If you're situation has changed, you're a new parent or recently separated, this article is for you:
Seeing as though it’s tax return time, I thought I’d share this info, especially to new parents and recently separated parents as they might not know about this trick that a lot of us already know and use to our advantage.
What is your family income situation? It makes all the difference if you have kids and are receiving Family Tax Benefit from the government, which most parents do. Unless you’re lucky enough to earn approximately $150,000+ p.a. and don't need this benefit payment at all.
There are a few different situations that determine your family tax benefit payment and what it means at tax time. When my kids were babies, this is the one thing that really got me into budgeting as it taught me how I could make money work for me.
Everybody with kids, earning a single or combined income above $53,728 each year are able to do this and it’s a nice little top up each year at tax time.
You’ll soon receive your letter from Family Assistance asking you to estimate your income for the coming year ahead. Before you call them with your information, read this to be one step ahead of them for your own well being.
If you can get by not relying on this payment or just happy receiving minimal payments from the government, you can use this to your advantage and have yet another form of savings plan going through the year and not even miss it.
By estimating your income for the year ahead, this determines how much assistance you’ll receive…so you just need to over estimate the income you think you’ll receive. That's all you have to do.
I found that when my kids were babies and I was new to Family Tax Benefit payment, I was better off over estimating my ex husbands income to receive a nice little ‘top up’ at the end of the financial year.
We were used to living frugal and with the kids being so young, we didn’t socialise a lot anyway. This allowed me to over estimate the income to reduce our benefit payments each fortnight. What this did was essentially turn it into another part of my budget and savings plan.
When tax time came around and my ex husband submitted his tax details to the ATO, Family Assistance then balanced up what we were owed and to be back paid. The amount was anywhere between $500-$2000 each year depending how much we had over estimated by. This amount plus the supplement per child at tax time was a fantastic amount to receive each year. I was able to really put this money to good use in my budget, to catch up or get ahead for the following year.
I haven’t been able to use this system for 7 years now as my income has been too low, therefore instantly giving me the maximum payment available, but this tax savings scheme I had going on back then was the reason I became so interested in budgets and how I learned to make my money work for me. This has carried over into other areas of my budget and has enabled me to think about money, payments and income in a completely different way, learning more and more all of the time.
FTB entitlement $13,000
FTB Paid to us -$11,700
Back pay amount =$ 1,300
EVERYBODY LOVES BACK PAY
If you're a single parent or coupled but earning below the threshold amount of $53,728 total income, this system won't apply for you as you should be receiving the maximum payment regardless. There is no way of 'banking the balance' at tax time. The maximum amount paid during the year is needed, therefore not applicable to get a back pay in this situation. This is the position I've been in over the last 7 years. Even though I haven't been able to save up a back pay at tax time, I'm still eligible for the child supplement, boosting me up at tax time anyway.