Reply With QuoteHi, it will not be classed as income for ftb purposes unless it generates an income. ie if you invest it and receive interest. Then you would need to declare the interest.
Registered User
FTB A & B and inheritance?
I know this is probably a tricky one, but I just don't have time to call CLink today (will do on Wed next week when DD1 is at daycare), but I just thought of something and now I'm really worried about how my payments will be affected.
Long story short is, DH's inheritance is about to be finally sorted out. We've been working for the past 18 months or so to figure out where all the money is and get it all paid to the estate of his late mum, as per her final wishes in her will. Everything is to be split 50/50 between DH and his little brother, including the house we're currently living in.
Anyway, we've finally finished jumping through the hoops that the superannuation and life insurance companies have set out for us and it looks as though everything will be finalised and paid to the estate in the next few weeks. DH intends to take his half of the inheritance immediately to pay off the rest of the house (around $30k owing), pay out our car loan, and put the rest in a term deposit to save for our first home, which we won't be looking at doing for at least another three years.
My question is, what effect will all this have on my Family Tax Benefits? I got stuck last year when DH got a pay rise and didn't tell me about it, I ended up getting overpaid a lot and had to pay back around $4k (in addition to the $600 per child or whatever that FAO holds back to give out at tax time). I certainly don't want that to happen again at tax time this year, and I definitely want to do the right thing and tell FAO what's happening NOW so that they can adjust my payments accordingly. But, I'm not 100% sure of the actual numbers involved (ie I don't know how much money DH is inheriting, he doesn't either), and I don't want to get to tax time, fill out the forms, only to find that my payments will be entirely suspended AND I have to pay back thousands of dollars, kwim? I don't have any of this inheritance now, but the way FAO asks the questions, it's hard - like 'Okay, I got $20k two weeks before tax time' but they count that as the entire year beforehand so they consider you to have been overpaid, kwim? Which I understand, but this is really tricky for me to 'get'...
I know DH will be fuming if my payments get cut off, as right now we really do need that money to help pay for the day-to-day stuff (I get about $300 a fortnight at the moment), and he has no intention of using the inheritance to live our lives, it's for our future, kwim? I know FAO won't see it that way though and I'm worried about what his reaction will be. I just don't know how it's going to affect my payments, does anybody else have any idea?
TIA for any advice or personal experience!
Registered User
Hi, it will not be classed as income for ftb purposes unless it generates an income. ie if you invest it and receive interest. Then you would need to declare the interest.
Registered User
I'm pretty sure Kylie is right. You could also be "gifted" money and not have to declare it until it generates extra income. My Dad and stepmum are quite generous at Christmas... one year their cheque would have pushed us over the threshold of one of the payments... but we didn't have to declare according to an accountant. We use the money to pay for school fees basically anyhow... it's not like we are living in luxury because of it.
Registered User
I know it's on the Centrelink website, just can't find it at the moment!
But I did find this: bear in mind though that this says it's for a Social Security payment. FTB payments are Family Assistance payments. But from memory, it may fall under this as well. If BG can remember, that'll be great
Lump sums
If you receive a lump sum amount while receiving a Social Security pension or allowance, the treatment of that amount under the income test will depend upon the nature of that lump sum. Generally, lump sum amounts that represent a profit or payment for a service are treated as income for a period of 52 weeks from the date you are entitled to receive that money.
Certain other lump sums are exempt from the pensions and allowances income tests.
Exempt lump sums
These share common characteristics. They:
• are generally unlikely to be repeated
• could not be reasonably predicted, and
• do not represent money paid to you for a service, or profit.
Exempt lump sums include:
• a one time gift
• an inheritance
• an irregular superannuation amount (such as commutation of a superannuation pension)
• compensation and insurance payouts for damages to property or personal effects
• value of emergency relief such as financial assistance for floods, bushfires and droughts
• redress payment from State Governments for the Forgotten Australians, and
• a one off windfall gain e.g. a lottery win, or receiving a prize/reward.
While the receipt of the lump sum is exempt under the income test, the lump sum amount is immediately treated as an assessable asset. If this is a financial asset, the deeming rules are applied—see the factsheet Deeming.
Lump sum amounts treated as income
Apart from the exempt lump sums, other lump sum amounts will be apportioned as income over a 52-week period. Common examples of lump sums treated as income over 52 weeks are:
• a distribution from a family trust
• a commission or royalty
• profits e.g. a distribution from a profit sharing agreement
• a grant or scholarship
• a lottery win that is paid as a series of payments under one contract, e.g. ‘Win $10 000 a year for life’
• payments to a professional sports person such as a signing-on fee, sponsorship or endorsement payment
• a dividend or distribution from a private company, and
• certain loan arrangements where there is no expectation that the loan will be repaid.
