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22 May 09 ATO's Tax Practitioner Forum (ATPF) - three new income tests

As mentioned last week (see 2009 TAXVINE No 19 (15 May 2009)), Dr Michael Dirkis FTIA represented the Taxation Institute at the ATPF meeting held on Friday 15 May 2009. A key issue discussed was the impact of the changes to the income tests from 1 July 2009 contained in the Tax Laws Amendment (2009 Measures No 1) Act 2009 which received Royal Assent on 26 March 2009.

The Act introduces three new income tests ("adjusted taxable income" (ATI), "rebate income" and "income for surcharge purposes") which will be used in calculating tax offsets, etc. These tests will impact on both employers and tax agents from 1 July 2009. Employers will be required to supply additional information for PAYG Summaries from 1 July 2009 (including extra superannuation contributions) despite the fact that due to the lateness of the bill software packages will not incorporate the changes. Tax Agents will face an additional 14 labels in the 2009/10 tax return and will need to review clients' PAYGW or PAYGI as clients may have lost their entitlement under the new tests.

It is also important to note that these tests are already being used to determine eligibility for pending tax changes. For example, the "adjusted taxable income" test is to be used in respect of the proposed $250,000 income threshold for the non-commercial losses rules announced in last week's Budget.

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