Is debt ruling your life?

Student debts, credit cards and personal loans can be a source of unnecessary stress and prevent you from enjoying other things in life.

Clearing your debts doesn’t have to be hard work. With the right professional advice, it’s possible to get your finances on track sooner than you think. Which means you can get back to living the good life, guilt free.

Here are some tips to help you get out of debt.  

Plan your budget

Achieving your goal of being debt free doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary for your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to attack your debt.

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

Prioritise

Prioritise all your debts by the interest rate you are paying. Try to get the balance down on high interest debts first, as paying these off first will save you a bit more money. The money you save in interest, you can then use to pay off your lower priority debts. This will get you to your debt free goal that little bit faster.  

Consolidate

Consolidate all your higher interest debts into one lower interest debt. This could be in the form of a low interest rate credit card or a personal loan. This strategy will also reduce your interest repayments.

Ensure you have the right card

There is no need for anyone to be paying 20 per cent interest on their credit cards. Due to the increased level of competition in the credit card space, many lenders are offering much lower interest rates and deals.

When doing your research, make sure you read the fine print, as cards offering low or zero interest rates on balance transfers, do so for a limited time only whereas other cards might offer a low interest rate for the life of the transfer.

Become card free

Once you have selected a low interest rate card to transfer your balance, make sure you don’t use that card for any new purchases until you have paid off the full amount from the initial transfer. The best way to do that is the old fashioned way – cut your card up and throw it away!

Take the first step

If you’re having difficulties repaying your debt, take the first step and speak to your lender. If you’re open and honest about your financial difficulties with your lender, you will probably find they are open to review your repayments and look at other solutions to help you out.

Speak to a professional

If you feel that you are in over your head and struggling with your finances, don’t ignore the situation. It won’t go away! Seek professional advice and take control of the situation.  

Contact our office today on 1300 352235 to book a completely free, no-obligation consultation with our financial planner.

Exciting news this week with the much-anticipated self-managed super fund (SMSF) draft ruling from the ATO, SMSFR 2011/D1. 

Many people are probably aware by now that you can borrow and purchase properties within a SMSF (we’ll post more on this in coming weeks). What hasn’t always been clear are some of the issues surrounding capital improvements of the property within the fund. The draft views expressed by the ATO confirm the opinion our associates at the 2020 Group have always supported. In fact, the ruling provides quite a few positives for limited recourse borrowings in respect to real property, making the solution even more attractive than ever.

Principal of the 2020 Group, Nic Ellis, is continually striving to find new and unique strategies to create wealth for clients. After the release of the ATO’s ruling, Nic had this to say:

“The ATO have confirmed the 2020 Group’s opinion that SMSF’s can renovate investment properties. We’ve been the only firm who has stood by this concept.”

What does this mean for you? According to Nic, you can add value to your investment property by renovating or adding extentions. Best of all, all of this can be funded directly from the SMSF with no out of pocket costs to you. I’ll let Nic tell you more about it himself in the video below….

If the idea of investing in property through a SMSF has peaked your interest, or you’d like to know more, give the team of experts at 2020 Financial Solutions a call on 1800 46 2020. Their integrated service includes all advice, structures, legal work and Conveyancing needed to complete the deal. They’ll even project manage the entire process for you!

On Father’s Day the Australian Government started public consultations on its plan to introduce two weeks of paid leave for dads to take time off work to spend with their newborn babies.

From 1 January 2013, the current Paid Parental Leave scheme will be expanded to include a dedicated payment for dads and other partners.  Eligible working dads and other partners will have access to two weeks Dad and Partner Pay at the national minimum wage, which is currently about $590 a week before tax.

The design of Dad and Partner Pay is based closely on the independent expert recommendations of the Productivity Commission.

The new payment will be available to eligible working fathers or partners (including adopting parents and parents in same-sex couples) who share the role of caring for a child born or adopted from 1 January 2013, and who meet the same income test and work test as the current Paid Parental Leave scheme. 

A family may receive Dad and Partner Pay either on its own or in addition to other family payments such as Paid Parental Leave, the Baby Bonus and Family Tax Benefit. The mother or other parent does not have to be accessing the Paid Parental Leave scheme for her partner to be eligible for Dad and Partner Pay.

Dad and Partner Pay will cost the Government a projected $188.5 million over 5 years (2010-11 to 2014-15).

