Single parents will, once their youngest child turns 8, start to pay more tax, how will this happen I hear you ask?

While the youngest child is under 8 a single parent will receive Parenting Payment Single. When the child turns 8 the parent will stop receiving Parenting Payment Single and start receiving the Newstart Allowance.

How does receiving Newstart effect your tax differently to Parenting Payment Single? The answer is that the parenting payment is treated as a pension and the tax payer receives a larger tax offset.

Newstart entitles you to a Beneficiary Tax Offset of 15% of the amounts of Newstart payments greater than $6,000, if your Newstart payment is $7,000 you will get an offset of $150.  If Newstart is $5,000 the offset is nil.

Parenting Payment Single entitles you to the Pensioner Tax offset of $2,240 if your taxable income is below $20,934. So what this means is if you receive $7,000 0r $6,000 0r even $20 of Parenting Payment Single you will receive and offset of $2,240.

I will do a quick example for the difference in tax that you would pay once your child has turned 8.  I am working on a total income of $20,000, ($8,000 earned as  Centrelink money and $12,000 earned from wages). These figures do not reflect Centrlink’s payments or income tests.

If your child is older than 8 years and you receive the Newstart allowance then the tax payable would be $600.

If your child is younger than 8 years  and you receive Parenting Payment Single, for the 2009 year your tax payable would be $nil.

If you earn $1 of Newstart Allowance your tax free threshold is $14,000 including the low income tax offset where as 1$ of Parenting Payment Single will give you a tax free threshold of $25,300 including the low income rebate.

34 Comments

  1. Hi, I have an 18 month old and am receiving parenting payment single I earned $14,000 from parenting payment single and $4,000 from work earnings. Could you please advise what tax I should have paid on these earnings as I don’t think work has taken tax correctly. Thanks

    1. Based on $18,000 of income in the 2010 year the amount of tax payable is $1,800

      The tax of $1,800 is then reduced by the low income offset of $1,350 and the balance of $450 is reduced to nil by the pensioner tax offset of $2,230.

      So the tax for person receiving parenting payment singe and earning $18k the tax payable is nil.

  2. Hi, I am married, part time Uni student working part time and my husband is on DSP. I don’t think I have paid enough tax on my $28353.00 taxable income with $3842.00 tax withheld. Could you please advise me if my fears are correct?
    Thank you kindly

    1. @ M White, Assuming that the $28,353 is your only income, (ie no bank interest, dividends, Centrelink or other income.) then the $3842 should adequately cover the amount of tax that is due.

  3. Hi there im a single mum of a 2 year old…
    I was wondering if a FTB offset is different to the Single parenting(pension) tax offset??
    Ive received a payment for FTB but when i called centrelink the gentlemen began to tell me its the same thing and he had never heard of an offset for pps

    1. Receiving Parenting Payment Single, means that you are eligible for the pensioner tax offset. Family Tax Benefit (FTB) is a payment from Centrelink. Two seperate items

  4. Hi, could you please advise me as to how much Tax I need to pay (if any)? I am a part-time student now but have always been full-time in the past, so I have never done this before.

    Newstart earnings: $5350
    ABN earnings: $7501.73
    PAYG Earnings: $596.

    Total Earnings (without centrelink): $8097.73
    Total Earnings (with Centrelink): $13,447.73

    Thank you!

    1. The low income tax offset of $1350 means that your earnings can be $15k before tax is paid.

  5. Hi there,
    I’m currently recieve Parenting Payment and i’m currently working 15 hrs a week when my child turns 8 and if i’m still working 15 hours a week am i eligible for Newstart?

  6. hi, could you please advise me as to how much Tax I need to pay (if any)?

    I am single, no children.
    My total incoem for 2009 -2010 is 23,827 from a full time job only. the tax withheld is 3,623.

    Someone told me because my total assessable income below the low income earner threshold for 09/10 (say 30,000), therefore i dont need to pay the Medicare levy charge, is that true?

    Many Thanks!

    Kevin

    1. @Kevin. If your taxable income is $23,827 the tax payable including the Medicare Levy is $1,681.46. As you have already paid $3,623 a refund is due of $1,941.55.

      The Low Income Tax Offset and the Medicare Levy thresholds are 2 separate amounts. The LITO is $30,000 for every one and the Medicare levy threshold for your situation is $18,488, as you are over the threshold 1.5% is levied on your total taxable income.

  7. Hi, i am just trying to work out the amount of tax i need to pay for this financial year. I was unaware you had to pay tax on single parenting payments. I have estimated my income (incl. parenting payment) to be $33,000. I have a 7 year old and a 10 year old. I also have a pension/concession card. I assume maintenance and family tax benefits are not regarded as taxable income. Thanks so much, Fiona.

  8. Hi, is my understanding that if I earn less than the low income earner threshold I do not need to pay tax progressively throughout the year? In other words, instead of waiting for a tax return to claim my tax payments back, I can simply not pay any tax on the presumption that I will not exceed the threshold? Thank you, Stefanie

    1. Stefanie, if you are employed your employer must take out the correct amount of tax out of your gross earnings. Once your gross earnings exceed $210 (Year ending 30th June 2011) then your employer must deduct PAYG Withholding.
      Based on the gross earnings of $211 (Tax needs to be with held) you will have annual income of $10972. The low income rebate for 2011 is $1500 which effectively gives you a tax free thresh hold of $16,000.
      Even if you think that your earnings may be below the $16, your employer is still obliged to deduct the correct amount of tax as per the ATO’s schedule.

