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Income tests provide guidance about individual’s eligibility and entitlement for a number of tax offsets, benefits, and obligations that is decided by ATO and other government organisations.  
An individual’s ability to access certain entitlements is assessed using the following tests:

  • Adjusted Taxable Income (ATI);
  • Rebate income; or
  • Income for surcharge purposes.

Adjusted taxable income (ATI)
ATI assesses individual’s entitlement through

  • Taxable income: Income from wages, lump sum payment, business adjusted by subtracting deduction from gross income;
  • Foreign Income: Money received from outside Australia for which individual don't pay Australian income tax;
  • Tax exempt foreign income: Income from Australia, earned while overseas in foreign service for at least 91 days, and is exempt from Australian tax;
  • Total Net Investment Loss: The sum of net losses from rental property income, plus net losses from financial investment income which will be added back when we calculate your adjusted taxable income;
  • Reportable superannuation contribution: The wages/salary individuals choose to sacrifice into a superannuation fund. If the person is self-employed, reportable superannuation contributions are the superannuation payments individuals make to claim as a tax deduction.
  • Tax fee government benefit: Certain non-taxable benefits like disability support pension, carer payment individual might receive from ATO or the Department of Veterans' Affairs.

Rebate Income
It determines individual's eligibility for the seniors and pensioners tax offset, calculated by individual’s taxable income plus applicable amounts like adjusted fringe benefits, deductible personal superannuation contributions, net financial investment, net rental property loss.

Medicare levy surcharge purposes
Income Test used for surcharge purposes to work out if individual have exceeded the Medicare levy surcharge threshold that applies to that person. It determines:

  • Individual's entitlement to the private health insurance rebate;
  • Individual's liability to pay the Medicare levy surcharge in absence of private health insurance.


Income test eligibility allows a person to get following tax offsets and benefits.

  • Total net medical expenses tax offset;
  • Senior and pensioners tax offsets;
  • Medicare levy surcharge (MLS) tax offset;
  • Spouse super contributions tax offset;
  • Dependent tax offsets.

Other items considered for tax offset includes-

  • Private health insurance rebate;
  • Medicare levy surcharge threshold calculation;
  • Government super co-contribution;
  • A deduction for your personal super contributions;
  • A deduction for your business losses (non-commercial losses);
  • Income tax concessions available to participants in certain employee share schemes;
  • HELP and SFSS repayments.


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