Resources to help you maximise your tax rebateEveryone hates paying tax but if you genuinely qualify for one of the many types of tax rebate, maximising your return should be high on your list of financial priorities when it’s tax assessment time. The Australian Tax Office (ATO) sets out various criteria for tax rebate qualifications, with tax refunds covering age, family, health and location amongst other factors. It’s a good idea to recognise the types of tax rebates available so that you can maximise your understanding when speaking to a financial advisor about your own specific tax rebate entitlement.
Tax rebate qualifications
You can claim tax offsets if you are in any of a number of outlined circumstances, and in the process favourably reduce your outgoings. These circumstances include:
- Dependent spouse tax offset: If you had a spouse during the previous year and were responsible for maintaining them, and if they were a resident, and you were also a resident at any time during this year, and if neither your spouse nor you were entitled to Family Tax Benefit (FTB) or were only entitled at the shared-care rate, you may be eligible to claim.
- Private health insurance rebate: This is a percentage of the premium paid to a registered health fund for appropriate private health insurance cover. The rebate you will receive is determined by the age of the oldest person covered by the policy. Rebate should not be affected by your level of income however.
- Baby bonus rebate: Mothers can claim a baby bonus each year until their child turns five. It can be claimed even if you don't pay tax, and it is paid whether or not you receive any other family benefits. The ATO offer a baby bonus calculator here.
- Beneficiary tax offset: You may be eligible for beneficiary tax offset if you received one or more grants on a set list of allowances, including parenting payment (partnered), newstart allowance, youth allowance, mature age allowance, partner allowance, sickness allowance, special benefit, widow allowance, austudy payment, exceptional circumstances relief payment or farm help income support, interim income support payment, education payment if you were aged 16 years or older (ABSTUDY living allowance, payment under the Veterans’ Children Education Scheme or payment under the Military Rehabilitation and Compensation Act Education and Training Scheme 2004),training for Employment Program allowance; New Enterprise Incentive Scheme allowance; textile, clothing and footwear special allowance; Green Corps training allowance; or other taxable Commonwealth education or training payments, and income support component from a Community Development Employment Project (CDEP). The ATO works out your tax offset from the income you show on your tax return, however you can use this calculator on the ATO website.
- Senior Australians tax offset: This applies if you are a male aged 65 years or more or a female aged 62.5 years or more, or you are a male veteran or a war widower aged 60 years or more or a female veteran or war widow aged 57.5 years or more, and you are eligible for Commonwealth age pension and similar payments, and you satisfy the necessary taxable income threshold (single with less than $38,340, separated with less than $71,406, married with less than $59,244, etc), and you are not in prison. The ATO website has a factsheet here.
- Zone tax offset: This applies if you lived or worked in a remote or isolated area of Australia, not including an offshore oil or gas rig, or you served overseas as a member of the Australian Defence Force or a United Nations armed force.
- Salary sacrifice arrangement: Also sometimes referred to as salary packaging or total remuneration packaging, this is an arrangement between your employer and yourself whereby you agree to forego part of your salary for other benefits of a similar cost (provided by your employer).
- Net medical expenses tax offset: These are medical expenses you have paid (less any refunds from Medicare or a private health fund). You are able to claim a tax offset of 20% of your net medical expenses over $1,500 and there is no upper limit.
This is only a guideline list, however, and to learn more about exactly which benefits and rebates apply to you, you should discuss your personal situation with your financial advisor or the ATO directly. However, there are many other resources available to give you a better understanding of tax rebates and entitlement.
Tax rebate websites
Without consulting your accountant or tax advisor, you can find many resources to help you work out what you may be eligible for. If you don’t clearly qualify for any of the grants listed above, you can visit a variety of websites to find out how you can gear your circumstances to work best for you. It’s worth checking your local bookstore or online book resource to see if there are any up to date books on the subject of tax and specifically tax rebates to gain a broader understanding of the topic. This will undoubtedly give you a better chance of fully realising your tax rebate potential.
After you submit your tax return, you should find out if your rebate request has been successful within a relatively short amount of time. If you submitted your tax return by post it can take up to seven weeks, whereas Internet applications take closer to three weeks to process. Once this time has passed you can contact an automated self-help service at the ATO to check the progress of your tax return, but be sure to have your tax file number (TFN) ready for this. If you think that your assessment is incorrect and you wish to contest it, you can find objection forms at the ATO website.
Income tax rebate calculators
The ATO website can help with working out expected tax rebate for a number of circumstances, including low income tax, family tax benefit (which is a financial aid that helps you to raise dependent children), and many others. The ATO site also offers a comprehensive tax calculator that estimates your tax refund or debt for the 2004-05, 2005-06 and 2006-07 income years. It will calculate Medicare levy, Medicare levy surcharge, Higher Education Loan Programme (HELP) debt, Student Financial Supplement Scheme (SFSS) debt, and any other tax offsets that may apply to you.
Tax rebates can be useful in doing anything from saving you a few dollars to shaving considerable amounts off your tax bill (and outgoings). Familiarise yourself with the categories of tax rebate and then seek the advice of a financial planner experienced in tax, and specifically tax rebate if possible, in order to both realise your tax rebate potential and maximise savings.