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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


Dollars for scholars

The strategy: To claim the new education tax refund.

Oh good, I need some extra cash. Can I claim it in this year's tax return? Tough luck. The refund will apply only to educational expenses incurred from July 1, which means you'll have to wait until next year to claim them. Treasurer Wayne Swan says to be eligible for the refund you should start keeping your receipts now.

What can I claim? Eligible families can claim education expenses of up to $750 for each child at primary school and $1500 for each child at secondary school. The refund covers spending on laptops, home computers and associated costs (including repair and running costs and leasing), home internet connections, printers, paper, education software, school textbooks and associated material such as study guides, learning materials and stationery and prescribed trade tools.

If you have more than one child at school, the spending can be pooled and used against the combined entitlement, so long as the children all have access to the purchased items.

However, you can't claim the refund if you are entitled to a tax deduction or Government payment or subsidy for that expense.

How does the refund work? It's structured as a 50 per cent refundable tax offset. This means that if you claim the maximum allowable expenses, you will get a $375 reduction in your tax bill or refund for each child at primary school and $750 for each child at high school. There will be a section in your 2008-09 tax return where you can claim the refund and a separate form available from the Tax Office for those people who don't have to fill out a tax return. MLC's technical services manager, Andrew Lawless, says this will enable the refund to be paid to all eligible families. Unlike many other offsets, you won't lose the benefit if you don't have a tax liability to use it against.

What if I spend more than the maximum amount? According to Treasury, education expenses in excess of the maximums can be carried forward to the next financial year. So if you have a major purchase, you can spread your claim over two tax years. But if expenses are not used in either the year they are incurred or the following tax year they will lapse.

Lawless says this will be particularly beneficial with purchases such as laptops that can cost more than $1500. Before the budget in May, parents could salary package laptops for their children tax effectively - as this is no longer allowed, the refund will be the main tax break available.

Is the refund means tested? It is only available to families entitled to Family Tax Benefit Part A. Eligibility for this benefit depends on the number of children you have, their ages and your family's adjusted taxable income. As a guide, Lawless says a family with two schoolchildren under 17 would be able to earn up to $111,082 before losing this benefit. Your adjusted taxable income is your taxable income plus reportable fringe benefits. However, from next July 1, Lawless says it will also include any salary sacrificed super contributions. This means some families who are eligible for FTB Part A and the education rebate this year may not be eligible after that. So claim those education expenses while you can.

Eligibility for the rebate also will be extended to families in which a child would have been an eligible child for FTB Part A but for the fact of receiving a Government benefit or pension such as Youth Allowance, a disability support pension or ABSTUDY. Children receiving these benefits are automatically disqualified for FTB Part A but may be covered by the rebate.

Can I claim the refund if my child starts school next February? You'll be able to claim it for half the financial year. If your child is moving from primary to secondary school next year, you can claim the refund at the secondary school rate for the year.

Annette Sampson
July 9, 2008
The Sun Herald


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