Making withdrawals from the Pathway Education Fund

Transcription

1 Making withdrawals from the Pathway Education Fund Fact sheet and withdrawal form This fact sheet provides important information about making withdrawals from your account in the Pathway Education Fund (PEF) and should be read before completing the PEF withdrawal form. Overview of PEF benefit payments and tax implications Type of withdrawals you can make Components you may withdraw from Tax implications Is evidence required? Education Benefit Net contributions only Tax free to the member No Investment earnings only Beneficiary is assessable on the Tax benefit is applied Yes see Important information for education withdrawals A combination of investment earnings and net contributions Beneficiary is only assessable on the Tax benefit is applied Yes see Important information for education withdrawals Non-Education Benefit Net contributions only Tax free to the member No Investment earnings only Member is assessable on the No The amount of tax payable is based on the Insurance bond rules (see Important information for noneducation withdrawals below) A combination of investment earnings and net contributions Member is only assessable on the The amount of tax payable is according to the Insurance bond rules (see Important information for non-education withdrawals below) No Important information for education withdrawals Eligibility for ASG Education Benefits If you use your earnings for education expenses (i.e. as an Education Benefit), a tax benefit is applied to your investment earnings and is added to your withdrawal payment. This is because ASG can claim a tax deduction for the Education Benefits it pays to its members, and it passes this benefit onto your nominated beneficiary. ASG will calculate the tax benefit for you and will add it to your withdrawal amount. Evidence requirements For ASG to process your withdrawal as an Education Benefit you must submit evidence that the nominated beneficiary of your fund is currently enrolled in an institution that satisfies ASG s Education Benefit Criteria (please see over page). This may include a confirmation of enrolment letter or tax receipt of enrolment fees paid, in relation to this withdrawal.

2 ASG Education Benefit Criteria Costs associated with full-time and part-time studies recognised by state, territory and federal education departments can be claimed as an Education Benefit. Study may be taken in Australia or overseas (in which case recognition by an equivalent overseas government education department will also be accepted). Course fees Any course fee charged by the following institutions can be claimed as an Education Benefit: University (Australia or overseas) TAFE college Registered Training Organisations Professional bodies (CPA, CFA etc.) Secondary school Primary school Preschool Any higher education course that is eligible to receive HECS or HELP support from the Australian government is eligible. Government recognised or sanctioned apprenticeship courses are also eligible. Expenses Expenses related to the completion of a course that meets ASG Education Benefit criteria can be claimed, where the expenses are a requirement of completing the course. Expenses may include: text books computers travel expenses excursions and schools camps living away from home expenses (rent, utilities) tools of the trade (calculators, measuring devices, hammers, personal safety equipment) ASG Education Benefit criteria may be changed at any time. For the most up-to-date list of criteria, please go to: Whether evidence provided meets ASG Education Benefit criteria is at the sole discretion of ASG. Additional evidence If you want to withdraw an Education Benefit of $6000 or more OR if the total of all your withdrawals for Education Benefits made in this calendar year is $6000 or more, you are required to submit additional evidence. This can be in the form of a tax receipt related to the expense for which you are withdrawing. If you are unsure whether your withdrawal requires additional evidence please contact ASG at memberservices@asg.com.au or on 131 ASG ( ). Submitting evidence Please attach photocopies of your evidence to this form and them to memberservices@asg.com.au, Tax payable on investment earnings Any investment earnings withdrawn from your Member Account will be treated as assessable income of your nominated beneficiary in the year of payment. Therefore any personal tax liability will depend on your nominated beneficiary s then taxable income at that time, the marginal tax rate, the applicable tax-free threshold and any entitlements to tax offsets or rebates. See the Australian Taxation Office (ATO) website for more information on individual tax rates: Currently the standard tax free threshold on the taxable income of a resident Australian is $20,542. In the case of a resident Australian who is not aged 18 years or over by the end of a tax reporting year and who is not excepted, or whose income is not excepted, under special tax rules for minors a lower tax-free threshold of $416 may apply.

3 Important information for non-education withdrawals If your withdrawal is not for an education expense you do not need to submit any evidence with this form. Any investment earnings you receive as part of this withdrawal will be taxed at your marginal tax rate subject to the Insurance Bond Rules as outlined below. Insurance Bond Rules Insurance Bond Rules are special tax rules that apply to a scholarship plan, when you withdraw your investment earnings as a Non-education Benefit. If you receive any investment earnings as a Non-education Benefit after 10 years from the date of your initial contribution, and you also satisfy the 125 per cent rule (see What is the 125 per cent rule? below), the amount you receive will be tax free. In other words, the tax on earnings has already been paid by the Fund. If you receive any investment earnings as a Non-education Benefit within the 10 year period, the amount will count as part of your assessable income and be subject to tax at your marginal rate. The exact amount you will be required to declare, which will be assessed, will depend on when (in relation to the 10 year period) you make the withdrawal please refer to the following table: Initial contribution Within 8 years, earnings are fully assessable Between 8 and 9 years, two thirds of earnings are assessable Between 9 and 10 years, one third of earnings are assessable After 10 years, earnings are non-assessable and you pay no tax Year You will however be entitled to receive a 30 per cent tax rebate on the assessable amount, to compensate for tax already paid by ASG on fund earnings in the Fund. The Australian Taxation Office will automatically calculate this special tax rebate, if you declare the assessable amount within bonuses received from life insurance companies and friendly societies in your individual tax return. What is the 125 per cent rule? The 125 per cent rule allows you to make additional contributions to your Member Account each year, provided they are not more than 125 per cent of the previous year s total contributions (i.e. they are limited to a 25 per cent increase on the prior year s total contributions). If you exceed 125 per cent of the previous year s contributions, the start date of the 10 year period will be reset for tax purposes. Exceeding the 125 per cent rule will not alter the tax position of Education Benefits, it will only alter when the 10 year period commences. Note: It is your responsibility to monitor your contributions with respect to the 125 per cent rule. ASG will provide you with information to help you manage your contributions via your annual member statement and on our website. If you have any questions about the 125 per cent rule and your contributions please contact ASG or speak to your licensed tax agent. The information contained in this form is current as at 11 October Please contact a licensed tax agent or go to to understand the full taxation implications of the withdrawal you plan to make.

