3rd Quarter 2015

You may be eligible for Child Care Rebate if:

•you use a Child Care Benefit approved child care service;

•you are eligible for Child Care Benefit, even if you earn too much to receive payment, and

•you and your partner meet the Work, Training, Study test or are exempt from it.

You meet the 'work, training, study test' for Child Care Rebate if you and your partner participated in work-related commitments at some time during the week in which you used child care or are exempt from that requirement. No minimum number of hours is required.

Child Care Rebate is different to Child Care Benefit and is not income tested.

The amount of Child Care Rebate you may receive per child, per financial year, depends on which year it is for and your out of pocket expenses. Out of pocket expenses are your total child care fees less the amount of any Child Care Benefit and Jobs, Education and Training Child Care Fee Assistance you may be eligible for.

The amount of Child Care Rebate is based on 50% of your out of pocket expenses. The maximum amount of Child Care Rebate you can get is $7,500 per child per year. The maximum amount payable is called the cap amount.

Once you reach the Child Care Rebate cap for your child for the financial year, you will not be entitled to any further rebate until the next financial year.

To receive Child Care Rebate you need to claim Child Care Benefit for approved child care. You do not need to lodge a separate claim for Child Care Rebate. You will automatically be assessed when you claim Child Care Benefit for approved care.

In some cases you may be assessed as being eligible for Child Care Benefit, but are not actually entitled to any payment because your income is too high. Even though you may not receive any benefit due to your income, you may still be eligible for Child Care Rebate.

Employers, financial institutions, companies, private health funds, other businesses and government agencies provide ATO with information on taxpayers, including details of income received, tax withheld and other tax-related data. The supply of this information is required by law. The ATO match the data they hold with the details you provide on your tax return. If they identify differences, they may send you a letter outlining the discrepancy.

The data matching letters that are issued by the ATO may relate to capital gains tax, dividend income, employee share schemes, employment income, foreign source income, fuel tax credits, government benefits, interest income, Medicare Levy, offsets, partnership and trust distributions to name a few.

If you receive a data-matching letter from the ATO, you will need to review your records. The action you take will depend on whether you agree or disagree with the information included in your letter. Find out what supporting documents you need to provide to verify the income or other information reported in your tax return.

If adjustments are required to your tax return, the ATO will issue you with an amended notice of assessment advising you of any amounts payable and how to pay.

Last year the ATO cross-referenced information reported in tax returns against over 600 million transactions provided to them by third parties to identify omitted income and incorrectly claimed offsets, such as the dependent spouse tax offset.

In the past the ATO has focused on areas such as omitted interest and employment income; however, they are now broadening their information matching to encompass a greater range of areas, such as:

• capital gains tax from the disposal of shares, collectibles, precious metals and property;
• foreign source income; and
• contractor income from payments made by government agencies.

By using this approach, the ATO last year contacted over 500,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns. Nine out of ten returns were amended as a result of their enquiries.