Toby, in answer to your questions - YES, parenting payment is taxable - but it's not automatically taxed by centrelink - you have to request it. as a result, you may end up with a tax liability to ATO once you have submitted your details as you'll be in a higher income bracket

in regards to the supplements - yes, even though you get your payments each fortnight, you are entitled to the supplements ($667 per child FTBA, and $324 per family ftbb) - if you qulify for payment, you qualify for supplements. your payment DOES still get reconciled - but there will be nothing to reconcile against. basically reconcilliation looks at what FTB you've received, compared to what you're entitled to (looks at things like actual income - unless you're single, on income support payment for most of the year - and maintenance - which i know you're not getting - but i'm doing a generic answer!) - and then makes sure you're paid appropriately for the FULL financial year

now, as a generic explanation of FTB and the supplements:

your FTB is calculated based on a number of factors (inome estimate, maintenance entitlement, current status as an income support customer) - and is worked out to a daily rate. in most cases, this is paid fortnightly. the supplements are part of that daily entitlement that is held back until the end of the financial year, and, when your daily entitlement is confirmed.

FTB is effectively a tax refund that you get for having dependent children - but how many people would benefit from it once their tax is done at the end of the financial year? do they benefit from a lump sum, and having nothing to live on fortnight to fortnight? most families NEED that money each fortnight, not at tax time - so the government pay it out in installments, based on your BEST GUESS of your income for the current financial year - and at tax time, they got and check your best guess against your actual circumstances for the year. this is the process known as reconcilliation

the reason??? how many people struggle to know exactly what their income will be? how many know that they will or won't get a pay rise? how many know exactly what dividends they'll get? how much of a loss their investment property will generate each year??

in all honesty, i've not ONCE seen someone estimate their income accurately to the dollar for the full financial year. and the government are aware of that. what they did, rather intelligently for the government , was to say (in a very simplified way)

ok, for each child in this age group, the tax reduction should be X number of dollars - but instead of giving them X dollars divided into 26 fortnights, we'll give them Y dollars divided up over the fortnights, and hold onto Z amount (supplements) until the end of the financial year. that way, if they underestimate their income, when we work out their actual income, there is something of a safety net in place, and not as many people will end up with small debts.

it means if you overestimate, you get money back, if you underestimate, you're less likely to get a debt. and realistically, KNOWING that there is money you're entitled to waiting for you - it's a HUGE incentive for people to get their financial issues for that year finalised through ATO - so it works in more ways than one!!!

this is the way i explain things when i'm at work - it's simplistic, but realistically - people don't need to know the in's and out's of the way it works - they just need to know how it applies to THEM - and this is the easiest way i can explain it!