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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. From 1 July 2009 the income test was further adjusted and now includes the applicant's:
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 3.9.3.32 Employer Provided Benefits - Cars, 3.9.3.33 Employer Provided Benefits - School Fees, Private Health Insurance & Low Interest Loans, 3.9.3.34 Employer Provided Benefits - Housing Assistance, 3.9.3.35 Employer Provided Benefits - Financial Investment & Expense Benefits, 3.9.3.40 Treatment of Income Components for CSHC
The following table shows the CSHC annual income limits applying from 1 July 2001.
|
Single |
Couples (combined incomes) |
Illness separated couples, including respite care and partnered (partner in gaol) couples (combined incomes) |
|
$50,000 |
$80,000 |
$100,000 |
For each dependent child, add $639.60.
The reference tax year is usually the tax year immediately preceding the current tax year. If the applicant has not received a TNA for the reference tax year, the tax year immediately preceding will be the reference tax year.
Example: Jane applies for a CSHC in January 2009. The current year is 2008-09. Jane must provide a TNA for the 2007-08 tax year. If this is not available Jane must provide a TNA for the 2006-07 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
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.
The following table lists circumstances that are acceptable for the purposes of using an estimate of income.
| Change in person's circumstances | Acceptable conditions |
|
The year following a person's retirement from the workforce, closure of a business, or receipt of an inheritance. |
The estimated reduction in the person's income is commensurate with their earnings or business income from the previous financial year.
Where an inheritance has been received that has increased their taxable income, the person must be able to show that their income will return to an amount below the relevant CSHC income limits in the year after using an estimate of income. |
|
Medical and health costs for self and/or partner.
Costs associated with transition to assisted living arrangements. |
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: - cost of treatments not covered by existing Medicare or health fund benefits, - costs to transition to a nursing home or other care facility, - cost of home renovations to improve independence or mobility, - vehicle modifications. |
|
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: - repair costs to owner occupied home, - emergency accommodation costs, - replacement or repair of motor vehicles for personal use, - costs to replace personal documents, such as driver's licence, birth certificate. |
Where an estimate of income is used, the CSHC holder should provide Centrelink with a copy of their TNA as soon as possible after the end of the financial year.
As a result of the changes to the income test to include total net investment loss and reportable superannuation contributions from 1 July 2009, existing CSHC holders and new applicants are required to provide an estimate of their income for 2009-10 if their income includes the new income components.
There are 3 possible scenarios for using as estimate of income for 2009-10:
The 2009-10 financial year is the only year that all cardholders with net investment losses or reportable superannuation contributions are required to provide an estimate. These income types will be identified in the 2009-10 TNA.
When a person provides a revised estimate of their income it will be used to determine their eligibility for the CSHC. If the revised estimate exceeds the relevant income limit the person will lose entitlement to the CSHC. Entitlement to the accrued rate of seniors supplement will be paid up to the date of cancellation.
A person may reapply for the CSHC if, due to a change in their circumstances, their estimated income falls below the income limit during the financial year. If this occurs the person should contact Centrelink to reapply.
Example 1: Mr Matthews is partnered and has held a CSHC for 5 years. His combined income will increase from $75,000 on his 2008-09 TNA to an estimated $115,000 in 2009-10 due to the inclusion of total net investment losses and reportable superannuation contributions. His income is expected to remain at this level in future years. Mr Matthews will lose his CSHC as his income exceeds the combined couple income limit of $80,000 per year.
Example 2: Mr and Mrs Evans had their CSHCs cancelled due to their estimated income exceeding the couple income limit of $80,000. During the year their financial situation changed and their revised income estimate reduced to $72,000. Mr and Mrs Evans reapplied for the CSHC and it was granted based on their reduced income.
Where a person provides an estimate of their income and the estimate is within the relevant income limit then they will remain qualified for the CSHC, provided they meet the other qualification requirements.
Example: Ms Lane is single and has held a CSHC for 3 years. Ms Lane's ATI has increased from $10,500 in 2008-09 to $25,800 in 2009-10. As Ms Lane's income remains within the single income limit of $50,000 per year she will retain her CSHC. As Ms Lane is using an estimate of her income she should provide Centrelink with a copy of her TNA as soon as possible after 30 June 2010 to confirm her actual 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 and applied for a CSHC in January 2009. Her reference tax year is 2007-08. Her 2007-08 TNA shows taxable income of $65,000 consisting of a $55,000 salary and $10,000 from investments. Her retirement income from January 2009 will be $48,000 consisting of superannuation pension of $38,000 and $10,000 from investments. It is acceptable for Sue to use an estimate of $48,000 for the current year (2008-09).
Example 2: It is January 2009 and John has held a CSHC for 3 years. He is single and his taxable income for 2007-08 increased to $59,000, consisting of $38,000 from superannuation and investments, as well as the sale of shares valued at $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 (2008-09) remains at $38,000. It is acceptable for John to use an estimate of income for 2008-09 to remain eligible for the CSHC.
Example 3: David and Mary are CSHC holders and Mary received an inheritance. Their 2007-08 TNA showed a combined taxable income of $124,000, consisting of the $50,000 taxable income from the inheritance and a superannuation pension of $74,000. Mary's taxable income from the invested inheritance will be $5,000. David and Mary can use an estimate for 2008-09 to remain eligible for the CSHC as the inheritance is a one-off event and their ongoing ATI will remain below the limits.
Some retirees sell shares every year and have capital gains on a yearly basis, therefore this may form part of their yearly taxable income, and is not of a one-off nature.
Factors to be considered when deciding whether an estimate is reasonable are:
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 4.2.1.10 Pensions Income Test & Limits
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.
Where a person has been required to provide an estimate of their income for 2009-10 due to the inclusion of total net investment losses and reportable superannuation contributions in the CSHC income test, the estimate will be automatically exempt from the above requirement regarding consecutive estimates.
Example: Mr Short used an estimate of his income for the 2008-09 reference tax year due to a change in his circumstances. Mr Short left work during the year and his retirement income had not been verified.
In the 2009-10 financial year Mr Short was required to provide an estimate of his income as he had reportable superannuation contributions.
In the 2010-11 financial year Mr Short will need to provide a TNA for either 2008-09 or 2009-10. If Mr Short has had a further change in his circumstances he would only be allowed to provide an estimate for 2010-11 if he could provide evidence that the event is unrelated to the previous estimates.
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Last reviewed: 7 December 2009
