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Rudd’s cash splash – the impact on your expatriates
- By Michael van Schaik
- Published 9/02/2009
- Beyond Numbers
- Unrated
As part of the Federal Government's $42 billion stimulus package announced on 3 February 2009, many taxpayers may be able to benefit from payments to be made by the Federal Government.
These include:
• a one-off bonus tax payment of up to $950 to be paid in April 2009;
• a $950 back to school bonus for families that qualify for Family Tax Benefit A payments; and
• a $950 single income family bonus to taxpayers who are eligible for Family Tax Benefit B payments.
It is interesting to note that many individuals may be able to qualify for more than one payment.
At this stage the proposed changes are in Bill form and have passed the lower house of Parliament. It is expected that after some minor amendments they will also pass the Upper House and receive Royal Assent shortly after.
Should there by any significant changes to the final details, we will let you know and we will also confirm the applicability of the new payments.
$950 cash bonus payment
It is important to note that this one-off payment does not constitute a tax offset but is actually a cash bonus which will be paid directly into the taxpayer’s bank account and is worked out based on the following taxable income thresholds:
The bonus will be available to most taxpayers who satisfy the conditions mentioned below and whose adjusted tax liability is greater than zero as determined in the illustration. Taxpayers who have not lodged their 2007/08 tax returns yet should do so before 30 June 2009 to avoid missing out on the bonus cash payment.
Based on the information currently available, we believe that the bonus will also apply to temporary resident taxpayers.
It will also apply to individuals who are treated as tax residents for only part 2007/08 tax year (i.e. individuals arriving or departing Australia part way through the tax year). We are uncertain whether these amounts will be prorated in these circumstances to reflect the employee’s part year tax resident status. We will clarify this point once the amending legislation receives Royal Assent.
Eligibility
In order to be eligible to receive the payment, the following conditions must be satisfied:
• The taxpayer must have lodged or will be lodging a 2007/08 income tax return
• A taxable income of up to $100,000
• An adjusted tax liability for the 2007/08 year greater than zero and
• Being an Australian tax resident for tax purposes (even if only at some stage during 2007/08)
Taxpayers can check their eligibility by following the steps laid out in the following illustration of a notice of assessment:
$950 Back to School Bonus
The Government proposes to pay a one-off, up-front $950 Back to School Bonus to families eligible for Family Tax Benefit Part A (FTB-A) on 3 February 2009 for each eligible child of school age (aged 4 to 18 on 3 February 2009).
Eligibility
To receive FTB-A the individual must be:
• An Australian resident – this means you have been living in Australia on a permanent basis and you are either:
o An Australian citizen, or
o The holder of a permanent resident visa, or
o The holder of Special Category Visa – someone who arrived on a NZ passport, or
o The holder of a particular temporary visa – these are known as “spouse provisional” or “interdependency” or “temporary protection” visas.
Therefore many temporary residents of Australia (i.e. 457 visa holders) are not eligible for this payment.
An individual cannot receive the FTB-A if they leave Australia permanently. If they leave temporarily:
• FTB-A is restricted to the base rate when the individual and/or their child(ren) are temporarily outside Australia for more than 13 weeks.
• FTB-A base rate payments are cancelled after a three year period and can only restart when you have returned to Australia and lodged a new Family Tax Benefit claim.
It is intended that the payments will be made automatically by Centrelink in the fortnight commencing 11 March 2009, will be non-taxable and will not be counted as income for social security purposes.
Those families who claim FTB-A as a lump sum, will receive their one-off payments from Centrelink in 2009-10 and 2010-11 after their 2008-09 tax returns have been processed by the Australian Taxation Office.
This payment is in addition to and separate from the Education Tax Refund.
$950 Single income family bonus
The Government is also proposing to pay a Single-income family bonus will provide an up-front, one-off bonus payment of $950 to families who receive Family Tax Benefit Part B (FTB-B). Families who are eligible for FTB-B on 3 February 2009 will receive the Single Income Family Bonus.
It is intended that the payments will be made automatically by Centrelink in the fortnight commencing 11 March 2009, will be non-taxable and will not be counted as income for social security purposes.
Those families who claim FTB-B as a lump sum, will receive their one-off payments from Centrelink in 2009-10 and 2010-11 after their 2008-09 tax returns have been processed by the Australian Taxation Office.
Eligibility
To receive FTB-B the individual must be:
• An Australian resident – this means you have been living in Australia on a permanent basis and you are either:
o An Australian citizen, or
o The holder of a permanent resident visa, or
o The holder of a special category visa – someone who arrived on a NZ passport, or
o The holder of a particular temporary visa – these are known as “spouse provisional” or “interdependency” or “temporary protection” visas.
Therefore many temporary residents of Australia (i.e. 457 visa holders) are not eligible for this payment.
Entitlement to FTB-B ceases after 13 weeks of temporary absence. Therefore those individuals who fail the temporary absence test on 3 February 2009 will not qualify for this bonus.
Employers need to consider...
If you have any employees working for your organisation on temporary overseas assignments, have you considered how the above could impact on their payments?
• Tax Equalisation payments and the $950 cash bonus
o Will you factor in these bonuses into your calculations so that your Australian employees working outside Australia do not miss on the cash bonus?
o Will you look to claw back this amount from assignees currently in Australia?
• Do you have any single-income family earners on your overseas payroll list?
o Do you take into account FTB-A and FTB-B as part of your equalisation process?
o How are you going to deal with employees sent on short term assignments who may lose their entitlement to FTB-B and the $950 Single Income Family bonus?
Questions
Please contact Michael van Schaik, Associate Director, Employment & Remuneration Services.
