Whether you are applying for tax offsets, government benefits, or concession, but the eligibility can be determined with your adjusted taxable income (ATI). To get detailed information about adjusted taxable income, keep reading on:

What is Adjusted Taxable Income?

Basically, ATI helps to entitlement eligibility for Child Support Agency and Centrelink benefits, the family tax benefits (both A and B), and the Child Care benefits. Parental leave pay and Dad and partner pay threshold depends on your ATI.

The low-income family supplement and the low-income supplement and entitlement to the Commonwealth Seniors Health Card are subject to adjusted taxable income thresholds. Private health insurance rebates, Medicare levy surcharge thresholds, higher education loan program repayments, and dependants tax offset get affected by the ATI.

How Is The ATI Calculated?

ATI depends on your taxable income, and your measurable income is a less allowable inference or deduction – with applied other adjustments. Applicable adjustments may include any one of the listed below:

  • Deductible personal superannuation contributions
  • Reportable employer superannuation contributions
  • Received tax-free government pensions and benefits
  • Adjusted reportable fringe benefits
  • Target foreign income (income and other amounts from outside sources Australia not incorporated in your taxable income or obtained as a fringe benefit)
  • Net rental property loss
  • Net financial investment loss

Different Types of Income May Include in Adjusted Taxable Income

  • Foreign income
  • Taxable income
  • Tax-exempt foreign income
  • Reportable fringe benefits
  • Total net investment losses
  • Reportable superannuation contributions
  • Tax free-pensions or benefits

Foreign income

When you get income from outside Australia, and you don’t pay Australian income tax on it. It may include money from foreign business interests, income that you’ve earned overseas, or investments.

Taxable income

Basically, it can apply to family assistance payments, Commonwealth Seniors Health Card, and Carer Allowance. Taxable income not only includes one’s salary, but it also includes compensation, such as bonuses, tips, commission, and allowance. Taxable income can be calculated as Taxable income= gross income – allowable deduction. This income you need to pay tax on. Included income from:

  • A business
  • Wages & salaries
  • Investments
  • JobKeeper payment that you get from an employer

Income that comes under the tax-free threshold can be count as taxable income. The types of taxable income may include:

  • Investment & business income
  • Employee compensation & benefits
  • Miscellaneous taxable income

Tax-exempt foreign income

This type of foreign income can be applied to family assistance payments. This is the income from Australia that can be earned from either:

  • Australians on international projects that are approved by Minister for trade, investment, and tourism.
  • The armed forces serving overseas members.

Reportable fringe benefits

You can get reportable fringe benefits from your employer, and it is pre-tax benefits. It can include the payment of:

  • A car, and a mobile phone
  • Your home loan or rent
  • School fees for children
  • Child care expenses
  • Health insurance premium

Total net investment losses

This can be applied to family assistance payments, Commonwealth Seniors Health Card, and Carer Allowance. Total net investment losses are:

  • When you invest more and get less income from your investment
  • Negatively geared investment from financial investment or rental property

Reportable superannuation contributions

Again, this is applied to family assistance payments, Commonwealth Seniors Health Card, and Carer Allowance. Reportable superannuation contribution can be considered as your personal contribution that you make to a super fund. When you lodge your tax return, then you can claim it as an income tax deduction. This is the mandatory payment from your employer.

Tax free-pensions or benefits

This is applied to Carer Allowance and family assistance payments.

Child Support

If you are one of those who pay child support, then you can deduct it from your ATI for:

  • Low-income supplements
  • Carer allowance
  • Family assistance payments

Manage ATI to Increase Eligibility for Offset and Concessions

Many people might want to manage their level of ATI to get eligibility for relevant concessions and offsets. As you know, adjusted taxable income can be affected by many adjustments, and various strategies can be used. Depending on the offset or entitlement and your personal situation, ATI calculation can be tricky and tedious.

Your income, partner’s income, and various other factors dictate the best approach for you. Hence, for many people, their eligibility for offsets and entitlements is very important and must be considered while making financial decisions.

Final Thoughts on Adjusted Taxable Income

Your adjusted income is considered as your gross amount that you have left once you have taken your deduction. The rest adjustable tax income is the amount on which you owe the state, federal, and local governments. You may know that if you die before the ending of a specific income year, then an individual’s ATI can be calculated as: the number of days in the income year will be divided by the number of days a person was alive during the income year.

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