A consultation paper on Dad and Partner Pay has been released to ensure that parents and employers can have their say on the new entitlement. Employer and employee groups, small business groups, family and community groups and individuals are invited to make their comments on the consultation paper. The consultation period finishes on 17 October 2011.

A new data matching initiative between Centrelink and the ATO is expected to claw back millions of dollars from welfare recipients who have debts with the Australian Government.

Beginning on July 1 this year, Centrelink and the ATO will automatically match data on a daily basis as a way of cross-checking former welfare recipients who have a debt with the Commonwealth. 

The new initiative is expected to recover more than $71 million over four years.

Those who are identified as having debts and who haven’t made repayment arrangements with Centrelink may have their tax refunds garnisheed when they lodge their income tax return.

Of course, this is nothing new in itself. More than $27.5 million was recovered from over 43,000 former Centrelink customers’ tax refunds in the 2009/10 financial year through the tax garnishee process.

Apparently this process has been handled manually every year for the past 15 years, involving a significant amount time and people-power. The process will now be automated and, according to Assistant Treasurer, Bill Shorten, will ”result in more people being referred to the tax garnishee process, retrieving more outstanding debt on behalf of taxpayers.”

Mr Shorten said ”The new data matching link is expected to increase the number of former customers identified for this process by an additional 65,000, above current detection levels, over the four years.”

Centrelink is currently writing to over 90,000 people with outstanding debts who aren’t currently receiving a payment from Centrelink or the Family Assistance Office.

To avoid losing a tax refund because of an old debt, people are advised to contact Centrelink to set up a repayment plan. Details on how to do this are in the letter or people can contact Centrelink on 13 6330.

We’re already receiving a few FTB supplement questions this year so it looks like time to update you on the current rates.

FTB Part A and FTB Part B both include a supplement payment. This gets paid after you (and your partner, if you have one) have lodged your tax returns for the income year.

If it turns out that you have been overpaid, the supplement will first be used to help offset any overpayment of Family Tax Benefit or Child Care Benefit.

For the 2010-11 financial year, the following rates apply:

The above table represents the maximum benefit;  your payment may be lower depending on your individual entitlement and circumstances.

You do not need to apply for the supplements. After tax returns are lodged, Family Assistance reconcile your payments for the year and make any necessary adjustments. The supplements are then automatically paid into the same account that you usually receive Family Tax Benefit payments.

If you are not required to lodge a tax return, you should notify Family Assistance as soon possible to avoid delays in receiving a supplement you might be entitled to (you can do this using their online services).

If you usually apply to receive a lump sum of FTB at the end of the financial year, the supplements will be included with your annual payment.

Did you know that only one in five taxpayers who meet the eligibility criteria for the super co-contribution actually make a personal contribution in order to receive the additional government payment.

The super co-contribution is a Government initiative to help low to middle income earners save for their retirement. You can take advantage of the super co-contribution payment by making a personal contribution into your super fund before the end of the financial year. You could receive up to one dollar for every dollar you personally contribute, up to the limit.

For the 2010-11 income year, the maximum entitlement is $1,000. This starts to shade out at $31,920 and cuts off completely once your income exceeds $61,920. The current income thresholds are reproduced below. 

If you are eligible, when you lodge your tax return, the ATO will calculate the amount of co-contribution you are entitled to and pay it into your fund. The minimum super co-contribution payment is $20.

A lot of our clients have received an unexpected additional tax refund as a result of the ATO amending tax returns of eligible Youth Allowance recipients to include a deduction for study expenses. This came about thanks to the High Court decision in  Commissioner of Taxation v. Anstis.

In the same way that the ATO did this for Youth Allowance recipients, they are now amending the tax returns of eligible Austudy and Abstudy clients. Tax assessments for the 2007, 2008, 2009 and 2010 income tax years will be amended to include a tax deduction of $550 for study expenses for each year of eligibility.

Deductions can be claimed for the 2011 year for study expenses incurred by Austudy, ABSTUDY and Youth allowance recipients.

Keep in mind that this is likely to be the last time you can claim a deduction against an assistance payment. The government announced its intention in the recent Budget to change the law to prevent deductions being claimed against all government assistance payments from 1 July 2011.

You can now work out your finances on the go with new MoneySmart mobile phone apps.

The new apps, which can be downloaded for free onto your iPhone or Android handsets, have been developed by the Australian Securities and Investments Commission (ASIC) as part of the new MoneySmart.gov.au website.

