In the 2008-09 income year, Oscar has gross business receipts of $43,000, business deductions of $41,500, and other personal investment income of $15,000. Is Oscar eligible for co-contributions?
For the purposes of the 10% test, total income is not reduced by allowable business deductions.
Oscar would be eligible to receive a co-contribution based on the eligibility criteria under the 10% test because the percentage of his gross total income from employment, carrying on a business or a combination or both is 74%.
The 74% figure is calculated as:
Gross business receipts
(Gross business receipts + Other income)
= $43,000 / ($43,000 + $15,000) = 74%
As this percentage is greater than 10% of his total income, Oscar meets the 10% test.
Assuming other criteria have been met, the next step is to calculate the total income for co-contribution threshold purposes. For threshold comparison, total income is reduced by allowable business deductions.
Total income for Oscar for comparison with the lower and higher income thresholds would be calculated as:
(Gross business receipts + Other income) less business deductions
= ($43,000 + $15,000) - $41,500 = $16,500
Oscar has a total income of $16,500 for co-contribution income threshold purposes.
Therefore, Oscar would qualify for the full $1.50 on each $1.00 of personal contributions made (that have not been claimed as a deduction) to a complying fund (up to a maximum of $1,000) as his total income is under the $30,342 lower income threshold.
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Last Modified: Monday, 12 October 2009
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