Under the No Jab No Pay legislation, if your children (up to the age of 19) do not meet the immunisation requirements then you will not be eligible for Child Care Benefit. Your child must be fully immunised, on a catch-up schedule or have a valid exemption in order to receive these payments. Note that while conscientious objection is not considered an exemption category, children with verified medical exemptions by a General Practitioner such as medical contraindication, natural immunity or participation in a recognised vaccine study are allowed.
8 LOW-INCOME EARNERS
There are a few tax benefits available if you are a low-income earner, such as when you work part time.
Low-Income Tax Offset
The low-income tax offset (LITO) is a tax rebate for individuals on lower incomes. In 2017-18, the LITO will provide a tax rebate of $445 for individuals who earn less than $37 000. The offset is reduced by 1.5 cents for every dollar that your taxable income exceeds $37 000, before eroding entirely at $66 667.
Low-income earners can effectively earn up to $20 542 each year tax-free. So if you have a spouse who is not working, consider an income-splitting strategy to save as much as $10 066 in tax.
To be eligible for LITO, you must be a resident for tax purposes and lodge a tax return. The ATO will automatically apply this offset to your assessment for you if you're entitled to it.
Minors cannot use the LITO to reduce tax payable on their unearned income.
Go to my website www.mrtaxman.com.au for a low-income tax offset calculator to work out the amount of offset you are entitled to.
Superannuation Co-Contribution
If your total superannuation balance is under $500 000 and your total income is under the low-income threshold of $36 813 and you contribute $1000 post-tax to your super fund, the government will match it by 50 per cent with a further $500. The super co-contribution gradually phases out to nil (by 3.333 cents per dollar) at the higher income threshold of $51 813.
Superannuation Spouse Contribution Tax Offset
You are entitled to a rebate of up to $540 if you make contributions into your spouse's superannuation fund, if your spouse's assessable income and reportable fringe benefits are less than $40 000 (increased from $13 800 in the 2016-17 income tax year).
The rebate is 18 per cent of the lesser of:
• $3000 reduced by $1 for every dollar that your spouse's assessable income and reportable fringe benefits exceed $37 000 (increased from $10 800 in the 2016-17 income tax year)
• the total of the eligible spouse contribution.
The ATO outlines that tax offsets and tax deductions are not the same. Tax offsets are taken directly off your tax, while tax deductions are taken off your assessable income, which is used to calculate your tax. So each $1 of tax offset means you pay $1 less tax, regardless of your taxable income.
Low-Income Superannuation Tax Offset
From 1 July 2017, this offset replaces the Low-Income Superannuation Contribution but despite the new name, the operation remains the same. The government will contribute up to $500 annually into the superannuation account of workers on adjusted taxable incomes of up to $37 000 to ensure that no tax is paid on superannuation guarantee contributions.
9 SENIOR AND PENSIONER TAX OFFSET
Senior Australians or pensioners may be eligible for an offset that allows them to earn more income before they have to pay tax and the Medicare levy.
As we saw earlier, if you are under the pension age (currently 65.5 and increasing to 67 in 2023 and 70 by 2035), you can earn an income of up to $20 542 before any tax is payable (see p. 14).
The tax rules get even better when you reach age pension age (or service pension age), as you may be able to access more generous tax-free thresholds, known as the senior and pensioner tax offset (SAPTO). Table 1.3 shows the thresholds for the SAPTO.
Table 1.3: thresholds for senior and pensioner tax offsets (SAPTO) (2017–18)
* Maximum offset reduced by 12.5 cents for each $1 in excess of shaded-out threshold.
** A taxpayer's taxable income is taken to be half the couple's combined taxable income.
source: © Australian Taxation Office for the Commonwealth of Australia.
Senior Australians are not required to pay any income tax if their income is below $32 279 for singles (or $28 974 each for couples). But if senior Australians derive income from a share portfolio they are encouraged to lodge a tax return, as they will receive a nice refund from all of the excess franking credits attached to their dividends.
If you're single, you can earn up to $32 279 (and $28 974 each for couples) in non-super income without paying a cent of tax because of the application of SAPTO and LITO. Any additional superannuation benefit that you receive from a taxed source is tax-free.
Senior Australians who are over Age Pension age but still participate in the workforce can keep more of their pension when they have earnings from working via the Work Bonus incentive. The Work Bonus allows an eligible pensioner to earn an extra $250 per fortnight from employment before it affects their pension rate. Single pensioners can effectively earn $414 per fortnight (being $250 from Work Bonus and the $164 income test free threshold) and still receive the maximum rate of pension.
Any unused part of the $250 fortnightly Work Bonus exemption amount can be accrued in a Work Bonus income bank, up to a maximum of $6500. The income bank amount is not time limited; if unused, it can carry forward
