Trish’s response: Since 1 July 2009, salary sacrificed super contributions have been included when assessing income for the Family Tax Benefit (FTB). The income test used for the FTB is the same test as the one used for the Commonwealth Seniors Health Card.

Before July 2009, adjusted taxable income, for the purposes of FTB included:

• Taxable income (includes salary and wages, lump sum payments, and income from: business or self-employment, investments, real estate, taxable Government pensions and benefits; and other taxable income)
• Adjusted fringed benefits
• Net rental property losses
• Certain exempt income from government payments (these are very specific payments)
• Target foreign income
• Child maintenance paid to another person (deductible child maintenance expenditure).

Since 1 July 2009, adjusted taxable income also includes:

• Income that is salary sacrificed to superannuation, and
• Net financial investment losses.

At end of this response I have included an extract from the Centrelink website confirming the wider definition of ‘adjusted taxable income’, now including ‘total net investment losses’ and ‘reportable super contributions’. The extract is sourced from the web page titled ‘Changes to Family Assistance Payments’.

Note: My response only relates to the question regarding whether salary sacrificed super contributions are included in adjusted taxable income for FTB calculations. If you want more information on FTB and eligibility then I suggest you visit the Family Assistance Office website.

Extract from Centrelink website on Family Assistance Payments:

Expanded definition of income

Total net investment losses

Since 1 July 2009, total net investment losses are included as income and used to work out your family assistance. If you expect to make a loss from rental property income, investment income or both, you need to give details of the total amount of losses. Total net investment losses are those that derive from investment earnings, not capital losses.

The changes were implemented 1 July 2009, and customers who are affected by this change include:

• Family Tax Benefit, Child Care Benefit and Baby Bonus customers who have net losses due to financial investments
• all dependent Youth Allowance, ABSTUDY Living Allowance and Assistance for Isolated Children (Additional Boarding Allowance) customers whose parents have net losses due to financial investments
• all Commonwealth Seniors Health Card customers who have net losses due to financial investments.

For a full list of benefits and payments that will be affected by these changes visit the changes to the definition of income^[1] could affect your payment page.

Family Tax Benefit, Child Care Benefit and Baby Bonus customers are required to estimate this income component at the new claim stage. They will also need to include this component when they update their income estimate for family assistance.

Dependent customers claiming Youth Allowance, ABSTUDY Living Allowance and Assistance for Isolated Children (Additional Boarding Allowance) for the 2011 calendar year will require this information from their parents to assess eligibility (except where the parent is exempt from the Parental Income Test).

Existing dependent Youth Allowance, ABSTUDY Living Allowance for Isolated Children (Additional Boarding Allowance) customers will require this information as part of the 2010 End of Year review commencing in September 2010.

Commonwealth Seniors Health Card holders will be required to provide this additional information to satisfy the Commonwealth Seniors Health Card income test requirements at the new claim stage or when providing an estimate.

Reportable superannuation contributions

Since 1 July 2009, any reportable superannuation contributions will now be included as income and used to work out your family assistance. Reportable superannuation contributions include:

• discretionary contributions, for example voluntary salary sacrificed contributions, made on your behalf by your employer, above those required by law, an industrial award or the superannuation guarantee, and
• total superannuation contributions made by you as a self employed person, for which you can claim a tax deduction.

The changes were implemented 1 July 2009, and customers who are affected by this change include:

• FTB, Child Care Benefit (CCB) and Baby Bonus and working age who salary sacrifice toward superannuation
• income support customers under age pension age whose reported earnings include amounts salary sacrificed into superannuation. Where the customer is over age pension age, there is no change, as the salary sacrificed amount is already counted as income
• existing dependent Youth Allowance, ABSTUDY Living Allowance and Assistance for Isolated Children (Additional Boarding Allowance) customers who will require this information as part of the 2010 End of Year review commencing in September 2010
• Commonwealth Seniors Health Card (CSHC) holders who will be required to provide this additional information to satisfy the CSHC income test requirements at the new claim stage or when providing an income estimate.

Families customers are required to estimate this income component at the new claim stage, to assist them in receiving the correct rate of payment. They will also need to include this component when they update their income estimate for family assistance.

All non-means tested family payments, such as Maternity Immunisation Allowance and Double Orphan Pension are not affected by this measure.

Related posts:

1. Family tax benefits: do my tax-free super benefits count as income?
2. How is contributions tax deducted from salary sacrifice contributions?
3. Does the Government’s co-contribution count towards my contributions cap?