Adjusted taxable income

I lack details of the items which comprise ATI to express an opinion.

Generally, your adjusted taxable income includes your:

• taxable income (your assessable income minus deductions)
• adjusted fringe benefits amount (total reportable fringe benefits amounts × 0.51)
• tax-free government pensions or benefits (includes disability pensions, carer payments and defence pensions)
• target foreign income (includes any income earned from overseas that is not already included in your taxable income or received in the form of a fringe benefit)
• reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
• total net investment loss (includes both net financial investment loss and net rental property loss)
• child support you paid.

The government has made changes to the treatment of fringe benefits under the income tests. From 1 July 2017, the adjusted fringe benefits total is the sum of:

• reportable fringe benefits amounts received from employers exempt from fringe benefits tax under Section 57A of the Fringe Benefits Tax Assessment Act 1986 multiplied by 0.53
• reportable fringe benefits amounts from employers not exempt from fringe benefits amounts under Section 57A of the Fringe Benefits Tax Assessment Act 1986.

 

Hi @Paul@PFI

Her taxable income minus deductions is around 155k. She doesn't have the rest of the items except net rental investment loss of around $10k. Does it mean ATI is 165k?

Is there a way to spread high income in one year to the next year with low income as PAYG employee to be eligible for the parental leave? I don't think she can make the ATI lower in this financial year by prepaying the interest for the next financial year or salary sacrificing into super.
Cheers!

 

Sounds like it

 

@Terry_w

Ok, it seems a bit unfair for someone whose ATI is $165k but the other person's ATI is $149k according to the quote below.

DHS parental leave is $695 per week for a maximum of 18 weeks. So, someone with $149k is eligible for this but the other isn't?

"have received an individual adjusted taxable income of $150,000 or less in the financial year either before the date of birth or adoption or the date you claim, whichever is earlier"

 

You may now realise why ATI is used v's taxable income. Entitlements and benefits arent a right. They are often means tested so the benefits flow to those most in need. Someone decided on the specific cap and Parliament passed that as law.

 

I have no opinion on whether it is fair or not (actually I do but i won't say).

But planning ahead could have allow for a higher allowance.

 

Hi @Terry_w
What sort of higher allowances do you mean? It seems like everything gets added back in to the taxable income.
It is quite impossible to deduct $15k or 20k in expenses for phone and car in one financial year. Cheers!

 

By allowance i meant maternity leave payment

 

I believe one or both spouses can claim the benefit if they share the period of leave. They need to make a choice.

 

Moral of the story is dont have kids

 

Yeah, I think the spouse earns about the same. So, won't make much difference.

 

Hello again,

@Paul@PFI and @Terry_w

Her IT contracting agency might be able to defer 2 months of this 2018 financial year pay to next Financial year 2019 for her. That means I think it should bring down this financial year Adjusted Taxable Income of her. What do you think?

Cheers!

 

when is the income incurred?

 

The department will pay the payroll agency in May and June this year but the payroll agency will pay her in July and August.
So, the income incurred in July and August for her?

 

Sounds like they are just delaying payment.

 

Get her to check with her accountant. This is not a game for beginners. I thought I was over the limit but was under. Don’t stuff around and try to work it out yourself, you will have plenty of stuffing around to do once Centrelink becomes involved. Save what hassle you can.

 

Deferral strategies can sometimes work in the first year and bite even harder the next when the income in year 2 include 14 months AND enhanced turnover etc possibly even super cap and other issues too...may also impact family benefits, maternity leave pay etc. Can also be a blatant scheme arrangement where an agency holds back your income.

 

I see. Yup, I will get her to talk to her accountant.

@Paul@PFI, thank you. what does enhanced turnover mean? I think it is something to smooth out the income when she goes on maternity leave.

 

This years t/over over 12mths is $120K. Next years its $140K.

You swing 2 months of this year to next year ie This year t/o is $100K. Next years its $160K.

Murphys law of tax strategies say it will bite you.

Smoothing income sounds like a tax scheme to me. A tax benefit ?. Or is the predominant purpose a Centrelink benefit ?. They also have avoidance rules.

 

I mean when she goes on maternity leave for 6 months next financial year she won't get paid half of next year as a contractor. She doesn't get paid maternity leave from her employer as a contractor too.

So, her 6 months income could become 70k plus 2 months from this financial year to smooth the income when she is on the parental leave.

It could both be tax benefits and centrelink benefits. Do you mean Centerlink has the avoidance rules? Cheers!