Bonus Payments for Australian taxpayers
As many would be aware, the Federal Government is spending $42 billion over a number of measures to stimulate our Australian economy during this current world economic crisis.
One measure is to provide up to $900 as a tax-free cash bonus to Australian taxpayers. It is estimated that 8 million Australians may be entitled to this bonus, or part thereof.
So how does someone get this bonus? Well, the criteria to be eligible to receive this bonus are as follows:
1) The bonus is based on a taxpayer’s taxable income for the year ended 30 June 2008
2) The taxpayer must lodge their 30 June 2008 tax return by 30 June 2009 to be eligible. (clearly a way of encouraging everyone eligible to lodge their 2008 tax returns asap).
3) For minors (ie those under 18), special rules apply to limit their entitlement. Minors must be classified as either an excepted person (for example, a disabled child) or have earned excepted assessable income (for example, salary and wages).
4) The taxable income thresholds in which the bonus is to be paid are as follows:
|
Taxable Income For 30 June 2008 |
Tax-free Bonus Amount |
|
Up to $80,000 |
$900 |
|
$80,001 to $90,000 |
$600 |
|
$90,001 to $100,000 |
$250 |
5) The taxpayer must have a net tax payable figure on their 2008 income tax assessment. That is, the taxpayer’s basic income tax liability plus any medicare levy/medicare levy surcharge less any offsets/rebates and franking credits is more than zero. Just to illustrate, consider the following two examples:
|
Taxpayer A |
Taxpayer B |
|
| Income: | ||
|
$90,000 |
$Nil |
|
$1,450 |
$6,000 |
|
$700 |
$30,000 |
|
$300 |
$12,857 |
| Deductions |
|
|
|
($2,000) |
$Nil |
|
($50) |
($2,200) |
|
|
|
|
| NET TAXABLE INCOME |
$90,400 |
$46,657 |
So, looking from the above example you would believe both taxpayers would be eligible. Taxpayer A may be eligible for $250, and Taxpayer B the full $900.
But now let us look at whether each taxpayer meets the tax liability condition:
|
Taxpayer A |
Taxpayer B |
|
| Gross Income Tax |
$22,760 |
$8,597 |
| Add: |
|
|
| Medicare Levy |
1,356 |
$700 |
| Less: |
|
|
| Tax Offset – Franking Rebates |
($300) |
($12,857) |
|
|
|
|
| Subtotal |
$23,816 |
($3,560) |
| Less: |
|
|
| Tax Instalments Deducted – Salary |
($23,950) |
$Nil |
| NET TAX TO PAY/(REFUND DUE) |
($134) |
($3,560) |
As you will see from the examples above, Taxpayer A has a positive figure at the subtotal line, whereas Taxpayer B’s subtotal is negative, and therefore not greater than zero as required.
So Taxpayer A will receive the tax-free cash bonus of $250, whereas Taxpayer B will receive nil.
We would encourage all those people that may be eligible to ensure their 2008 income tax returns are lodged before the cut off, to ensure the cash bonus is paid.
It is expected that these payments will start being paid in April 2009.
Tags: Government benefit, stimulus plan