The lump sum amount is also immediately treated as an assessable asset. If this is a financial asset, the deeming rules are applied—see the factsheet Deeming.
Registered User
FTB is not impacted by the income test that Jody has listed - that only applies to income support payments (parenting, newstart etc)
contact ATO and query with them what investing the money will mean tax wise - if ATO deem any of it income, than FAO will - generally it's only the income earned that is taxable (unless you go and buy an investment property - then it will have other implications).
Registered User
I have been through this. I was advised to put all the money into a trust account in the name of one of my children. Centrelink cannot ask questions relating to your child's bank accounts.
Registered User
Wow, thanks for that info, ladiesDefinitely puts my mind at ease a little.
So basically, the sum of money in and of itself is not considered 'income', but if DH puts it in, for example, a term deposit account, the interest accrued IS and therefore must be reported to FAO? That's fine by me
Jodi, thanks so much for that excerpt, I should probably have gone looking for that myself to begin with lol - but C'Link-speak is like a foreign language to me, I've never done a tax return and have pretty much zero understanding of what constitutes taxable income etc, so I get completely baffled and give up about three lines in :/
One thing that did catch my eye, though, was that money from a 'family trust' IS counted as taxable income - would DH's inheritance fall under this instead? I just know that there is an 'estate' in MIL's name and that everything in it is to be split between DH and BIL... I have no idea what the difference is between a family trust and an estate :/
Oh wow. I'm so dumb lol. Sorry for the stupid questions!
Lucy in the sky with diamonds.
Oohhh, I'm not sure about that. Hopefully BG or Jodie can deny or confirm but if the trust earns money it can be considered income for the child and affect the FTB entitlement.
Registered User
No, i made sure that it doesn't incur interest.
Registered User
That's ok hun. I worked there, so I know where to look and how to speak their lingoWow, thanks for that info, ladies
So basically, the sum of money in and of itself is not considered 'income', but if DH puts it in, for example, a term deposit account, the interest accrued IS and therefore must be reported to FAO? That's fine by me
Jodi, thanks so much for that excerpt, I should probably have gone looking for that myself to begin with lol - but C'Link-speak is like a foreign language to me, I've never done a tax return and have pretty much zero understanding of what constitutes taxable income etc, so I get completely baffled and give up about three lines in :/
One thing that did catch my eye, though, was that money from a 'family trust' IS counted as taxable income - would DH's inheritance fall under this instead? I just know that there is an 'estate' in MIL's name and that everything in it is to be split between DH and BIL... I have no idea what the difference is between a family trust and an estate :/
Oh wow. I'm so dumb lol. Sorry for the stupid questions!
Thanks BG, had a feeling that was the case but couldn't remember!
I found this from another thread which BG answered:I have been through this. I was advised to put all the money into a trust account in the name of one of my children. Centrelink cannot ask questions relating to your child's bank accounts.
your best bet is to be upfront on all accounts. childrens bank accounts shouldn't impact your payment however it will depend on how that account is set up in regards to access as some people will squirrel away money for themselves and put it under their childs name. so long as you have a paper trail of where the money is coming from and can confirm it's money for your child (and if any large amount is spent, you can confirm how) you should be fine with it having no impact - but when you do your next interview with c'link, take the details in - if you show them the info you've done all you can kwim?
~ taken from this thread: https://www.bellybelly.com.au/forums...k-account.html
Registered User
Okay, I'm back again, with pretty much the same questions!! Erg. I'm sorry, I've just been making myself sick to the stomach the last few days worrying about this, I would love some advice :/
Well, it's been dragging on (still!), but in about 4 weeks' time, DH will be getting his money. As far as I know (and I honestly don't know much), this could be as much as $150k. The house has been paid off and MIL's parents have transferred DH's half into his name on his behalf, so DH is now half-owner of this house. I'm just screwy with this because the house ownership is technically within THIS financial year (and I'm worried about having to pay back money to C'Link), and the money bit will be in NEXT financial year.
I just got a letter from C'Link asking me to fill out the amounts of money to estimate this year's income, I'm just taking a guess as DH has done a lot of overtime lately, and it didn't ask anything about assets like the house - do I need to notify C'Link of that? Will this year's estimate effect next year's estimate (ie would I technically be 'lying' if I didn't include the inheritance in the estimate for next year, which they've requested, or can I just change my estimate WHEN we get the money)?
I'm sorry, I just don't understand any of this... I know DH is paying to get his tax done professionally this year due to all the changes and what not, I'm going to see if I can pay to get a tax return for myself done as well - I've never lodged one before as I've not worked enough to even bother, really - I'm just paranoid that C'Link is going to see that DH owns half the house and got a bit of money and that they'll cut me off completely and I'll have to get a job to pay the bills that my FTB A & B are currently paying
I'm so confused and worried!! Sorry to ask dumb questions
Bookmarks