4 AUSTRALIAN SCHOLARSHIPS GROUP FRIENDLY SOCIETY LIMITED ABN AFSL No REGISTERED OFFICE: HANOVER STREET OAKLEIGH VIC 3166 PH: 131 ASG ( ) FAX: Withdrawal form Pathway Education Fund Member number. Benefit number. Complete this form for each withdrawal you wish to make. Section 1: Member details Member 1 Given names: Last name: Residential address (required): Postal address (if different from residential address): D.O.B: Phone (H): Phone (W): Phone (M): address: Member 2 Given names: Last name: Residential address (required): Postal address (if different from residential address): D.O.B: Phone (H): Phone (W): Phone (M): address: 2.1 Section 2: Withdrawal details The information in the following table is designed to assist you in completing the rest of the form and is required to be completed to enable us to process your withdrawal request. Please tick ONE of the boxes in both columns 1 and 2 to indicate the withdrawal you want to make. 1. Are you withdrawing as an education expense? 2. Which component(s) of your account do you wish to withdraw? 3. Is evidence required? (Please note the tax implications of each option in the fact sheet attached to this form.) 4. Section(s) of this form you must complete Yes Net contributions only No 2.2 and 2.3 a) Earnings only or a combination of investment earnings and net contributions Yes 2.2 and either 2.3 b) or c) No Net contributions only No 2.2 and 2.3 a) Earnings or a combination of investment earnings and net contributions No 2.2 and either 2.3 b) or c) Page 1 of 3 of this withdrawal form

5 2.2 What amount do you want to withdraw in total? Nominate the total amount you want to draw from your Member Account. Amount $. or tick box to withdraw all: 2.3 What component(s) of your account do you want to withdraw from? Please specify which component(s) of your account you want to withdraw this amount from: a) net contributions only b) investment earnings only c) a combination of net contributions and investment earnings^ For option c) please enter your withdrawal amount in either the net contributions or investment earnings fields below. If you enter a single withdrawal amount below, ASG will calculate how much you need to draw from the other component to effect your total withdrawal amount shown in section 2.2 above. Net contribution: Investment earnings: Amount $. or Amount $. ^ If you have selected either option b) or option c), please indicate on section 2.1 of this form if your withdrawal relates to an education expense and satisfies ASG Education Benefit criteria. Please note that if you do not complete Section 2.1 we cannot process your withdrawal. Section 3: Payment details Nominate how you would like to receive your withdrawal: Direct deposit to the bank account listed on your ASG membership. Please note: We cannot direct deposit to credit cards. Cheque sent in the mail If you would like a direct deposit to your bank account and you have not yet submitted your bank account details please provide them below: Bank/institution: BSB: Account number: Name(s) of accountholder: If you would like a cheque posted to you in the mail please indicate whether you would like us to send it to your residential address or postal address as nominated in section one of this form. If you don t have or don t complete the postal address section of this form we will send the cheque to your residential address as completed in section one of this form. Residential address Postal address Page 2 of 3 of this withdrawal form

6 Nominate when you would like to receive your withdrawal: Please indicate which period below you would like your withdrawal to be paid in. Withdrawal period Submission cut-off date Scheduled payment date Please tick Period 1 31 July 15 August Period 2 31 October 15 November Period 3 31 January 15 February Period 4 30 April 15 May If you require a withdrawal to be processed sooner than the next withdrawal period, you may request an unscheduled withdrawal. An unscheduled withdrawal will attract a processing fee of $25 and it will generally be processed within 10 business days. Please tick here if you would like an unscheduled withdrawal. Section 4: Declaration I/We wish to make a withdrawal from my/our Member Account as detailed above, and I/we declare that all information provided above is true and correct. Member 1 Name: Signature: Date: / / Member 2 Name: Signature: Date: / / To process your request, all members listed on the membership title are required to sign this form. For verification purposes please include a legible photocopy of your current Driver s Licence/s or Passport/s (please enlarge to 150%). If we are unable to verify your signature/s against the verification documents, we will mail another form to you for completion. Page 3 of 3 of this withdrawal form