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6.6 Taxation

• 6.6.1 Taxable ABSTUDY Allowances
• 6.6.1.1 Taxable Income
• 6.6.1.2 Living Allowance Only
• 6.6.1.3 Taxation Instalments
• 6.6.1.4 Group Certificates Issued
• 6.6.1.5 Lodgement of a Taxation Return
• 6.6.2 Tax File Number (TFN)
• 6.6.2.1 Applicants Who Must Provide a TFN
• 6.6.2.2 Applicants Who Need Not Provide a TFN
• 6.6.2.3 Commencing ABSTUDY Payments
• 6.6.2.4 Lodgement of Claims
• 6.6.2.5 Difficulty in Applying for a TFN
• 6.6.2.6 Regarded as Having Provided a TFN
• 6.6.2.7 Taxation Queries

Introduction

This chapter explains the taxation issues relating to ABSTUDY allowances and the conditions under which there is a requirement for the provision of tax file numbers.

6.6.1 Taxable ABSTUDY Allowances

6.6.1.1 Taxable Income

Payments intended to support the students’ day-to-day living costs and certain other allowances are assessable forms of income for income tax purposes. Those allowances that are forms of taxable income are:

• Living Allowance, for students 16 years or older (including the Living Allowance component of the Masters and Doctorate Award); and
• additional assistance where paid as a supplement to a fortnightly allowance.

Note 1: ABSTUDY taxable allowances are regarded as income, even if an allowance is actually paid to a parent/guardian applicant or an agent.

Note 2: Under the Income Tax Assessment Act 1936 student assistance allowances paid on behalf of, or directly to students under 16 years of age (regardless of their status) are not regarded as taxable income.

6.6.1.2 Living Allowance Only

For students who live in a residential college or hostel and who elect to have residential fees paid directly by ABSTUDY, only the reduced Living Allowance entitlement of up to $40.00 a fortnight is assessable as taxable income of the student

6.6.1.3 Taxation Instalments

Students may elect to have tax deducted from taxable ABSTUDY allowances.

6.6.1.4 Group Certificates Issued

Group Certificates detailing the following will be issued to the student at the end of the financial year:

• the gross amount of taxable income paid for the financial year; and
• the total amount (if any) of taxation instalments deducted for the financial year.

6.6.1.5 Lodgement of a Taxation Return

Once tax instalments are deducted, tax payments are forwarded to the Australian Taxation Office (ATO). A student wishing to reclaim amounts paid in tax will not be able to do so until the end of the financial year after a taxation return has been lodged and a taxation assessment completed by ATO.

6.6.2 Tax File Number (TFN)

6.6.2.1 Applicants Who Must Provide a TFN

Legislation requires that the following categories of ABSTUDY applicants must provide their Tax File Number (TFN) when applying for ABSTUDY assistance:

• students aged 16 or older;
• parents/guardians of students aged less than 16 years; and
• parents/guardians of all students aged 16 years or older, including part-time applicants, upon whom the student is financially dependent; and
• the student’s partner (only if the student is full-time).

6.6.2.2 Applicants Who Need Not Provide a TFN

The following categories of customers do not need to provide a TFN when making claim for ABSTUDY assistance:

• customers who supplied their TFN to ABSTUDY for a previous claim;
• students under 16 years of age;
• students, parents or partners who are exempt from providing their TFN under the Income Tax Assessment Act 1936 as they receive a FaCS or DVA income support pension or benefit. These are:

* a FaCS benefit, ie age pension, wife pension, disability pension, carer payment, sole parent pension, widow allowance, special needs pension or special benefit, or

* a pension under part 3 of the Veterans’ Entitlement Act 1986;

• students, parents or partners who are at risk from another person and whose physical safety could be at increased risk from the disclosure of their TFN;
• Aboriginal or Torres Strait Islander clients who are attending a traditional ceremony at the time of claim lodgement - a TFN must be provided on their return from participation in that ceremony;
• students, parents or partners who have lost all records of their TFN because of fire or flood damage to their home within the six months preceding the claim for ABSTUDY - ceases to take effect six months after the damage occurred;
• customers who have lodged a claim for a TFN through Centrelink but have not yet received advice from ATO;
• parents who live permanently outside Australia and who do not earn income in Australia; and
• parents or partners who are temporarily overseas - a TFN must be provided on their return to Australia.

6.6.2.3 Commencing ABSTUDY Payments

Payments may not commence on an ABSTUDY claim until either the TFN has been provided from the relevant people or a TFN claim has been lodged with Centrelink for passing on to ATO.

6.6.2.4 Lodgement of Claims

ABSTUDY applicants may lodge claims for TFNs at Centrelink Customer Service Centres.

Applications for TFNs may also be lodged at regional ATO centres.

6.6.2.5 Difficulty in Applying for a TFN

For circumstances where a student, student's partner and/or parent/guardian may have difficulty applying for a TFN through normal channels, eg because of access or problems with obtaining documentation, Centrelink and ATO have special arrangements for ABSTUDY students and students’ partners or parents/guardians.

These arrangements entail the use of a special form, called the ‘Tax File Number claim/enquiry for an Aboriginal or Torres Strait Islander’ form, which is only for Aboriginal and Torres Strait Islander people and which includes a section ‘Proof of Age Reference’ enabling an authorised referee to verify the applicant’s identity instead of the need to provide documentary evidence of identity.

The ‘Tax File Number claim/enquiry for an Aboriginal or Torres Strait Islander’ form may be lodged at any Centrelink Customer Service Centre or mailed directly to Centrelink. Centrelink will then forward the claim to the ATO.

6.6.2.6 Regarded as Having Provided a TFN

A student and student's partner or student's parent/guardian will be regarded as having supplied a Tax File Number (TFN) if:

• s/he has provided the TFN to Centrelink for a previous claim; or
• s/he provides her/his TFN for the current claim; or
• s/he has lodged a TFN claim/enquiry form with Centrelink.

Note: A student and student's partner or parent/guardian who do not provide the required documentation described above will be considered not to have supplied a tax file number.

6.6.2.7 Taxation Queries

Enquiries about taxation issues not covered in this Chapter should be referred to the nearest ATO.

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