The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

3.9.3.40 Treatment of income components for CSHC

Foreign income (1.1.F.160)

Applicants must provide details of any foreign income received in the applicable tax year that is not taxable income in Australia (1.1.A.320).

Explanation: The Australian tax year is used even if this is different to the tax year of the source country. Assessors will need to use their discretion about verification of the amount of foreign income declared. If an applicant is unsure whether their foreign income is taxable income in Australia they should contact the ATO to clarify their taxation status.

The foreign income amount is to be converted to Australian dollars and added to the applicant's taxable income.

Act reference: SSAct section 23(1)-'tax year', section 23(1)-'taxable income'

Taxation agreements

There are double taxation agreements between Australia and some other countries that are similar to the social security reciprocal agreements. These agreements avoid the dual payment of tax in each country on the same income. If a foreign Income amount has already been included in an Australian tax return as a result of a double taxation agreement, it is NOT to be counted again as foreign income.

Types of applicants with foreign income

There are numerous types of applicants receiving foreign income.

Examples: The types of applicants with foreign income include:

  • residents employed outside Australia whose foreign employment income is not taxable in Australia, such as foreign-based airline pilots and engineers, those working for international organisations such as United Nations organisations and those working for approved overseas projects
  • residents who receive gifts or allowances of money from any foreign source, such as from relatives living overseas, if they are made on a regular basis
  • residents who received income from foreign business interests or investments which are exempt from Australian tax, such as migrants with business interests in their country of origin
  • newly arrived migrants who received foreign income in the reference year that is not subject to tax in Australia
  • non-residents, partnered to Australia residents working in Australia for overseas companies, organisations or governments, such as civil servants and defence personnel posted to Australia or non-residents working temporarily at Australian education institutions or who are visiting students
  • residents who received an overseas pension or benefit that is not taxable income under the Australian ITAA.

Act reference: SSAct section 7(2) An Australian resident is a person who: …

Income from foreign business interests

Applicants with income from foreign business interests will be able to deduct business expenses from that income amount. Allowable business deductions will be broadly the same as those allowed under the Australian Taxation Act.

Explanation: Business expenses are those expenses that arise from activities directed toward the production of income.

Total net investment loss

For CSHC purposes, an applicant's income for the applicable tax year includes their total net investment loss amount. This amount is added onto the applicant's taxable income when working out their income for CSHC purposes.

Total net investment loss is comprised of 2 components:

  • net losses from financial investments - see 3.9.3.37
  • net rental property loss - see 3.9.3.38.

Act reference: SSAct section 1071 Seniors Health Card Income Test Calculator

Policy reference: SS Guide 3.9.3.37 Total net investment loss - net financial investment loss, 3.9.3.38 Total net investment loss - net rental property loss

Reportable superannuation contributions

A person's reportable superannuation contributions are the sum of:

  • any reportable employer superannuation contributions (certain salary sacrificed employer contributions to superannuation) for the income year that are to be reported to individuals on their payment summary from 1 July 2009, and
  • total amount of deductible personal superannuation contributions made by a self-employed person for the income year.

Act reference: SSAct section 1071 Seniors Health Card Income Test Calculator

Policy reference: SS Guide 3.9.3.39 Reportable Superannuation Contributions

Account based income stream

From 1 January 2015, account-based income streams (long-term) come under the income test for CSHC. Account-based income streams (long-term) include account-based pensions and account-based annuities.

Income from account-based income streams is assessed under the deeming provisions using the person's latest superannuation statement (see 4.4.1.20).

Act reference: SSAct section 9(1) Financial assets and income streams definitions, section 1071-13 Long-term financial asset

Policy reference: SS Guide 3.9.3.31 Account-based Income Streams

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