“These new mobile phone apps give Australians the ability to access the free, unbiased guidance of the MoneySmart website no matter where they are,” said Parliamentary Secretary to the Treasurer, David Bradbury.

“A fantastic feature of the new apps lets you calculate the real cost of repayments on interest-free deals, so you can make a better-informed choice about your financing arrangements while you are in the store.

“The apps also let you work out your savings goals, mortgage repayments or superannuation contributions on the go.

“The new smart phone apps expand the ways people can use the helpful tools and resources that are available on the MoneySmart website.

For more information, go to http://www.moneysmart.gov.au/, or search for “MoneySmart” in the Apple iTunes App store or the Android Market on your mobile device.

Australians receiving government financial assistance will no longer need to worry that additional superannuation contributions, prescribed by law or the rules of their super fund, will be considered when determining their eligibility to receive that financial assistance.

The Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, today introduced into Parliament an amendment to the definition of reportable employer superannuation contributions (RESC).

“Basically, if a working Australian who is receiving government financial assistance gets additional superannuation contributions they have no control over or cannot influence, because the amount of contribution is prescribed in law or the rules of their super fund, then that superannuation will no longer be considered as reportable employer superannuation contributions, so it won’t be considered income when determining their eligibility for financial assistance,” Mr Shorten said.

“It means we’re not penalising people who are saving for their retirement through superannuation but who still require assistance. This gives effect to the Government’s original intention that RESC should only be those contributions that employees can control, such as salary sacrifice-like arrangements.”

The amendment will apply retrospectively back to July 2009 when RESC was first legislated. RESC are generally superannuation contributions made under formal salary sacrifice arrangements, but include other contributions an employee can influence.

Examples of additional superannuation contributions that will no longer be considered RESC include:

• Contributions required to be made under an enterprise agreement if the employee makes a post-tax contribution (‘matched’ contributions)
• Contributions required by legislation.

The Government is also considering wider issues concerning the RESC definition.

“These things are important to get right. In addition to introducing this amendment today, to provide clarity for those affected, we will have a further process to determine what, if any, additional refinements may be needed,” Mr Shorten said.

I was met with a mix of both scepticism and delight this week as I contact taxpayers who have received an unexpected, addition tax refund as a result of the Anstis case. (Let’s face it, it’s not often I call people to say “Hey, the Tax Office have sent us money for you although you weren’t expecting it”).

The case received a fair amount of coverage at the time. Essentially, the High Court decided that the taxpayer was permitted to claim education expenses against their Youth Allowance income. As a result, the ATO have been amending eligible taxpayers assessments with a standard additional $550 deduction for each of the 2007 – 2010 years they were eligible.   

This has been a positive for many of our client base who’s refund payments are starting to flow through now

Don’t get used to it, though. According to budget papers, the Government will amend the tax law to prevent deductions being claimed against all government assistance payments, with effect from 1 July 2011, in response to the 2010 High Court decision in Commissioner of Taxation v Anstis.

Commencing the measure from 1 July 2011 will allow individuals who receive Youth Allowance (Student) to claim a deduction for expenses incurred in gaining their payment for the 2010/11 income year. This is to ensure individuals who have maintained records of their expenditure following the High Court decision are not precluded from claiming a deduction.

Legislation introduced into Parliament today will support older Australians on the age pension to stay connected to the workforce through a new, more generous Work Bonus.

The new Work Bonus is set to commence on 1 July this year and will encourage older Australians to continue contributing their skills and knowledge by remaining in the workforce.

Under the new rules age pensioners will be able to earn up to $250 a fortnight without it being assessed as income under the income test.

Pensioners will also be able to build up any unused amount of their $250 fortnightly bonus in an ‘income bank’ to a total of $6,500.

The ‘income bank’ can be used to exempt future earnings from the pension income test, so that a pensioner could earn up to $6,500 a year extra without it affecting their pension. This could be from regular work each fortnight or, for example, over a six week period before Christmas.

Any unused amount of the income bank can be carried forward across years.

How does this work in a practical sense? Let’s look at the case studies provided by the Governemnt:  

Case studies

Bob is an age pensioner working as a school crossing supervisor earning $300 a fortnight. Under current rules, half his employment income is disregarded ($150) by the Work Bonus so only $150 is assessed as income under the pension income test. Under the new Work Bonus, $250 will be disregarded, and only $50 assessed, so Bob will have $100 less income a fortnight counted under the pension income test.

