Adjusted taxable income

Your adjusted taxable income will be used to assess your eligibility for some payments, supplements, support and benefits.

What counts as adjusted taxable income

Depending on which payments or services you claim, your adjusted taxable income can include:

  • taxable income
  • foreign income
  • tax-exempt foreign income
  • total net investment losses
  • reportable fringe benefits
  • reportable superannuation contributions
  • certain tax free pensions or benefits, and
  • superannuation income stream benefits, including both taxable and non-taxable components

For some payments or services, any child support you pay will be deducted from your adjusted taxable income.

Taxable income

Taxable income is your gross income minus allowable deductions. It includes income from wages, a business, investments, lump sum payments and any taxable pensions or benefits like Parenting Payment and Newstart Allowance. Income under the tax free threshold is still counted as taxable income.

Family Tax Benefit, Child Care Benefit and Child Care Rebate aren’t taxable payments.

If your allowable deductions are greater than your gross income, that is if you make a loss, your taxable income is taken to be nil for the purpose of calculating your adjusted taxable income.

Foreign income

Foreign income is money received from outside Australia for which you don't pay Australian income tax. This may include money from foreign business interests or investments. The amount must be in Australian dollars and cover the Australian financial year.

Read more about foreign income for family assistance purposes.

Tax-exempt foreign income

Tax-exempt foreign income is income from Australia, earned while overseas in foreign service or on an approved project for at least 91 days, and is exempt from Australian tax. For example, this can include income earned by residents outside Australia on overseas projects that have been approved by the Minister for Trade and Investment, or members of the armed forces serving overseas.

Total net investment losses

Total net investment losses are the sum of net losses from rental property income, plus net losses from financial investment income. The losses will be added back when we calculate your adjusted taxable income.

A net loss from rental property income is the amount by which the expenses of owning the property, such as mortgage interest payments and maintenance costs, exceed the gross rental income from it.

A net loss from financial investment income is the amount by which the expenses of owning the investment, such as interest payments on the money lent to purchase the investments, exceed the income that the investments are earning. These investments are often referred to as negatively geared.

Reportable fringe benefits

Reportable fringe benefits or employer provided benefits are benefits that you get from your employment such as:

  • help to pay your rent or home loan
  • a home phone
  • a car
  • school fees for children
  • health insurance premiums, and
  • child care expenses paid by your employer

You'll find this amount recorded on your payment summary at the end of the financial year. You can ask your employer to tell you the expected amount for this financial year.

Reportable superannuation contributions

Reportable superannuation contributions are the wages you choose to salary sacrifice into a superannuation fund. This is on top of the compulsory contributions paid by your employer.

If you are self employed, reportable superannuation contributions are the superannuation payments you make that you claim as a tax deduction.

Tax free pensions or benefits

Tax free pensions and benefits are certain non-taxable pensions or benefits you might receive from us or the Department of Veterans' Affairs.

These can include payments such as:

They don’t include:

Read more about which tax free pensions or benefits are included in your adjusted taxable income for child support in the Child Support Guide on the Department of Social Services website.

Read more about which tax free pensions or benefits are included in your adjusted taxable income for family assistance and low income supplements in the Family Assistance Guide on the Department of Social Services website.

Superannuation Income Stream Benefits

Any benefits received in the relevant income year from a superannuation income stream that are non-assessable non-exempt income, within the meaning of the Income Tax Assessment Act 1997, are included in your adjusted taxable income for Low Income Supplement or Low Income Family Supplement.

Child support you pay

Child support you pay to support natural or adopted children from a previous relationship will be deducted from your adjusted taxable income for family assistance payments and low income supplements.

If you have a partner, any child support they pay to support natural or adopted children from a previous relationship will be deducted from their adjusted taxable income. This includes child support we collect, private maintenance and non-cash maintenance, but doesn’t include spousal maintenance.

Family assistance payments

Your adjusted taxable income will be used to assess entitlement to Family Tax Benefit Part A and Part B, Child Care Benefit for approved care, Parental Leave Pay, Dad and Partner Pay and Schoolkids Bonus.

Your adjusted taxable income for family assistance purposes includes:

  • taxable income
  • reportable fringe benefits
  • reportable superannuation contributions
  • total net investment losses
  • certain tax free pensions and benefits
  • foreign income, and
  • tax-exempt foreign income

Any child support you pay will be deducted from your adjusted taxable income for family assistance payment purposes.

Child support

A range of income amounts for both parents are taken into account to work out child support payments. We add up the following amounts to calculate your adjusted taxable income:

  • taxable income
  • reportable fringe benefits
  • reportable superannuation contributions
  • total net investment losses
  • certain tax free pensions and benefits, and
  • target foreign income

Low Income Supplement

To claim Low Income Supplement or Low Income Family Supplement you must meet the income requirements. Both payments are subject to an adjusted taxable income test. There is no assets test.

Adjusted taxable income for the purposes of the Low Income Supplement or the Low Income Family Supplement includes:

  • taxable income
  • reportable fringe benefits
  • reportable superannuation contributions
  • total net investment losses
  • target foreign income
  • tax exempt foreign income
  • tax free pensions or benefits, and
  • superannuation income stream benefits received, including both taxable and non-taxable components

Any child support you pay will be deducted from your adjusted taxable income for Low Income Supplement or Low Income Family Supplement purposes.

Commonwealth Seniors Health Card

This health card is subject to an adjusted taxable income test plus any deemed amount from account-based income streams. There is no assets test. Your adjusted taxable income is the sum of the following:

  • taxable income
  • target foreign income
  • total net investment losses
  • employer provided benefits, and
  • reportable superannuation contributions

Any deemed amount from account-based income streams will be added to your adjusted taxable income to determine your eligibility for the card.

Account-based income streams you had before 1 January 2015 won't be assessed using the deeming rules provided you continue to be eligible for the Commonwealth Seniors Health Card from 31 December 2014. If you change products, or buy a new account-based income stream from 1 January 2015, this account-based income stream will be assessed using the deeming rules.

Page last updated: 25 August 2016

This information was printed Sunday 28 August 2016 from humanservices.gov.au/customer/enablers/adjusted-taxable-income It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.