Taxable income for family assistance and Paid Parental Leave scheme payments 007-07080010

Item

Description

1

Income of Australian Defence Force (ADF) personnel serving overseas

Allowances and salary of ADF personnel deployed to a theatre of war, as declared by the Australian Government (for example, Afghanistan, Iraq), can be exempt income while the person is physically in the war zone, that is from the day they arrive to the day they depart the war zone. This income is not included as income for family assistance payments. East Timor ceased to be classified as a war zone from 18 August 2003.

Income for other continuous periods of 91 days or more is recorded as tax exempt foreign income on the person's payment summary. This income must be included in their income estimate for family assistance payments.

An income estimate for the full financial year for Family Tax Benefit (FTB) / Child Care Subsidy (CCS) (or 6 month period for Stillborn Bay Payment) must include:

• the income of the partner in Australia
• the serving member's taxable income before they are deemed to be in the war zone
• the serving member's taxable income after they are deemed to be in the war zone
• the serving member's tax exempt foreign income under section 23AG of the Income Tax Assessment Act 1936

2

Farm Management Deposits (FMD) Scheme

The FMD Scheme allows primary producers to, in effect, shift income from good to bad years. It has replaced the Income Equalisation Deposits (IED) Scheme.

Deposits made to the scheme create potential deductions, while withdrawals may result in assessable (taxable) income.

Withdrawals are taxable income if the deposit was claimed as a deduction. Farm management deposits may contain both deductible and non-deductible deposits. Withdrawals of non-deductible deposits are not considered as taxable income.

When withdrawals are made, customers are considered to have withdrawn any non-deductible amounts first.

3

Scholarship income

There are significant differences in the way income from scholarships affects family assistance payments and income support payments.

Information about how scholarships affect income support payments is found in Assessing scholarship income.

For family assistance payments

Scholarships can be granted to the recipient or the child and can be taxable or non-taxable.

Scholarship granted to the recipient

• A taxable scholarship is included in their income estimate
• A non-taxable scholarship is not included in their income estimate

They must advise if the scholarship is taxable or non-taxable.

Income from taxable scholarships is recorded as taxable income.

Under no circumstances would a non-taxable scholarship be considered as non-taxable pension or benefit.

Some non-taxable scholarships that are not included as income for family assistance payments may be considered income for income support payments.

Scholarship granted to a Family Tax Benefit (FTB) eligible child

If the child is under 16, the scholarship has no effect on eligibility.

If the child is over 16, a scholarship granted under a Post-Graduate Award Scheme would be treated as a 'prescribed educational scheme payment' and therefore would preclude payment of FTB for the child.

4

Grants paid under the Tasmanian Regional Forestry Agreement - Private Forests Reserve Program

The grant is paid for preserving part of the land owned.

Income Test treatment depends on whether the grant is paid as an upfront lump sum or as regular management payments.

• An up-front payment made to a person in relation to this Program should not be assessed as income. These payments are consideration for the person giving up certain rights for the use of their property. This type of transaction is not treated as income for social security purposes (however, the money received may be treated as an asset under the Assets Test and subject to deeming depending on how it is invested)
• Regular Management payments are to be assessed as income, less any costs incurred maintaining the land

5

Status Resolution Support Services payment

This payment is made by Services Australia on behalf of the Department of Home Affairs to people while they seek to resolve their immigration status.

This payment is not taxable and is not to be included as part of a person's FTB income estimate.

6

Home Equity Access Scheme payments

Loan payments received through the Home Equity Access Scheme (HEAS) are not taxable and are not to be included as part of a person's FTB income estimate.

7

COVID related payments

The following payments are considered taxable and must be included in the customer’s FTB income estimate:

• Pandemic Leave Disaster Payment
• Consumer Travel Support Program (CTSP) payment

These payments are reportable to the ATO. Customers need to ensure they are included at the end of the financial year when:

• lodging a tax return, or
• advising they are not required to lodge

Note: the Coronavirus Supplement will be included on the customers Centrelink Payment Summary at the end of the financial year as part of their main Income Support Payment (ISP). They will not have to report this separately.

8

Native title benefits

Native title benefits:

• are not subject to income tax (including capital gains tax), and
• are not to be included as part of a person's FTB income estimate