184.108.40.206 Assessment of income for CSHC
On 1 January 1999 the ordinary income (1.1.O.30) test was replaced by an income test based on ATI (1.1.A.62). This income test is based on the applicant's ATI for the reference tax year, usually evidenced by their TNA plus any other income documents required to determine the person's ATI. A person's ATI includes:
- taxable income, disregarding the individual's assessable First Home Super Savers (FHSS) scheme released amount (within the meaning of the Income Tax Assessment Act 1997) for that year
- total net investment loss for the applicable tax year
- target foreign income for the applicable tax year
- employer provided fringe benefits for the applicable tax year, and
- reportable superannuation contributions, including income that is salary sacrificed to superannuation.
From 1 January 2015, account-based income streams are included in the income test. The balance of an account-based income stream is assessed under the deeming provisions using the person's latest superannuation statement (220.127.116.11 and 18.104.22.168).
Income does not have to be above the tax-free threshold to be included.
Note: Applicants for the CSHC who have a partner must provide details of their partner's income regardless of whether their partner already holds a CSHC.
Act reference: SSAct section 10A(2)-'target foreign income', section 1071 Seniors Health Card Taxable Income Test Calculator, section 1071-3 Adjusted taxable income
Policy reference: SS Guide 22.214.171.124 Employer Provided Benefits - Cars, 126.96.36.199 Employer provided benefits - school fees, private health insurance & low interest loans, 188.8.131.52 Employer Provided Benefits - Housing Assistance, 184.108.40.206 Employer Provided Benefits - Financial Investment & Expense Benefits, 220.127.116.11 Treatment of income components for CSHC
Treatment of amounts released from the FHSS scheme
The FHSS scheme was announced in the 2017-18 Budget to allow first home buyers to save a deposit inside superannuation.
For taxation purposes, some amounts withdrawn from a saver's FHSS scheme superannuation account are considered to be taxable income. However, all amounts withdrawn are not assessed as part of a person's ATI for the income test.
The following table shows the CSHC annual income limits applying from 4 November 2022. The income limits are indexed on 20 September each year. However, a 2022-23 Budget measure resulted in a one-off additional increase to the income limits on 4 November 2022.
|Couples (combined incomes)
|Illness separated couples, including respite care and partnered (partner in gaol) couples (combined incomes)
For each dependent child, add $639.60.
Reference tax year
The reference tax year is usually the tax year immediately preceding the current tax year. If the applicant has not received a TNA for that reference tax year, the tax year immediately preceding that reference tax year will be the reference tax year.
Example: Jane applies for a CSHC in January 2015. The current tax year is 2014-15. Jane must provide a TNA for the 2013-14 tax year. If this is not available Jane must provide a TNA for the 2012-13 tax year.
Members of a couple must use the same reference tax year.
Act reference: SSAct section 1061ZG Qualification rules, section 1071-2 Reference tax year
Using an estimate of income
Acceptable conditions for using an estimate of income for the CSHC income test are limited to situations where the applicant can demonstrate that a change to their personal circumstances has occurred through retirement, ill health, or another one-off event such as a natural disaster, and that because of the change, their most recent ATI does not reasonably reflect their current level of income.
The following table lists circumstances that are acceptable for the purposes of using an estimate of income.
|Change in person's circumstances
A person's retirement or partial retirement from the workforce or closure of a business.
The estimated reduction in the person's income is commensurate with their earnings or business income from the previous financial year.
Medical and health costs for self and/or partner.
Costs associated with transition to assisted living arrangements.
Costs incurred after a catastrophic event or natural disaster.
The person or their partner has withdrawn money from a superannuation fund or retirement saving account, to pay for any of the following costs, which has increased their taxable income above the threshold:
Loss of income due to unforeseen, unavoidable and highly unusual economic event.
Note: Normal market fluctuations, or failure of a particular company or investment would not be sufficient.
The person or their partner experiences significant loss in taxable income due to the economic event, and the previous financial year does not reflect their current level of income.
Where an estimate of income is used, the CSHC holder should provide Centrelink with a copy of their TNA, plus any other income documents required to determine the person's ATI, as soon as possible after the end of the financial year.
Estimates of income - one-off variation in income
If an applicant's income for the reference tax year is above the CSHC income limits, and the applicant can show that the source of the increased income is of a 'one-off' nature then, subject to certain conditions, the applicant may give an estimate of their income for the current tax year provided it is within the relevant income limit to qualify for the CSHC.
Example 1: Sue is single, recently retired from the workforce on 1 July 2014 and applied for a CSHC in January 2015. Her reference tax year is 2013‑14. Her 2013‑14 TNA shows taxable income of $65,000 consisting of a $55,000 salary and $10,000 from investments. Her estimated retirement income for the 2014‑15 financial year will be $48,000 consisting of her estimated superannuation pension for the 2014‑15 financial year of $38,000 and $10,000 from investments. It is acceptable for Sue to use an estimate of $48,000 for the current year (2014‑15).
Example 2: It is January 2015 and John has held a CSHC for 3 years. He is single and his taxable income for 2013‑14 increased to $59,000, consisting of $38,000 from superannuation and investments, as well as a taxable capital gain on the sale of shares of $21,000. John's mobility has recently deteriorated and he has used the proceeds of the sale of his shares to pay for modifications to his car and home to improve his capacity to remain independent in his home. John can show that the sale of his shares is of a one-off nature as he has not made any similar transactions in previous years. His income for the current year (2014‑15) remains at $38,000. It is acceptable for John to use an estimate of income for 2014‑15 to remain eligible for the CSHC.
Some retirees sell shares every year and have taxable capital gains on a yearly basis, therefore this may form part of their yearly taxable income, and is not of a one-off nature.
Determining if an estimate is reasonable
Factors to be considered when deciding whether an estimate is reasonable are:
- whether the applicant's explanation of how they calculated the estimate is consistent with the estimated amount, and
- the reason for change in income (as listed in the above table).
Example: Whether the reasons given are consistent with the reduction in income.
Act reference: SSAct section 1071 Seniors Health Card Taxable Income Test Calculator
Policy reference: SS Guide 18.104.22.168 Pensions income test
Using an estimate for 2 or more consecutive years
A person may use an estimate of income for 2 or more consecutive years ONLY if they can show an additional increase in income that is of a one-off nature for each year, and that the change in their circumstances (as listed in the above table) is acceptable and that the events are unrelated.