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Access: Individual tax return > Adj Credits tab

The Adj Credits tab includes items related to Adjustments, Credit for interest on tax paid and Taxation of financial arrangements (TOFA).

Items in this tab:

• Item A1

• -Under 18 (including HECS-HELP/TSL/SSL & ABSTUDY SSL/SFSS loan debts)

• Item A2-Part-year tax-free threshold

• Item A3-Government super contributions

• Item A5-Amount on which family trust distribution tax has been paid

• Item C1

• -Credit for interest on early payments

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Click this link to open the information on Item A1 label J on the ATO website.

Use the Tax Minors worksheet (Schedule U) to enter the excepted income and action code to be returned at label J and any excepted net capital gain to be integrated to the 'Calculator' only field at item 18.

The worksheet contains all the eligibility criteria for Excepted Net Income (ENI) together with fields for the types of income that make up ENI.

If the taxpayer is under 18 and is married or has a de facto spouse, then spouse details must be completed.

Estimate Calculation

After item A1, a calculation panel is provided to enter the outstanding amount of HECS-HELP, Trade Support Loan (TSL), Student Start-up Loan (SSL) or ABSTUDY Student Start-up Loan, and Student Financial Supplement Scheme loan debts.

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CCH References

2-160 Income of minors: special tax payable by minors

2-170 Which minors are within the rules?

2-180 What income is caught?

15-300 Low income rebate

Click this link to open the information on Item A2 on the ATO website.

This item is only to be completed if the taxpayer changed residency either by commencing or ceasing residency during the income year. This information is used to adjust the tax-free threshold on a pro-rata basis.

Date: Enter a date within the current tax year.

Commenced/Stopped Residency: Select the appropriate code from the list.

• C (Commenced Residency) - Tax calculates the number of months from the date entered to the end of the current tax year (30 June) including the month entered.

• S (Stopped Residency) - Tax calculates the number of months from the beginning of the tax year (01 July) to the date entered including the month entered.

Label N: Eleven (11) is the maximum number of months applicable to this field, therefore if the date entered results in 12 being calculated, delete the date and do not enter this item as the reduced tax-free threshold would not be applicable to this taxpayer.

Foreign residents are not entitled to a tax-free threshold.

Residents are entitled to the full tax-free threshold of $18,200.

Where a person changes their residency during the year, they are entitled to a part-year tax-free threshold.

Part-year residents are entitled to a tax-free threshold of $13,464 plus a pro-rated amount for each month they are a resident of Australia. We will work out your tax-free threshold for you using information you provide at this item. If you want to work it out, follow the steps below.

• Multiply the number of months as an Australian resident by $395.

• Add $13,464.

The total is your part-year tax-free threshold.

The Part Year Tax-Free Income Threshold

The Part Year Tax-Free Income Threshold for taxpayers commencing or ceasing residency is calculated from the number of months at Label N. Tax prompts the preparer to pre-fill the number of days exempt from the Medicare levy to M1.

Medicare Levy Worksheet

If the fields at A2 are greyed out, the Medicare Levy Worksheet has already been attached to the return. Press [Enter] to open the worksheet then click the Pt-Yr Resident button to open the Part Year Residency dialog.

To attach a Medicare Levy Worksheet at A2:

1. Click the Schedule icon or [Alt+S].

2. Click the Pt-Yr Resident button.

3. Enter the details for commencing or ceasing residency.

4. Click OK and answer Y/N to the prompt to ‘Transfer the number of exempt days to Medicare?’

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CCH References

2-130 Reduction of tax-free threshold

Click this link to open the information on Item A3 on the ATO website.

Note that there is no requirement to enter Sole trader and professional business income or salary or wages income at the A3 labels. Both the ATO and MYOB can calculate that income from labels in the return.

These labels at A3 are to advise those things that the ATO can't define due to there being no specific labels on the return and no way for the ATO to define what is solely earned and what might be shared income and expenses.

Use the Superannuation super contribution worksheets (scc) at these labels to assist in the calculation of all income; investment, partnership and other sources income earned either solely or jointly with another person.

Separate worksheets are available for solely earned income and jointly earned investment income.

Once you have completed these labels you can use the Super Co-contributions What-if calculator worksheet to estimate the amount your client might expect from the Government by way of a Government contribution.

Note: Other sources at this label does not include Sole trader and professional business income or Salary or wages income.

Income from investment, partnership and other sources refers to all investment income (interest and dividends, capital gains and other business income and deductions other than income earned as a Sole Trader) earned solely or jointly with another person.

Where income and expenses are shared with another person or persons, only those transactions with each person that result in a profit are included for these purposes. If you have more than one person with whom you share income, losses are not offset against gains to arrive at a net position. Each such pairing must be entered separately.

There are several worksheets and each must be completed in order that the separate amounts for each of the three labels can be calculated.

Complete the labels in the worksheet and the relevant values will be calculated and integrated to label F. Where there is business income and deductions amounts will also be integrated to labels G and H.

Complete the relevant fields in the worksheet relating to business income. Those items that are relevant are included in the various worksheets. The relevant values will be calculated and integrated to labels F, G and H.

Complete the relevant fields in the worksheets relating to business deductions. Those items that are relevant are included in the various worksheets. The amount calculated for business deductions will be integrated to label H.

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CCH References

13-760 Government co-contributions

Item A4-Working holiday net income

Click this link to open the information on Item A4 on the ATO website.

Any Working Holiday Maker (WHM) income identified at item 1 is pre-filled to the Working holiday maker worksheet (whm).

If your payment summary does not show the payment type H but you earned the income at any time from 1 January 2017 to 30 June 2017, while you were on a 417 or 462 visa, then include that income in this step.

Enter any expenses incurred in earning that income that you have included at any of items D1 to D10. The net of income less deductions is integrated to label D and it is on this amount that Tax is calculated.

Special rates apply to the eligible WHM income:

• 15% is applied to the first $37,000 of eligible WHM income

• The excess over $37,000 is taxed at standard non-resident rates commencing at 32.5%.

The breakdown of the tax on taxable income, where WHM income is present, is shown in the [F4] estimate.

Click this link to open the information on Item A5 on the ATO website.

In 2016-17 did a trust, company or partnership distribute anything to you on which family trust distribution tax has been paid?

Amount: Enter the amount on which FTDT has been paid. This amount is not included in Taxable Income and is not subject to Income Tax or Medicare, but it will be used in the determination of liability for the Medicare Levy Surcharge.

The on-screen wording in brackets following the item description does not form part of the ATO printed form. If the Medicare Levy Surcharge (mls) is completed prior to this item being completed, any amount on which FTDT has been paid must be entered in the mls worksheet.

To use the mls worksheet:

1. Press label X to open the worksheet. (If an mls worksheet is already attached to the return it will be opened when you click label X or when you press [Enter] at the label.)

2. Click the Income Tests button.

3. Enter the total of ‘amounts on which FDT tax has been paid’.

4. Press [F6] to save and integrate the amount to label X.

Back to Adjustments

CCH References

6-268 Family trust distribution tax

Click this link to open the information on Item C1 Label L on the ATO website.

Use the Interest on early payments worksheet (epi)  available at label L to calculate the correct credit due. Any amounts calculated in the epi worksheet in the previous income year will be brought to account as income in the Interest worksheet (int) in the following income year.

The per annum interest rates on early payments may be viewed and printed by clicking Maintenance > Tax Rates > Early Payment Interest.

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CCH References

25-440 Interest on early payments

28-170 Interest on overpayments

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