The Education Tax Refund

The Tax laws Amendment (Education Refund) Bill 2008 applies from 1 July 2008 and permits eligible taxpayers to claim a tax offset for certain education expenditure incurred in respect of children undertaking primary and secondary school studies.

This is not a tax deduction, it is a tax offset. A tax deduction means you do not pay tax on allowable expenditure. By including this expenditure as a deduction on your tax return, you get back the tax paid on that spend at your marginal rate, be it 15%, 30% etc. A tax offset means you get back 100% of what you spend. So at a marginal rate of 30%, a $100.00 deduction gives you $30.00 but a tax offset of $100.00 gives you a refund of $100.00. Now to see if you qualify.

In order to qualify for this refund a taxpayer must meet certain criteria and if that criteria is not met then no refund is available. Broadly speaking, the tax offset is available to taxpayers who are entitled to a Family Tax Benefit (FTB) Part A payment from Centrelink (or certain other prescribed payments) and have one or more children undertaking primary or secondary studies, or are independent students receiving allowances such as Austudy, Youth Allowance or payments under the Labour Market Programs. The payment is to the person receiving the FTB, not the spouse.

The schooling requirement is assessed for each half year in the tax year, ie from 1 July to 31 December and then again from 1 January to 30 June. Eligible taxpayers are able to claim a 50% tax offset in respect of eligible education expenses incurred during an income year up to $750.00 for each primary school student and $1,500 for each secondary school student.

This means that if you are eligible and spend $800 on a primary school student you can claim half of the maximum $750.00 which gives you a $375.00 tax refund. Likewise for a secondary school student if you spend $1,500 you can claim a $750.00 refund. I realise that this is not as clear a picture as could be painted but it is the best that can be achieved in less than 500 words.

The eligible expenditure, for which you should keep receipts includes: Computers; computer related equipment; computer software; home internet connection; school textbooks and stationery and prescribed tools of trade. Also included is the cost of repair to any of these items.

NON ELIGIBLE items are school fees, school uniforms, tutoring costs, sporting equipment, school subject levies or the cost of school excursions. I realize these seem to be the biggest expense items and this is probably why the tax office excluded these items.

One point of note is that if you spend more than the amount, for example a $2,000 computer for a secondary school student. You can claim half of $1,500 this year and half of the remaining $500 next tax year. However if the student is in year 12 and finished school in December then the claim is limited to half of $750.00 this year and nothing next year.

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Show How Much You Care With Secured Loans and Remortgages

Before you know it, you will be in the midst of the summer and the peak holiday season, and this year, even more than usual, you want to really have a great time, and feel that you deserve to after all the recent financial hardships.

When you had your working hours cut,you were worried that your family would suffer due to less income coming into the home, as your income was much less than before, because you were now only working three days instead of the normal five days plus overtime.

The income was less, but the same utility bills, mortgage payments, credit cards, etc. had still to be paid, and this was of great concern to you.

However, you need not have worried, as your wife and children rallied round in a loyal way, and did everything possible to help you and to make you feel better.

Your wife is a nurse, and as such, her working hours were not affected, as people still become ill, recession or not, and instead of even working the same hours as before, she took on overtime hours to help keep the home fires burning brightly.

Your younger son did a paper round each morning before leaving for school, and the elder one became a waiter at the weekend.

Your earnings are now back to normal, and you feel that you are now in the position of being able to show your family your gratitude.

You are lucky that they stood shoulder to shoulder with you, as often, when financial problems occur, families and relationships can split up, and this in fact did happen to some of your friends., and even to those who had been married for a number of years.

Your bank account has not sufficient funds to give your wife and children what they want and you now need a loan of some kind.

If someone is a homeowner, there really is no contest, as the best way to borrow is by taking out either a remortgage or a secured loan that are both all purpose home loans.

A remortgage or a secured loan will enable you to buy your college student son the little car that he wants, and with cash in hand you can get a bargain by buying privately.

Your younger son can now go on the trip abroad with his school, thanks to low interest remortgages and secured loans, that currently have interest rates from less than 2% to around 9% respectively. The funds left can take you and your wife on a second honeymoon to anywhere that she wants., and if you use some of the homeowner loan or remortgage funds for debt consolidation, the holiday will, at the end of the day, cost you almost nothing.

You will be so glad when you see how excited your family are when you tell them about your treats for them.

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