $100k.

nope. never earned anything

I would prefer to be paid $100k and have the choice to negatively gear than to have zero income. I understand that from your viewpoint the end result is the same (if they were, in fact, all cash losses) - but the person with zero income is more entitled to payments because they did not have the luxury of the choice that you had. MHO, obviously.

there was no choice to neg gear because there is no income i.e. she wasn;t paid $100k, she was paid nothing. and yes they are 90% cash losses.

it doesn't make a scrap of sense...

Guy 1... has no income - he gets the benefit

Guy 2... has no income PLUS he has lost $100k - he doesnt get the benefit because for some bizarro reason they say the income is postive $100k?!
 
I know where you are coming from Ausprop.

We are in the same boat.

The Government gives NO reward for trying to get ahead.

Even more so since Labor took the reigns.

It's not so much about not receiving anything, it's more the frustration that we know there are so many irresponsible people out there who get handouts for doing absolutely nothing to contribute to this society.

The only comfort you may take from this is none of your hard earned money is going to lazy bludgers who rely on Governemnt Welfare. It's all completely yours.:):)

Childcare payments have also been messed up and made more complicated. It has been made more difficult for not only parents, but the actual Centres are in a mountain of paperwork.

It now takes three months to receive any part payment.

Regards JO

agreed. the property has sat empty for 9 months whisltwe have tried to sell it. it settles next week. She won;t be claiming losses on it after this debacle - will jsut say it wasn;t available for rent thus it is all a capital loss.

what a nightmare it has been having a property in her name. tenants trashed the joint, ran up losses that can't be deducted because she has no income and now the family benefit is canned because centrelink think she is a high income earner because she has lost a lot of money

negative gearing - pfff. I'm sticking to cashflow
 
it doesn't make a scrap of sense...
Guy 1... has no income - he gets the benefit
Guy 2... has no income PLUS he has lost $100k - he doesn't get the benefit because for some bizarro reason they say the income is positive $100k?!

I feel for you mate but there is nothing we can do,
the libs started it by making it hard for anyone to get money and labor finished the job making it impossible to get anything if you are not a bludger.

Even bludgers must be having it hard to get anything,
It seems to me that it must be standard practice to reject every claim
so straight away 50% of the people go away and continue to live on the streets.
The other 50% who bother to appeal might get something if they are lucky and centrelink don't find another excuse not to pay them.....
 
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