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Tax Return Advice: Tax Tips for stay-at-home parents

At One Click Life, we are passionate about finding ways to help our clients make every cent count. With tax season in full swing, we thought parents rightly deserved their very own tax tips post.

With time at a premium, we are sure the last thing on your mind when you catch a few minutes to yourself is tax advice. Let our tax experts help.

Do stay-at-home parents need to lodge a Tax Return?

As a stay-at-home-parent, if you didn’t work during the tax year and didn’t earn an income, you won’t have to lodge a return. This is provided your taxable income was less than $18,200 for the year, you had no tax withheld/PAYG instalments, other income including dividends and distributions were less than $18,200 and you weren’t subject to income averaging rules.

Which income payments are exempt from tax?

The Child Care Subsidy is also exempt income and is not taxable and the same applies to any child support and spouse maintenance payments you received. Family tax benefits are also exempt income.

What deductions can parents make?

Keep the receipts for donations to your children’s school – you are entitled to claim a deduction on your Tax Return for donations made to school building funds.
Remember that if you use your car for work, keep a log book AND keep all your expenses for the year. There are 2 methods of calculating motor vehicle expenses and having record of both will give you the option of selecting the best method to claim.

Take advantage of the Superannuation bumper and any spouse contributions

Don’t forget the government’s co-contribution to superannuation, helping Australians boost their retirement savings. If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government also contributes $500 maximum. This is all done automatically if your super fund has your TFN so there is no need for the taxpayers to do anything.

If you didn’t work during the year or earned under $37,000 and your spouse made contributions to your Superannuation fund on your behalf, your spouse may be entitled to an offset for those payments in their Tax Return.

How does the Medicare Levy Surcharge work?

Children under the age of 21 and children aged 21-24 year of age who are full time students are classed as dependents for the purpose of calculating the Medicare Levy Surcharge. For every child after the first child, the income threshold for a family is increased by $1,500 from a base threshold of $180,000. This means for a family of 4, the Medicare levy surcharge will not be payable until the combined family income exceeds $181,500 for the income year. However, if the family maintains an appropriate level of private health insurance with hospital cover, the Medicare Levy Surcharge will not be payable at any level of income.

What is the Child Care Subsidy?

Under the new package, the current Child Care Rebate and Child Care Benefit will be replaced by a single Child Care Subsidy. It looks at 1) combined family income; 2) activity levels of parents; and 3) the type of child care being accessed. Stick with us here, we’ll explain each point.

Combined family income: Families earning $190,015 or less per year will have no cap on accessing the Child Care Subsidy. Families earning more than $190,015 and less than $354,305 will have an annual cap of $10,655 per year per child.
The percentage of child care fees or the relevant hourly rate (whichever is lower), the Government will contribute based on a family’s combined income:

Combined family income^Subsidy rate*
$0 to $72,46685%
More than $72,466 to below $177,466Between 85% and 50%. The percentage goes down by 1% for every $3,000 of income your family earns.
$177,466 to below $256,75650%
$256,756 to below $346,756Between 50% and 20%. The percentage goes down by 1% for every $3,000 of income your family earns.
$346,756 to below $356,75620%
$356,756 or more0%

Activity levels of parents: In two parent families, both parents must meet the activity test requirements – 3 steps of hours of activity and maximum number of hours of subsidy per child. Where the parents meet different steps on the activity test, the parent with the lowest entitlement determines the hours of subsidised care for the child.

 Hours of activity*Maximum number of hours of subsidy per child*
18 hours to 16 hours36 hours
2More than 16 hours to 48 hours72 hours
3More than 48 hours100 hours

“Activity” doesn’t always mean paid work. It can be e.g paid annual and parental leave; volunteering or undertaking unpaid work in a family business; self-employment, studying or attending training courses and job hunting.

The type of child care being accessed: An approved child care service must be used. Check out the Australian Government’s mychild website to see if the service is approved.
The maximum hourly rate the Government will subsidise is based on the type of child care service:

Service TypeMaximum hourly rate cap
Centre Based Day Care (Long Day Care and Occasional Care)$12.74^
Family Day Care$11.80^
Outside School Hours Care (Before, After, and Vacation care)$11.15^
In Home Care$34.64^ (per family)

You will need to meet all eligibility criteria for Child Care Subsidy as well as extra criteria for In Home Care to qualify as an approved child care service.

The simplest way to make your tax refund process as easy as possible? 

One Click Life offers online Tax Returns at your fingertips in an easy-to-use platform run by industry professionals. 

Taxes, Health Insurance, and Wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your Life Admin in one place.

Let One Click Life take care of your Tax Return and life’s essential tasks, so you can spend more time doing the things you love.