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.
Below are some of the tests used to assess a person’s entitlements:
A person’s ATI affects their entitlement to any dependant tax offset. Generally, an adjusted taxable income includes:
adjusted fringe benefits amount
tax-free government pensions or benefits
target foreign income
reportable super contributions
total net investment loss
child support paid
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.
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:
if they are entitled to the private health insurance rebate, and
if they do not hold an appropriate level of private health insurance, their liability to pay the Medicare levy surcharge
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.