Glossary

Last updated 26 May 2021

Adjusted taxable income (ATI)

The following amounts are included in the calculation of your ATI when determining eligibility for a low income super tax offset (LISTO):

your taxable income (excluding any assessable First home super saver released amount)
your reportable employer superannuation contributions
your deductible personal superannuation contributions
your adjusted fringe benefits
certain tax-free government pensions or benefits you received
your target foreign income
your net financial investment loss
your net rental property loss

less

any child support payments you provided to another.

Business deductions

Business deductions are deductions which relate to a business that you carry on. This includes your share of a loss, from carrying on a business in a partnership, and any deductions relating to expenses that you incur in relation to a distribution from a business partnership.

Business income

Business income is income you earn from carrying on a business either solely or in partnership. For Government super contributions purposes, distributions of business income from a trust or from a company in which you hold shares are not regarded as your business income.

Most business income is included in the Business and professional items schedule for individuals 2021 at P8. However, that schedule instructs that some types of income should be included in other items in your tax return. In order to determine eligibility for Government super contributions we need to know your total business income, not just the amounts included at P8. Accordingly, we ask you to calculate these amounts in worksheets 1, 3 and 5.

Eligible income

To be eligible for Government super contributions, 10% or more of your total income (without a reduction for allowable business deductions) must be from eligible income, which is income from running a business, eligible employment or a combination of both.

To get a Government super contribution for 2020–21, you must be an employee or in business during 2020–21. Common examples of eligible income are salary, allowances, lump sum payments, employment termination payments, reportable fringe benefits and reportable employer super contributions.

Personal services income you show at item P1 of your Business and professional items schedule for individuals 2021 is treated as eligible income if the income is attributed to employment or business. However, if your personal services income does not relate to employment or the carrying on of a business, then it is ineligible income.

Employment income

For the purposes of working out your employment income for A3, an employee, in addition to its ordinary meaning, also includes a person who:

works under a contract that is wholly or principally for their labour
is paid as a member of an executive body of a company (for example, a director of the company)
is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills, or provides services in connection with such activities
is paid to perform services in, or in connection with, the making of any film, tape or disc or of any television or radio broadcast
holds an appointment, office or position under a Commonwealth, state or territory law, or under the Constitution
is in the service of the Commonwealth, or a state or territory (including members of the defence forces, or police force)
is a member of parliament (Commonwealth, state or territory).

A person who holds office as a member of a local government council is not necessarily regarded as an employee of the council. They are only regarded as an employee if the local government council has decided that the salary of its members is subject to pay as you go (PAYG) withholding.

For the purposes of determining eligibility for Government super contributions, income that is attributable to employment is included as eligible income. This means that eligible income can include amounts that are compensatory (for example, lost earnings) or Government incentives (for example, paid parental leave), where there is a connection between the employment activities and the payment. However, these payments are only eligible income for 2020–21 if the person remains an employee of the relevant employer for at least some part of 2020–21.

Government super contributions

Government super contributions include both super co-contributions and low income super tax offset.

Ineligible income

To be eligible for Government super contributions, 10% or more of your total income (without a reduction for allowable business deductions) must be from eligible income. Eligible income is from running a business, employment or a combination of both. For the purposes of filling out A3, income is either eligible or ineligible. Ineligible income includes income from your investments.

Joint income

Joint income is income you earned in conjunction with another person or entity. This may be interest from a jointly held bank account, dividends from jointly owned shares or rental income from a jointly owned rental property.

Income you earn with another person is treated as partnership income for income tax purposes. In many cases, a partnership return should be lodged, and individuals should show the partnership income less deductions at item 13. However, if you were not in a partnership carrying on a business, you show your share of the income and expenses at the appropriate item on your own tax return. This would be the case if the only income derived jointly (or in common) with another person was:

rent from a jointly owned property
interest from a jointly held account
dividends from jointly held shares.

For practical purposes, worksheets 1 and 2 allow for the identification of joint income or deductions in relation to some other joint investments which you may have shown at other items.

Joint income group

You are in a joint income group if you owned income-producing assets with another person or persons. For example, you are in two joint income groups if:

your parents and you have a joint bank account, and
your spouse and you co-own rental properties.

Low income super tax offset

This is a government measure to boost super savings. If your ATI does not exceed $37,000 and concessional contributions are made to your super account, you may be able to receive a low income super tax offset. The payment will be 15% of the amount of your concessional contributions up to a maximum of $500. If the calculated amount is less than $10, then the payment is $10.

Concessional contributions include:

employer (super guarantee) contributions
other family and friends' contributions
salary sacrifice contributions
personal contribution amounts where you have been allowed a deduction
notional taxed contributions for individuals with a defined benefit interest

but do not include

contributions to constitutionally protected funds.

See also

Super contributions – too much can mean extra tax

You will be eligible for a low income super tax offset if all of the following apply:

a concessional contribution is made by you or on your behalf, to a complying super fund or retirement savings account after 1 July 2012 (concessional contribution is as defined in the Income Tax Assessment Act 1997)
your adjusted taxable income is $37,000 or less
10% or more of your total income (without allowable business deductions) is from employment income, carrying on a business or a combination of both
you do not hold an eligible temporary resident visa at any time during the year, unless you are a New Zealand resident or holder of a prescribed visa.

Solely earned income

Income you earned that was not joint income.

Super co-contribution

A government measure to boost super savings. If your total income is below $ 54,837 you may be eligible for the government super co-contribution by making personal super contributions to your fund.

Personal super contributions are amounts you choose to contribute to your super fund from after-tax income. This is in addition to any employer contributions, however it does not include contributions made through a salary sacrifice arrangement, and does not include an eligible Downsizer contribution.

You will be eligible for the super co-contribution if all of the following apply:

you did not exceed your non-concessional contributions cap for 2020–21
your total superannuation balance at 30 June 2020 was less than $1,600,000
you make a personal super contribution by 30 June 2021 into a complying super fund or retirement savings account (RSA) and don't claim a deduction for all of it
your total income is lower than $ 54,837
10% or more of your total income (without allowable business deductions) is from employment income, carrying on a business or a combination of both
you are less than 71 years old on 30 June 2021
you do not hold an eligible temporary resident visa at any time during the year, unless you are a New Zealand resident or holder of a prescribed visa
you lodge your 2021 tax return.

Temporary resident

You are eligible for super co-contributions and low income super tax offset only if you do not hold an eligible temporary resident visa at any time during the year, unless you are a New Zealand resident or holder of a prescribed visa.

If you are a non-resident, the income attributable to employment outside Australia will not be counted as eligible income.

Total income

Total income for the purposes of super co-contribution equals:

your assessable income plus
your reportable fringe benefits total plus
the total of your reportable employer super contributions (RESC) for the income year less
any allowable business deductions less
any assessable First home super saver released amount.

Total income for the purposes of the low income super tax offset equals:

your assessable income plus
your reportable fringe benefits total plus
the total of your reportable employer super contributions (RESC) for the income year less
any assessable First home super saver released amount.

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