| 02 9982 2466

Income tests for tax offsets

Income tests are used to work out a person’s eligibility for tax offsets and benefits which can reduce the amount of tax they have to pay.

The Australian Taxation Office considers various items from a person’s tax return when applying income tests. For example, a number of offsets, benefits and obligations are assessed using a family income threshold. Those who have a spouse should include the spouse’s income in the relevant section of their tax return.

Below are some of the tests used to assess a person’s entitlements:

Adjusted taxable income (ATI)
A person’s ATI affects their entitlement to any dependant tax offset. Generally, an adjusted taxable income includes:
Rebate income
The ATO determines whether a person is eligible for the seniors and pensioners tax offset by considering a person’s ‘rebate income’. Rebate income includes taxable income; adjusted fringe benefits amount; total net investment loss and reportable super contributions.

Income for Medicare levy surcharge purposes
The ATO uses a person’s income for surcharge purposes to work out if they have exceeded the Medicare levy surcharge threshold that applies to them to determine:
Super income tests
Reportable employer super contributions are included in the income tests for the spouse super contributions tax offset; government super co-contribution and deduction for personal super contributions.

Posted on 15 November '16 by , under Tax.

Leave a Comment

You must be logged in to post a comment.

Join Our Mailing List!

Subscribe to our mailing list to receive all the latest financial newsletter updates as well as information on important dates on our business calendar.

Recent Updates

Firm News

What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

Business Calender