Question

If I understand correctly, the $900 stimulus payment won’t be paid to people who earned less than $6000 last year — ie, those who did not pay net tax.

On a scale of 1 to 10, where 1 is a gale and 10 is cyclone Tracy multiplied by hurricane Katrina, how much of a poostorm is this going to generate when millions of folks discover they’re not going to get any “free” money?

I might be a libertarian, but until I crunched the numbers I was planning to spend the daylights out of the $900 I thought was coming my way.

Of course I might have misunderstood the numbers.

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8 Responses to Question

  1. John Passant says:

    Jacques

    If you factor in the Low Income offset I think the figure is closer to $11,000 before you receive the stimulus payment.

    I wrote about this recently on my blog through the experience of a friend called Brian.

    The irony is my friend misses out because he took a few months off work to campaign for free for Labor and so his income was below $11,000.

    My rough calculations are that about 400,000 people are in the same category.

  2. Jacques Chester says:

    Wow. I wonder if the papers will try to dig up your mate Brian in a few weeks when people start ringing the ATO to find out they weren’t eligible.

  3. James A says:

    This is fairly well known amongst my student friends for a few weeks now, many of whom don’t get Centrelink so don’t get that payment either. Then there are a select few who got both.

  4. Patrick says:

    You are very slow to have worked that out only now Jacques, and John Passant is right as well, as is James A – a lot of people who don’t qualify as low-income taxpayers qualify under one of the pensions or family assistance heads.

  5. spog says:

    As Patrick and James A have indicated, there are/were several routes into the money. However, to get in via the “taxpayer” one, you have to have paid tax. This was actually in the initial media coverage, as I recall thinking that someone I know was in for a nice surprise; then it dawned on me that, like John Passant’s Brian, they hadn’t paid tax and would get nothing.

    How much income you have to have to pay tax is also a moveable feast. That’s because the test requires a tax liability after rebates have applied. While it’s true that the low income tax offset means the taxable income would need to be >$11,000 in the 2007-8 year, it’s not the only rebate in play. For example, if you received Newstart allowance or some other taxable welfare payment, it will increase your taxable income (compared to your actual “private” income) but could reduce your tax liability back to zero because of rebates attaching to those welfare payments.

  6. Jacques Chester says:

    spog;

    I see your point, but when you say “did you pay tax?” to people, they think of PAYE and tax returns, not net liability. Folks aren’t tax accountants.

    Ironically the government has relieved me of any pointless Irish Catholic / libertarian guilt by not paying me because I have thus far avoided applying for welfare.

  7. James A says:

    Yes, I should have said there was some initial confusion over PAYE tax deductions vs net tax, but it cleared up within a week or so. BTW Jacques, comment email subscriptions don’t seem to be working.

  8. Legal Eagle says:

    It’s really ridiculous, the whole thing. My retiree parents didn’t get anything because their taxable income was too low. But various other people who are pretty well off get it.

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