Summary Overview
Take a close look at this if you are claiming tax deductions, or reducing taxable income from Super contributions.
Adjusted Taxable Income (ATI) is the metric Centrelink uses for the income test. It is not just your taxable income; it adds back several amounts to measure your true financial capacity. These add-backs include reportable super contributions (RESC), fringe benefits, net investment losses (like rental property losses), and tax-free pensions.
Key Requirements:
- ✓ ATI includes taxable income, reportable super, fringe benefits, and net investment losses.
- ✓ Assessment uses ATI from the financial year before the birth or adoption.
- ✓ Claimant must declare all components of ATI in their application.
Common Misconceptions
Myth
"Salary sacrificing into super reduces my income for the PPL test."
Reality
Salary sacrificed super (RESC) is added back to your taxable income to find your ATI. It does not help you pass the test.
Myth
"Negative gearing losses reduce my income for the test."
Reality
Any net investment losses (like negatively geared property or share losses) are added back to your income for the ATI calculation.
Practical Examples
Scenario
Mark has a taxable income of $175,000 but also has $10,000 in reportable super contributions.
Outcome
Mark's ATI is $185,000, failing the individual income test.
His reportable super was added back, pushing him over the $180,007 individual cap.
Action Checklist
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Check reportable super — Look at your payslips or talk to payroll to find your reportable employer superannuation contributions (RESC).
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Audit investment losses — Identify any rental property or financial investment losses that will be added back to your taxable income.