
Since July 2009, various definitions of income are used when determining eligibility and entitlements to superannuation concessions, tax offsets, or liability for the Medicare Levy and Surcharge.
Below we summarise the key income definitions used for superannuation and tax measures applying as at 1 July 2012.
Details of superannuation or tax item
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Income definition used
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Proposed additional 15% tax on concessional contributions for those earning over $300,000*
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Proposed to be based on* :
Taxable income
+ concessional contributions
+ total net investment loss
+ adjusted fringe benefits
+ target foreign income
+ some tax-free pensions or benefits (e.g. certain Centrelink and DVA payments).
LESS child support.
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Eligibility to claim deduction on personal superannuation contributions (<10% rule)
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Assessable income from employment
+ reportable employer superannuation contributions
+ reportable fringe benefits
MUST BE LESS THAN 10% of the total of all the person’s
Assessable income (from all sources)
+ reportable employer superannuation contributions
+ reportable fringe benefits.
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Government co-contribution
Based on after-tax contribution of $1,000:
Max. of $1,000 for 2011/12 and $500 for 2012/13 (proposed)#
Lower threshold 31,920#
Upper threshold: $61,920 2011/12
$46,920 2012/13 (proposed)#
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Eligibility for the co-contribution is met if 10% or more of:
Assessable income
+ reportable employer superannuation contributions
+ reportable fringe benefits
is attributable to employment and/or carrying on a business.
The co-contribution entitlement is based on:
Assessable income
+ reportable employer superannuation contributions
+ reportable fringe benefits
LESS deductions as a result of carrying on a business. Note that personal deductible super contributions cannot be deducted for this purpose.
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Low income superannuation contribution
Maximum of $500 for 2012/13 (based on 15% on concessional contributions)
Up to $37,000.
No taper.
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Taxable income
+ total net investment loss
+ adjusted fringe benefits
+ reportable employer superannuation contributions
+ any personal deductible contributions made
+ target foreign income
+ some tax-free pensions or benefits (e.g. certain Centrelink and DVA payments).
LESS 100% of the individual’s deductible child maintenance expenditure.
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Spouse contribution offset
Maximum offset of $540 based on spouse contribution of $3,000.
Lower threshold $10,800
Upper threshold $13,800
Taper at 18%.
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Assessable income
+ reportable employer superannuation contributions
+ reportable fringe benefits.
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Low income tax offset
Maximum of $445.
Lower threshold $37,000
Upper threshold $66,667
Taper at 1.5%.
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Taxable income.
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Senior Australians and pensioners tax offset
Maximum offsets:
Single: $2,230
Couple, each: $1,602
Taper 12.5%.
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Taxable income
+ total net investment loss
+ adjusted fringe benefits
+ reportable employer superannuation contributions
+ any personal deductible contributions made
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Mature age worker tax offset
Maximum of $500
Payable where net income from working is between $10,000 and $53,000.
Taper of 5% outside these thresholds.
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Assessable income from employment
+ assessable income from carrying on a business
+ reportable fringe benefits
+ reportable employer superannuation contributions
LESS deductions to the extent that they relate to assessable income mentioned above. Note that personal super deductible contributions cannot be deducted for this purpose.
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Medicare levy
1.5%
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Taxable income.
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Medicare surcharge
1% to 1.5%
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Medicare surcharge is payable where:
Taxable income
+ certain distributions from family trusts that are not taxable
+ total net investment loss
+ reportable employer superannuation contributions
+ any personal deductible contributions made
+ reportable fringe benefits
LESS any taxable component of superannuation withdrawn within the low rate cap, which attracted the offset reducing tax to nil, exceeds the relevant income threshold.
When liable, the surcharge is calculated on:
Taxable income
+ reportable fringe benefits
LESS any taxable component of superannuation withdrawn within the low rate cap, which attracted the offset reducing tax to nil.
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* as per Minister Bill Shorten’s Media Release No. 24: 2012-13 Budget – superannuation reforms, issued 8 May 2012. These measures are not yet law.
# Lower threshold to remain frozen as announced in Federal Budget 2011-2012, May 2011 (Budget paper no. 2). The maximum Government co-contribution will be $500 and the matching rate will reduce to 50 cents per $1 of after-tax contributions (and as a result the upper income threshold will reduce to $46,920) as announced in the Government’s Mid-Year Fiscal and Economic Outlook, November 2011. These measures are not yet law.