Amanda is an employee who earns an annual salary of $42,000 in the 2006-07 income year. As a result of salary packaging a car, she also has reportable fringe benefits of $8000, and has investments that return an annual dividend of about $6,000.
As well as including her annual salary of $42,000 on her income tax return, Amanda also includes her reportable fringe benefit amount of $8,000, and her dividend income of $6,000 bringing her total income to $56,000.
Amanda also makes personal contributions of $1,000 to her super, above the nine per cent of salary her employer must pay.
Initially, she understood she was eligible for a significant co-contribution, given her salary of $42,000, but the co-contribution is calculated on total income determined by the Tax Office.
In this case, total income is $56,000, comprising salary $42,000, fringe benefits of $8,000 and return on investments of $6,000. With tax deductions of, say, $3,000, taxable income is $45,000. However, the Tax Office calculates any co- contribution on total income.
In the case of Amanda, with a total income of $56,000 and personal super contributions of $1,000, she is entitled to a co-contribution payment is $100 which still represents a 10 per cent return on investment in a matter of months.
Sections within Case studies
Last Modified: Monday, 12 October 2009
Subscribe
