3.2.2 Taxable income
This topic contains information about the following:
- taxable income
- taxable income for individuals whose income has been assessed by the ATO, and
- taxable income for individuals whose income has not been assessed by the ATO.
Act reference: FAAct section 3(1)-'taxable income'
Taxable income has the same meaning as in the Income Tax Assessment Act 1997. It is the amount of assessable income received for a relevant income year, less any allowable deductions.
Note 1: Generally, all taxable income is taken into account when the rate of FTB for individual families is calculated. Taxable income is generally earned from employment type activities. However, if the individual or family has some non-employment type income such as pensions, government allowances and payments, which may be taxable, this income also needs to be taken into account to determine the rate of FTB. Other forms of income that should be accounted for include business income, capital gains and passive income such as interest and dividends.
Example: Cathy receives FTB for her 2 daughters. She has also been awarded a part-time PhD scholarship by Queensland University. Because the income provided from her part-time scholarship is deemed taxable, Cathy must update her FTB income estimate to include her scholarship income. Cathy's friend, Rhonda, is also receiving FTB for her son Charlie and has been awarded a non-taxable scholarship by Queensland University to undertake her PhD. Rhonda does not need to update her FTB income estimate to include her scholarship income because her full-time scholarship is deemed to be exempt income.
Note 2: Some scholarships are taxable. Details of whether a scholarship is taxable or not should be available from the scholarship provider.
Note 3: For the purposes of the SBP income test, taxable income is only assessed if it is received in the relevant 6 month period beginning on the day of the stillborn child's delivery. For further details on how the income test period is defined see 4.15.1.
Policy reference: SS Guide 184.108.40.206 Income from scholarships
Income assessed by the ATO
The ATO assesses taxable income and advises taxpayers of the amount on a notice of assessment. This amount is used to assess taxable income for FTB and CCS purposes and can also be used as evidence of income for the SBP income test. The SBP income test is based on the 6 month period beginning on the day of the stillborn child's delivery and the assessment will be based on the individual's estimate of taxable income during that period.
Note 4: For the purposes of FA, any assessable First Home Super Saver released amount (within the meaning of the Income Tax Assessment Act 1997) that may be included in the recipient's taxable income is disregarded.
Act reference: FAAct Schedule 3 clause 2 Adjusted taxable income
Income not assessed by the ATO
If an individual or their partner (1.1.P.30) has not had their income assessed by the ATO (because they are not required to), they may provide an estimate of their taxable income, depending on the type of claim they are making. Even if income is below the tax-free threshold, it is classed as taxable income and assessed for FTB and CCS purposes, as well as for SBP income test purposes. A loss is treated as zero taxable income.
Example: Maria has taxable income of $38,000 from employment. Maria's partner Joe has estimated $5,500 income from investments. Joe has not paid tax on the investment income as it is below the tax-free threshold. The income, however, is taxable and is added to Maria's taxable income, resulting in a combined taxable income of $43,500.