What exactly is Assessable Income?
Assessable Income (also known as taxable income) is income that you can pay tax on – but you only have Assessable Income if your earnings exceed the tax-free threshold of $18,200 per annum. According to the Australian Tax Office, your Assessable Income is comprised of earnings from:
- salary and wages
- tips, gratuities and other payments for your services
- allowances for things like car, travel, clothing and laundry
- interest from bank accounts
- dividends and other income from investments
- bonuses and overtime an employee receives
- commission a salesperson receives
- pensions
- rent received
Your salary packaging funds are not subject to income tax – they are tax-free after all – but the increase in take-home pay will increase the gross value of your salary. This is called Adjusted Taxable Income, and it equals your reduced salary plus the gross value of the salary packaged fringe benefits.
Find out how salary packaging could change your Assessable Income and Adjusted Taxable Income by using our handy salary packaging calculator below. Refer to the ‘Annual payment summary (PAYG)’ section in the full report; for Assessable Income refer to the ‘Taxable income’ figure, and for Adjusted Taxable Income refer to the ‘Total’ figure.
Of course, an increased Adjusted Taxable Income may change certain payments that are calculated using that figure. Keep reading to find out how this may affect Child Support, student debt (HECS-HELP or SFSS), and the Medicare Levy Surcharge. It’s worth noting that the financial benefits of salary packaging almost always outweigh any increase in payments.
Please note: Your Assessable Income will likely not impact your Centrelink arrangements. If you do have a Centrelink payment, you may need to seek advice on your individual circumstances from them.
