The difference between your taxable income and adjusted taxable income

If you are hoping to get a tax offset, it is important to understand the difference between your taxable income and adjusted taxable income (ATI).

For many years, access to tax offsets (previously known as rebates) was subject, in many cases, to an income test based, in effect, on a person's taxable income.

From mid-2009, however, the income test usually has been based on what is known as adjusted taxable income (ATI), which is a much less generous definition of income.

In some cases, the test is known as the "rebate income" test, but this is almost the same as the ATI.

In essence, the ATI is the same test Centrelink has been using for some years to determine eligibility for many government benefits.

The bottom line is that anyone who thinks they could be eligible for a tax rebate or government benefit may find that their ATI (or equivalent) disqualifies them.

This is because it generally includes all of the following:

• your taxable income;
• your employer superannuation contributions;
• any tax deductible super contributions you personally made;
• the value of fringe benefits received from your employer;
• net investment losses generated due to negative gearing; and
• any untaxed foreign income.

And income test rules are only likely to get tougher.

For example, the government may well make another attempt to include non-taxable income from private pensions, such as account-based pensions, when assessing eligibility for the Commonwealth Seniors Health Card, an initiative that is currently on hold.

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