Income tests
Income tests are used to work out your eligibility for a number of tax offsets and benefits, which can reduce the amount of tax you have to pay.
We use a number of items from your tax return when applying income tests. You should ensure that you complete all items that apply to you in the income tests section of your tax return.
A number of offsets, benefits and obligations are assessed using a family income threshold. If you have a spouse, you should include your spouse's income in the relevant section of your tax return.
From 1 July 2017, there are changes to the treatment of fringe benefits under the income tests. For information on the changes, see Adjusted taxable income (ATI).
Depending on your circumstances, any of the following tests may be used to assess your entitlements:
We use income tests to assess the following tax offsets and other items in your tax return.
Tax offsets include:
- net medical expenses tax offset for disability aids, attendant care or aged care
- invalid and invalid carer tax offset
- seniors and pensioners tax offset
- Medicare levy surcharge (lump sum payment in arrears) tax offset
- spouse super contributions tax offset.
See also:
Other items include:
- private health insurance rebate
- Medicare levy surcharge threshold calculation
- government super co-contribution
- a deduction for your personal super contributions
- a deduction for your business losses (non-commercial losses)
- income tax concessions available to participants in certain employee share schemes
- HELP and SFSS repayments.
See also:
Adjusted taxable income
Your adjusted taxable income (ATI) affects your entitlement to any dependant tax offset.
ATI is the sum of the following amounts:
- taxable income (your assessable income minus deductions), disregarding any assessable First Home Super Saver (FHSS) released amount
- adjusted fringe benefits total, that is the sum of
- reportable fringe benefits amounts received from employers exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986 multiplied by 0.53, and
- reportable fringe benefits amounts from employers not exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986
- target foreign income (includes any income earned from overseas that is not already included in your taxable income or received in the form of a fringe benefit)
- total net investment loss (includes both net financial investment loss and net rental property loss)
- tax-free government pensions or benefits (includes disability pensions, carer payments and defence pensions)
- reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
less
any child support you paid.
See also:
Rebate income
We work out what we call 'rebate income' to determine whether you are eligible for the seniors and pensioners tax offset.
Your rebate income is the total amount of your taxable income (disregarding your assessable First home super saver released amount) plus the following amounts if they apply to you:
- reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
- total net investment loss (includes both net financial investment loss and net rental property loss)
- adjusted fringe benefits total, that is the sum of
- reportable fringe benefits amounts you received from employers exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986 multiplied by 0.53, and
- reportable fringe benefits amounts from employers not exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986.
See also:
Income for Medicare levy surcharge purposes
We use your income for surcharge purposes to work out if you have exceeded the Medicare levy surcharge threshold that applies to you. We do this to determine:
- if you are entitled to the private health insurance rebate
- if you do not hold an appropriate level of private health insurance, your liability to pay the Medicare levy surcharge.
Private health insurance rebate
To assess your private health insurance (PHI) rebate entitlement, generally your income for surcharge purposes is your:
- taxable income (your assessable income minus deductions), disregarding any assessable FHSS released amount
- reportable fringe benefits amount, as reported on your payment summary or income statement
- reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
- total net investment loss (includes both net financial investment loss and net rental property loss)
- the amount on which family trust distribution tax has been paid.
If you are between your preservation age and 59 years old and received a super lump sum, reduce income for surcharge purposes by any taxed element of the lump sum, other than a death benefit, that does not exceed your low rate cap.
Medicare levy surcharge
You may have to pay Medicare levy surcharge (MLS) if you or your dependants (including your spouse, even if they had their own income) did not have an appropriate level of private patient hospital cover for the whole financial year and your income was above a certain amount.
See also:
HELP, SSL, ABSTUDY SSL, TSL and SFSS repayment income
The Higher Education Loan Program (HELP), Student Start-up Loan (SSL), ABSTUDY Student Start-up Loan (ABSTUDY SSL),Trade Support Loan (TSL) and Student Financial Supplement Scheme (SFSS) repayment income includes your:
- taxable income (your assessable income minus deductions), disregarding any assessable FHSS released amount
- total net investment loss (includes both net financial investment loss and net rental property loss)
- reportable fringe benefits amount, as reported on your payment summary or income statement
- reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions).
See also:
Super income tests
Reportable employer super contributions are included in the income tests for the following:
- spouse super contributions tax offset
- government super co-contribution
- deduction for personal super contributions.
See also:
Income tests are used to work out your eligibility for a number of tax offsets and benefits, which can reduce the amount of tax you have to pay.