Phone: +61 3 9614 1444
These include:
• a one-off bonus tax payment of up to $950 to be paid in April 2009;
• a $950 back to school bonus for families that qualify for Family Tax Benefit A payments; and
• a $950 single income family bonus to taxpayers who are eligible for Family Tax Benefit B payments.
It is interesting to note that many individuals may be able to qualify for more than one payment.
At this stage the proposed changes are in Bill form and have passed the lower house of Parliament. It is expected that after some minor amendments they will also pass the Upper House and receive Royal Assent shortly after.
Should there by any significant changes to the final details, we will let you know and we will also confirm the applicability of the new payments.
$950 cash bonus payment
It is important to note that this one-off payment does not constitute a tax offset but is actually a cash bonus which will be paid directly into the taxpayer’s bank account and is worked out based on the following taxable income thresholds:
|
Taxable Income |
Bonus Amount |
|
Up to $80,000 |
$950 |
|
$80,001 - $90,000 |
$650 |
|
$90,001 - $100,000 |
$300 |
The bonus will be available to most taxpayers who satisfy the conditions mentioned below and whose adjusted tax liability is greater than zero as determined in the illustration. Taxpayers who have not lodged their 2007/08 tax returns yet should do so before 30 June 2009 to avoid missing out on the bonus cash payment.
Based on the information currently available, we believe that the bonus will also apply to temporary resident taxpayers.
It will also apply to individuals who are treated as tax residents for only part 2007/08 tax year (i.e. individuals arriving or departing Australia part way through the tax year). We are uncertain whether these amounts will be prorated in these circumstances to reflect the employee’s part year tax resident status. We will clarify this point once the amending legislation receives Royal Assent.
Eligibility
In order to be eligible to receive the payment, the following conditions must be satisfied:
• The taxpayer must have lodged or will be lodging a 2007/08 income tax return
• A taxable income of up to $100,000
• An adjusted tax liability for the 2007/08 year greater than zero and
• Being an Australian tax resident for tax purposes (even if only at some stage during 2007/08)
Taxpayers can check their eligibility by following the steps laid out in the following illustration of a notice of assessment:
$950 Back to School Bonus
The Government proposes to pay a one-off, up-front $950 Back to School Bonus to families eligible for Family Tax Benefit Part A (FTB-A) on 3 February 2009 for each eligible child of school age (aged 4 to 18 on 3 February 2009).
Eligibility
To receive FTB-A the individual must be:
• An Australian resident – this means you have been living in Australia on a permanent basis and you are either:
o An Australian citizen, or
o The holder of a permanent resident visa, or
o The holder of Special Category Visa – someone who arrived on a NZ passport, or
o The holder of a particular temporary visa – these are known as “spouse provisional” or “interdependency” or “temporary protection” visas.
Therefore many temporary residents of Australia (i.e. 457 visa holders) are not eligible for this payment.
An individual cannot receive the FTB-A if they leave Australia permanently. If they leave temporarily:
• FTB-A is restricted to the base rate when the individual and/or their child(ren) are temporarily outside Australia for more than 13 weeks.
• FTB-A base rate payments are cancelled after a three year period and can only restart when you have returned to Australia and lodged a new Family Tax Benefit claim.
It is intended that the payments will be made automatically by Centrelink in the fortnight commencing 11 March 2009, will be non-taxable and will not be counted as income for social security purposes.
Those families who claim FTB-A as a lump sum, will receive their one-off payments from Centrelink in 2009-10 and 2010-11 after their 2008-09 tax returns have been processed by the Australian Taxation Office.
This payment is in addition to and separate from the Education Tax Refund.
$950 Single income family bonus
The Government is also proposing to pay a Single-income family bonus will provide an up-front, one-off bonus payment of $950 to families who receive Family Tax Benefit Part B (FTB-B). Families who are eligible for FTB-B on 3 February 2009 will receive the Single Income Family Bonus.
It is intended that the payments will be made automatically by Centrelink in the fortnight commencing 11 March 2009, will be non-taxable and will not be counted as income for social security purposes.
Those families who claim FTB-B as a lump sum, will receive their one-off payments from Centrelink in 2009-10 and 2010-11 after their 2008-09 tax returns have been processed by the Australian Taxation Office.
Eligibility
To receive FTB-B the individual must be:
• An Australian resident – this means you have been living in Australia on a permanent basis and you are either:
o An Australian citizen, or
o The holder of a permanent resident visa, or
o The holder of a special category visa – someone who arrived on a NZ passport, or
o The holder of a particular temporary visa – these are known as “spouse provisional” or “interdependency” or “temporary protection” visas.
Therefore many temporary residents of Australia (i.e. 457 visa holders) are not eligible for this payment.
Entitlement to FTB-B ceases after 13 weeks of temporary absence. Therefore those individuals who fail the temporary absence test on 3 February 2009 will not qualify for this bonus.
Employers need to consider...
If you have any employees working for your organisation on temporary overseas assignments, have you considered how the above could impact on their payments?
• Tax Equalisation payments and the $950 cash bonus
o Will you factor in these bonuses into your calculations so that your Australian employees working outside Australia do not miss on the cash bonus?
o Will you look to claw back this amount from assignees currently in Australia?
• Do you have any single-income family earners on your overseas payroll list?
o Do you take into account FTB-A and FTB-B as part of your equalisation process?
o How are you going to deal with employees sent on short term assignments who may lose their entitlement to FTB-B and the $950 Single Income Family bonus?
Questions
Please contact Michael van Schaik, Associate Director, Employment & Remuneration Services.
Phone: +61 3 9614 1444
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Article Series
This article is part 1 of a 2 part series. Other articles in this series are shown below:
-
Rudd’s cash splash – the impact on your expatriates