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Super co-contribution

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Newbie

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Last financial year I was expecting to get a co-contribution as my assessable income was below the threshold required.

I passed the 10% rule regarding business/employment income.

However it appears that it did not happen as I was told the tax department considers rental payments as income and does not deduct rental expenses such as interest payments, rates, repairs etc from this income.

In other words even though my asessable income fell under the threshold required for co-contribution once my rental income was added without taking into account my rental costs/deductions it was above the threshold.

This makes no sense to me whatsoever and I did try to find out info on this but couldn't - Im just going on what I was told by the department.

Can anyone confirm if this is correct?

Thank you

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Best answer

Devotee

Replies 2

Hi @Jj1984 

 

For the purposes of the10% test, the following definition of income is assessed:

 

Total income 1 = assessable income + reportable fringe benefits + reportable employer super contributions (RESC).

 

This test figures out how much of your income in a financial year is attibuted to employment, and whether or not they exceeds 10% of their overall assessable income earned in that year. You can only qualify for co-contribution if this criteria is met.

 

 

Separately, for the purposes of calculating your maximum co-contribution entitlement, the person’s total income 2 for the 2018-19 financial year must be lesser than the higher income threshold of $51,813.

 

Total income 2 = assessable income + reportable fringe benefits + reportable employer super contributions (RESC) – any amounts for which the person is entitled to a deduction as a result of carrying on a business.

 

As you can see, under total income 2, the categories of income counted are slightly expanded to the formula used for the 10% test. In most cases, it will be a person's "assessable income" that makes up the majority of the income assessed by total income 2 , which is gross income before tax deductions.

 

Therefore, in figuring out how much of income will be counted towards the total income test 2 (the threshold of $51,813), your combined income from employment plus rent from property are captured in the calculation.

 

 

Hope this helps

R

 

3 REPLIES 3
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Best answer

Devotee

Replies 2

Hi @Jj1984 

 

For the purposes of the10% test, the following definition of income is assessed:

 

Total income 1 = assessable income + reportable fringe benefits + reportable employer super contributions (RESC).

 

This test figures out how much of your income in a financial year is attibuted to employment, and whether or not they exceeds 10% of their overall assessable income earned in that year. You can only qualify for co-contribution if this criteria is met.

 

 

Separately, for the purposes of calculating your maximum co-contribution entitlement, the person’s total income 2 for the 2018-19 financial year must be lesser than the higher income threshold of $51,813.

 

Total income 2 = assessable income + reportable fringe benefits + reportable employer super contributions (RESC) – any amounts for which the person is entitled to a deduction as a result of carrying on a business.

 

As you can see, under total income 2, the categories of income counted are slightly expanded to the formula used for the 10% test. In most cases, it will be a person's "assessable income" that makes up the majority of the income assessed by total income 2 , which is gross income before tax deductions.

 

Therefore, in figuring out how much of income will be counted towards the total income test 2 (the threshold of $51,813), your combined income from employment plus rent from property are captured in the calculation.

 

 

Hope this helps

R

 

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Newbie

Replies 1

Ok - Thank you for this answer.

So if I'm correct in understanding your answer you ARE saying that all rental income is assessable income - not just the profit...?

To give an example if I recieve $60 000 in rent from a tenant but my interest payments, rates, land tax and all other expenses relating to holding the property are $50 000 my ASSESSABLE income in terms of whether I qualify for the super co-contribution is regarded as being $60 000 and NOT only the $10 000 I actually made in profit from renting out the property?

This seems ludicrous if what you are saying is correct.

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Devotee

Replies 0

Hi @Jj1984 

 

Yes - $60,000 is your assessable income and therefore the amount counted towards income test for your Co-Contribution entitlement. 

Expenses and costs incurred in relation to the property are only taken into consideration when you are working out your "taxable income".

 

 

 

https://www.ato.gov.au/Individuals/Lodging-your-tax-return/In-detail/What-is-income-/

Assessable income

Assessable income is income that can be taxed, provided you earn enough to exceed your tax-free threshold. Examples of assessable income are:

  • salary and wages
  • tips, gratuities and other payments for your services
  • allowances for things like car, travel, clothing and laundry
  • interest from bank accounts
  • dividends and other income from investments
  • bonuses and overtime an employee receives
  • commission a salesperson receives
  • pensions
  • rent.

Note: If you are being paid cash including cash cheques, you must declare the cash as income when you lodge your tax return.

See also:

 

https://www.ato.gov.au/Individuals/Lodging-your-tax-return/In-detail/What-is-income-/

Taxable income

Your taxable income is the income you have to pay tax on. It is the term used for the amount left after you have deducted all the expenses you are allowed to claim from your assessable income.

Assessable income − allowable deductions = taxable income

The important thing to remember about deductions is that you apply them to reduce the amount of income you pay tax on, you do not deduct them directly from your tax amount.

 

 

Hope this helps

R