Bob’s pension will increase by $50 a fortnight due to a lower amount of income being assessed under the pension income test.

Maria is an age pensioner who only works for six weeks a year as an accountant at tax time. During the six week tax season she earns $1,500 a fortnight, earning a total of $4,500. As Maria does not work at all in the year between tax seasons, after 12 months under the new Work Bonus she will have accumulated $5,750 (23 fortnights x $250) of Bonus in her ‘income bank’. Therefore during the tax season, the $4,500 she has earned can be offset and will not affect her pension.

Maria will continue to receive the maximum rate of pension as she has no income that is assessed under the pension income test, despite earning $4,500 in the six week period. In addition, Maria would retain $2,000 in her ‘income bank’ to offset future employment earnings.

The new Work Bonus will cost $90 million over four years to deliver.

Clearly it’s a positive for many senior Australians who have more incentive to work if they choose to.  This, in turn, allows business access to the skills of older workers. Given the feedback from many older jobseekers this last year, I have to wonder if business will be keen to tap into the valuable resource our older workers are?  

What do you think? Should senior Australians be encouraged to continue working? Are employers less likely to hire older workers, despite their experience? Why do you think that is?  

Yesterday APRA released it’s Annual Superannuation Bulletin for the 2010 financial year. 

According to the report, total superannuation assets increased by 13.9 per cent during the year to $1.23 trillion.  

Where is this trillion bucks?  

Well, $722.6 billion are held by APRA-regulated super entities and $390.9 billion are held by self managed super funds (SMSFs). The rest is made up of exempt public sector super schemes and the balance of life office statutory funds. 

Growth

Click to enlarge

Industry funds showed the most growth through the year, with assets increasing by 17.9 per cent.  

Small funds, which include SMSFs, increased by 16.9%  and, as at 30 June 2010, now hold the largest proportion of superannuation assets, accounting for 32 per cent of total assets.  

Who has the largest account balances?     

Members of small funds held the largest average account balance of $478,873. Corporate fund members held $90,815 on average, followed by members of public sector funds with an average account balance of $55,2031. Retail and industry fund members held an average of $20,248 and $19,641 respectively.   

Where are contributions coming from? 

Super contributions for the year totalled $107.7 billion. Employers contributed the most with $72.0 billion and members contributed $34.3 billion. Other contributions, which include spouse contributions and government cocontributions, totalled $1.4 billion. 

Want to know more?  

Copies of the Annual Superannuation Bulletin are available for download from APRA’s website.  The Bulletin also includes, for the first time, features on asset exposures of super funds and on gender diversity of licensed trustee boards.

Acting Attorney-General Brendan O’Connor and Minister for Human Services Tanya Plibersek today encouraged the thousands of residents significantly affected by some of the worst flooding in Queensland’s history to lodge a claim for the Australian Government’s Disaster Recovery Payment (AGDRP).

Mr O’Connor said the payment of $1000 for each eligible adult and $400 for each eligible child is designed to assist people who were forced to leave their homes, have lost their homes or whose homes have sustained major damage as a result of the floods.

“The floods crisis in Queensland is easing in some areas, but worsening in others,” Mr O’Connor said.

“The Australian Government’s Disaster Recovery Payment is available for communities across all 41 Local Government Areas in Queensland that have been declared natural disaster zones.

“In addition, there are a range of other payments and grants available for businesses, primary producers and residents to help them get back on their feet.”  

“More than 100 claims have been approved so far and we’re expecting the first payments to be made to flood victims today,” she said.

“Hundreds more claims are currently being processed and I strongly encourage people affected by the floods to contact Centrelink as soon as possible to check if they are eligible for assistance.

“People can call the Australian Government’s Emergency Assistance Hotline on 180 2266, between 8am-8pm Queensland time, visit their local Centrelink or Medicare Office or speak with Centrelink staff at their local Community Recovery Centre.

In addition to the AGDRP, other joint Commonwealth/Queensland assistance available includes:

• NDRRA Personal Hardship and distress assistance (available across ten LGAs: Central Highlands, Southern Downs, Western Downs, Lockyer Valley, Banana, Barcaldine, North Burnett, Mackay, Bundaberg and Toowoomba):
• Personal Hardship Assistance Grants – A grant of $170 per person, up to a maximum of $780 for a family of five or more is available. This grant is available to people experiencing hardship due to the disaster who require assistance to meet their basic needs.
• Essential Household Contents Grants – Assistance of up to $1660 for individuals and $4980 for families.
• Structural Assistance Grants – Assistance of up to $10 250 for individuals and $13 800 for families may be provided for property owners whose home has been damaged.

