Introducing Adjusted Taxable Income

The Australian Taxation Office has recognised that taxable income as shown in an individual’s tax return can be artificially low where the income is affected by salary sacrificed superannuation, negative gearing and fringe benefits.

Accordingly, from 1 July 2009, the ATO will be using 3 new measures:

	adjusted taxable income(ATI)
	rebate income (RI)
	and income for surcharge purposes (ISP)

These measures will be used to determine your liability for surcharges and entitlements for rebates.

Adjusted taxable income is calculated as:
Taxable income plus adjusted fringe benefits (reportable fringe benefits * 0.535)
plus tax free pensions or benefits
plus target foreign income
plus reportable superannuation contributions
plus total net investment losses
less deductible child maintenance expenditure.

ATI will be used by Centrelink and the Child Support Agency for their assessments, and will be used by the ATO to determine eligibility for dependent rebates.

Rebate income is calculated as:
Taxable income plus adjusted fringe benefits (reportable fringe benefits * 0.535)
plus reportable superannuation contributions
plus total net investment losses

RI will be used to determine eligibility for Senior Australians Tax Offset and the Pensioner Tax Offset.

Income for Surcharge Purposes is calculated as:
Modified taxable income plus reportable fringe benefits (as per your PAYG payment summary)
plus reportable superannuation contributions
plus total net investment losses

ISP will be used to determine your liability for Medicare levy surcharge, although the surcharge will only apply to your taxable income and reportable fringe benefits amount.

From 2009/2010, employers will need to show reportable super contributions on your PAYG summary. Reportable super contributions are contributions made on your behalf that exceed the superannuation guarantee or trust deed minimum contribution.

Published : 9 June 2009