Family assistance payments – don’t forget the tax link

These days, the tax and social security systems are inextricably linked. Such is the modern world. No surprise then (or is there!) when getting a social security payment is linked to tax compliance. In government, the left hand often (but not always) talks to the right hand! The revenue collectors it seems have some interest in when and where the revenue they collect gets paid out.

The cross-over and linking of the tax and social security systems, while sensible from a governmental point of view, has made both systems and the laws applying to them even more complicated.

People who want to claim family assistance payments for the 2014 financial year must lodge a claim with the Department of Human Services (Centrelink) by 30 June 2015 to be eligible. This deadline applies to those who intend to lodge a claim for:

• Family Tax Benefit (FTB);
• Child Care Benefit (CCB);
• Single Income Family Supplement (SIFS).

While people can lodge their claim for family assistance lump sum payments even if their income tax returns have not yet been lodged or finalised, they should remember that they must also lodge their 2014 individual income tax returns by 30 June 2015 to receive their full FTB and SIFS entitlements for the 2013-14 financial year. This applies to all claimants – those who claim these payments as a lump sum payment, and those who have received payments throughout the year.

If the person is a member of a couple, income tax returns for both the taxpayer claiming payments and their partner must be lodged by 30 June 2015.

If taxpayers and/or their partners do not need to lodge an income tax return for the 2014 financial year, the ATO says they must still notify Centrelink by 30 June 2015, even if they have notified the ATO (now the left hand doesn’t talk to the right hand!).

The ATO warns that a delay in lodging a tax return by 30 June 2015 (even by one day) will result in taxpayers not being paid their full family assistance entitlements by Centrelink for the 2013-14 financial year.

It is important not to leave lodging the return until the last moment in case delays in mail or system issues prevent lodgment by 30 June 2015.

Deferrals past 30 June are not taken into account by Centrelink.

If tax agents have a deferral of time to lodge the 2014 Income tax return for any affected clients, the ATO says it does not change family assistance lodgment requirements. Any lodgment deferral granted by the ATO does not affect or influence Centrelink’s requirements that family assistance recipients must lodge their 2014 tax returns by 30 June 2015.

Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.