Assistance available for businesses and primary producers includes:

• Grants of up to $25,000 for small businesses and primary producers for clean up and recovery (available now across 13 Local Government Areas including Banana, Barcaldine, Bundaberg, Central Highlands, Cherbourg, Lockyer Valley, North Burnett, Scenic Rim, Somerset, South Burnett, Southern Downs, Western Downs, and Woorabinda).
• Concessional interest rate loans of up to $250,000 for small business operators and primary producers, as well as freight subsidies of up to $5,000 (available across 23 Local Government Areas: Balonne, Banana, Barcaldine, Blackall-Tambo, Bundaberg, Central Highlands, Cherbourg, Gladstone, Goondiwindi, Isaac, Lockyer Valley, Longreach, Maranoa, Murweh, North Burnett, Rockhampton, Scenic Rim, Somerset, South Burnett, Southern Downs, Toowoomba, Woorabinda and Western Downs).

For more information about assistance:

Individuals should phone the Australian Government’s Emergency Assistance Hotline on 180 2266 or the QLD Dept of Community Services on 1800 173 349.

Primary Producers should call The Queensland Rural Adjustment Authority 1800 623 946.

More information on Australian Government assistance is available at the Disaster Assist website www.disasterassist.gov.au or via the Centrelink website www.centrelink.gov.au.

As this year’s footy finals draw near, passionate footy fans may be thinking of upgrading to a plasma TV or surround sound system to catch all the action on field. Many large stores offer interest free deals to purchase these types of electronic goods but consumers need to be careful as these deals can have high fees and costs that can leave them more out of pocket than expected.

Ms Delia Rickard, ASIC’s Senior Executive Leader, Consumers, Advisers and Retail Investors said ‘These short-term benefits may sound good, but you also need to consider the long-term costs of these kinds of offers, particularly ongoing fees and potentially high interest rates.’  

‘Before heading to the shops, read our tips about the hidden traps of interest free deals. This way your finances will stay in front, even if your team doesn’t,’ Ms Rickard said.

Here are ASIC’s top three tips for consumers when shopping with interest free:

1. Interest free doesn’t mean fee free

While a store may advertise ‘no deposit, no interest, nothing to pay’, in most cases you will still be charged fees. These could include an establishment fee, a monthly service fee and a late payment fee. Before you sign anything ask about all the fees and charges so you can work out exactly how much you will have to pay back.

2. Watch out for the end of the interest free period

Credit providers are not obligated to tell you when the interest-free period is due to run out, so you need to keep on top of this yourself. If you fail to repay the total amount of your purchase by the end of the interest-free period, your credit provider will start charging you interest.

The interest rate charged could be very high—up to 30%, compared with standard interest rates on credit cards which average between 12–20%. So always aim to repay the debt early.

3. The minimum monthly payment is often not enough

If you’re paying by instalment, the minimum monthly payments suggested by the retailer who signs you up for the deal are often not enough to pay off the full purchase price before the interest-free period runs out. This means that you may be left with a large outstanding amount to pay at the end of the interest-free period. Make sure your agreed repayments are enough to pay off the full amount within the interest-free period.

For more information, download a copy of our factsheet Interest free deals available from www.fido.gov.au/credit.

Most of us are not stupid and recognise that these interest-free deals are a ridiculously expensive way to obtain goods if they are not finalised within the interest-free period. I expect that the majority of shoppers fully expect to have it paid off sooner rather than later. The best of intentions aside, the reality is that most people who sign up will find themselves paying a very high price.

If you are not disciplined enough to ensure it is paid off within the interest-free period,  don’t do it!

I took a large number of calls last week sorting out confusion surrounding what people like to call “bonus” payments. I’m referring to the Family Tax Benefit Part A and Part B Supplements. 

How much is it?

For the 2009-10 year, the maximum payments are $711.75 per child (part A) and $346.75 (part B).

How Do I Get it?

Generally, if you receive Family Tax Benefit, the supplement you are entitled to is paid automatically after you and partner have lodged your income tax returns. If you do not have to lodge a return, simply let the Family Assistance Office know.

What if I have a debt?

Once your tax returns are in, Family Assistance balances your account for the year. If you have been underpaid (ie. you overestimated your income) you should receive the supplements along with any ‘top-up’ payment you are entitled to. If you have been paid too much FTB throughout the year (ie. you have underestimated your household income), the supplement will be applied against your debt.