  9. Hi,
    I have been on single parenting payment and family tax a and b since November 2010 when I took custody of my 5 year old son,I have not done any work since October 2010, before that I had been working for the rest of the financial year. Will the pensioner offset be applicable to my earnings in total, or just my earnings since I have been receiving parenting payments?

  10. Hi,

    I am single and 24. For this financial year, I was on youth allowance as a uni student for 5 months ($450 Fortnight), on Newstart as a job seeker for 4 months ($550 Fortnight), then cancelled that when I got a job, which I’ve worked for 3 months this financial year ($4000 Gross income per month).

    What is my tax owing? Does the total amount of centrelink payments I received this year, get added on to the money I made when I got my new job? I’ve done the maths, and it looks like I’m gonna owe a lot because of this. Someone help please?

    1. Joel, the Centrelink and wages income are added together to work out your taxable income. The taxable income is used to calculate the amount of tax due which is then reduced by any tax credits paid through your wages and any applicable tax offsets.
      I have made a rough calculation of your income at $21,000 the amount of tax due on that figure is $2,250.
      The tax of $2,250 is then reduced by the low income offset of $1,500 (2011) to $750, the $750 is then reduced by any tax paid on the 3 months of wages which has not been stated in your question.
      If the tax withheld from your wages is greater than $750 then a refund will be due.
      This is only a estimate, as I don’t know the actual figures involved.

  11. Hi, Can you help me please im stressing so bad! Centrelink gave me wrong info and i only estimated my taxable income to them of 25,000 ( this was just from my wages earned not my parenting payment single). So the Correct information is below:
    parenting payment earned: $11194
    Tax paid through Centrelink : $750
    Wages earned : $20000
    Tax paid through wages : $3500

    With the offsets will i have a tax bill?
    Please give me some happy news.
    I not sure if you need to know for figures..i have a 7 year old and 14 year old
    Mandy

    1. Mandy, the amount of tax due on $31k with out taking into consideration tax offsets and your tax credits is $3,750…
      The tax amount of $3,750 will then be reduced by the low income offset $1,500, the offset for receiving parenting payment single, the educational tax refund and of course the $4,250 of tax that you have already paid through wages and Centrelink.
      I am thinking that you will be happy with the outcome when you lodge your return.

  12. if i worked for a month in a financial year, received 2 months of newstart allowance, then parental leave pay after having baby for 18 weeks, then im put on single parenting payment and family tax benefit A for the rest of the financial year coz i havent returned to work and am eligible to receive family tax benefit B, what tax offsets will i be eligible for and will i be receiving any refunds at the end of the year?Im getting confused, please help!

    1. Unfortunately you will need to contact Centrelink to get a definite answer in regards to your eligibility on receiving FTB B, as a single parent I think that you are eligible to receive.

  13. Hi, I’m very confused with this tax offset.
    im receiving single parenting payments and they deduct like 20$ every fortnight so it’d be 520 tax withheld. do i have to do a tax return to get that money and just the offset apply to me….. some one please help me plz…

  14. Hi,

    I earned about $4000 in this financial year then I went on parenting payment partnered for I think 2 or 3 months and have been on parenting payment single ever since feb or march. I have an 8 month old. All this offset and tax talk makes no sense can someone please just tell me If i will be happy with my tax return?!!

    1. Unfortunately more information is needed, with the income from your wages and parenting payment partnered no tax is due. Any refund that you would receive would be equal to the amount of tax that has been withheld from your wages.

  15. Hi,

    I’m so confused with the ato, this is my situation: have 9000 income from trust, 9905 from single parent pension, 6600 from work altogether 25,505. Any ideas how much tax I should be paying this year? Thank you so much in advance!!

    1. As you are receiving the single parent payment your tax free threshold for 2012 is $30,685 and as your income is less that that amount the no tax needs to be paid.

  16. Please help! I’m thinking I haven’t paid enough tax. Can you please advise. I’m a single mum of 2 yr old.
    Parenting payment (single) $7,158.00
    Gross income (excluding parenting payment) $35,000
    Total tax witheld $3,900
    I have private health insurance with no life time loading.

    1. The tax payable on 35k less the low income and pensioner offsets is about $1450. So having $3900 in credit will mean a refund of about $2450.

  17. Many thanks, you’ve taken a huge weight off my shoulders.

  18. Apologies, but could you please clarify for me. My total income including the pension will be approx 42 k. Will the 3900 tax I’ve paid still cover this amount? Is my understanding correct that the pension is added onto my gross income to form my total income for the year? Thanks again for your excellent service.

  19. hello i earnt 18500 in taxable income and but only paid $996 in tax the 11242 in single parenting payment which i paid no tax am i going to get a huge tax bill

  20. When will the family tax supplements be paid this year? Last year i received it on the 8th July but nothing as yet so far.I have told family assistance office i dont need to lodge return and i had no earnings.

  21. I earned

    34,344 wages paid 3,869.00 tax
    5,000 single parent payment no tax

    5 year old child, single parent, private health insurance

    I did my tax online but have not submitted, a $300,00 return, does this sound correct to you, it seems a little low???

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