The best source of information for you regarding your FTB supplements is the Family Assistance Office. While your local accounting practice might be able to provide you with generic info (as above), we cannot give specifics regarding your personal supplement payment date or amount, etc.

 One of the most common Centrelink questions I receive this time of year has to do with the Carer Supplement payments…

who qualifies for it, how much will it be and when is it paid?

$600 Carer Supplement

From today,  more than 500,000 carers across Australia will receive a $600 Carer Supplement, as part of the Australian Government’s Secure and Sustainable Pension Reform.

The annual $600 Supplement will be paid to people who receive:

• Carer Payment;
• both Wife Pension and Carer Allowance;
• both Department of Veterans’ Affairs Partner Service Pension and Carer Allowance; and
• Department of Veterans’ Affairs Carer Service pension.

The payment will also be provided to recipients of Carer Allowance for each person they care for.

This means that if a person is in receipt of Carer Allowance and Carer Payment (or Wife Pension, Department of Veterans’ Affairs Service Pension or Carer Service pension) they will qualify for two Carer Supplement payments, with an additional payment for each extra person they care for.

Most Carer Supplement payments will be paid between Thursday 1 July and Wednesday 14 July.

$1,000 Child Disability Assistance Payment

Around 135,000 carers who receive Carer Allowance (child) will also be paid the annual $1000 Child Disability Assistance Payment from 1 July for each child they care for.

From 1 July, pensioners can receive advance payments of up to a maximum amount of $1,005.75 for singles and $758.10 for each member of a couple in a six month period. This is a significant increase on the previous maximum advance of $500 a year for singles and each member of a couple. 

Part-rate pensioners will also have access to increased advance payment amounts, depending on the amount of pension they receive.

For the first time, pensioners can receive multiple advance payments each year up to the maximum rate, compared to only one advance payment under the old system.

This means that pensioners now have more financial flexibility to deal with unforeseen circumstances, such as replacing a broken refrigerator or buying new tyres for their car. 

The improved advance payments will be available to Age Pensioners, Disability Support Pensioners, and people receiving carers, wife and veterans’ pensions. The advance payments will be repaid from subsequent pension payments.

The advance payments will increase in line with adult pension rate increases in March and September each year.

In addition, pensioners can now choose to receive around half of the new Pension Supplement on a quarterly basis.

The first quarterly Pension Supplement payment will be available from 20 September this year.

As you’re  probably aware, there have been some changes to income tests which affect your eligibility to certain tax rebates and government benefits. We now have to get used to terms like ‘adjusted taxable income’, ‘rebate income’ and  ‘income for surcharge purposes’.

But wait, there’s more…  the income tests for HELP amd SFSS repayments, Mature Age Worker Tax Offset , etc have been amended to include new items such as  ’reportable super contributions’ and ‘total net investment losses’. 

I have had a few recent queries regarding this and so I’ve put up a summary of the new income tests and what on earth they actually mean on the  main site. 

I have to say it… in what universe is this simplifying the tax system for the average taxpayer? I actually love this stuff and thinking about it is giving me a headache!

We are seeing more and more people lately who have found themselves cut off from household Centrelink payments until  they or their partner lodge overdue tax returns.

If you receive Family Tax Benefit and you or your partner have outstanding returns for any year you were receiving FTB, don’t wait until your payments are stopped and you’re unable to meet the bills before doing something about it.

It may be that you were not required to lodge a return for the outstanding year/s. If this is the case, you can simply call Centrelink on 13 6150 or notify them via online services that you do not need to lodge. If you are unsure whether or not you need to lodge a return, a quick call to your accountant should clarify things for you. 

From the start of the next financial year (1 July 2010) if you or your partner have 3 or more outstanding tax returns for the years 2000-2008, your FTB will just be cancelled. Unfortunately, if this happens you may not be able to take advantage of the Education Tax Rebate. Worse yet, you’ll face the rigmarole of having to lodge a new claim for Family Tax Benefit.

You won’t be able to use eTax for overdue returns, but if you are more of the DIY type, you can contact the ATO and have them post paper tax returns out to you for the years you need. Alternatively, most tax agents offer a fee from refund facility if you’re short on cash and have to lodge in a hurry. The main thing is to not ignore it – it won’t go away and neglecting the issue simply compounds the problem.