An individual's adjusted taxable income is relevant to the rate of family tax benefit and child care benefit.

For the purposes of this Act, an individual's adjusted taxable income for a particular income year is the sum of the following amounts ( income components ):

(a)

the individual's taxable income for that year;

(b)

the individual's adjusted fringe benefits total for that year;

(c)

the individual's target foreign income for that year;

(d)

the individual's net rental property loss for that year; and

(e)

the individual's tax free pension or benefit for that year;

(1)

For the purposes of this Act (other than Part 4 of Schedule 1), if an individual is a member of a couple, the individual's adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual's partner.

(2)

For the purposes of Part 4 of Schedule 1, an individual's adjusted taxable income for an income year is:

(a)

the individual's adjusted taxable income for that year; or

(b)

the adjusted taxable income for that year of the individual's partner if it is less than the individual's adjusted taxable income for that year.

An individual's adjusted fringe benefits total for an income year is the amount worked out using the formula:

(1)

An individual's target foreign income for an income year is the amount of the individual's foreign income (as defined in section 10A of the Social Security Act 1991 ) for the income year that is not:

(a)

taxable income; or

(b)

received in the form of a fringe benefit (as defined in the Fringe Benefits Tax Assessment Act 1986 , as it applies of its own force or because of the Fringe Benefits Tax (Application to the Commonwealth) Act 1986 ) in relation to the individual as an employee (as defined in the Fringe Benefits Tax Assessment Act 1986 ) and a year of tax.

(2)

If it is necessary, for the purposes of this Schedule, to work out an amount of foreign income expressed in a foreign currency received in an income year, the amount in Australian currency is to be worked out using the market exchange rate for 1 July in that income year.

(3)

If there is no market exchange rate for 1 July in the income year (for example, because of a national public holiday), the market exchange rate to be used is the market exchange rate that applied on the last working day immediately before that 1 July.

(4)

For the purposes of this clause, the market exchange rate of a foreign currency is the on-demand airmail buying rate for that currency available at the Commonwealth Bank of Australia.

The net rental property loss of an individual for an income year is:

(a)

if the expenses incurred by the individual on rental property during that year exceed the individual's gross rental property income for that year—the amount by which those expenses exceed that gross rental property income; or

(b)

if the expenses incurred by the individual on rental property during that year do not exceed the individual's gross rental property income for that year—nil.

For the purposes of this Schedule, the following payments received in an income year are tax free pensions or benefits for that year:

(a)

a disability support pension under Part 2.3 of the Social Security Act 1991 ;

(b)

a wife pension under Part 2.4 of the Social Security Act 1991 ;

(c)

a carer payment under Part 2.5 of the Social Security Act 1991 ;

(d)

a pension under Part II of the Veterans' Entitlements Act 1986 payable to a veteran;

(e)

an invalidity service pension under Division 4 of Part III of the Veterans' Entitlements Act 1986 ;

(f)

a partner service pension under Division 5 of Part III of the Veterans' Entitlements Act 1986 ;

(g)

a pension under Part II of the Veterans' Entitlements Act 1986 payable to the widow or widower of a deceased veteran;

(h)

income support supplement under Part IIIA of the Veterans' Entitlements Act 1986 ;

Deductible child maintenance expenditure

(1)

For the purposes of this Schedule, if an individual incurs an amount of child maintenance expenditure during an income year, 50% of the amount of the expenditure is the individual's deductible child maintenance expenditure in respect of that year.

Child maintenance expenditure

(2)

For the purposes of this clause, an individual incurs child maintenance expenditure if:

(a)

the individual (the payer ), or if the payer is a member of a couple—the payer's partner, pays a payment (either one-off or periodic) or provides benefits; and

(b)

the payment or benefits are paid or provided in respect of the payer's, or the partner's (if any), natural or adopted child; and

(c)

the payment or benefits are paid or provided to another individual other than the payer, or the partner (if any), for the maintenance of the child.

Amount of child maintenance expenditure

(3)

For the purposes of this clause, if an individual incurs child maintenance expenditure, the amount of the child maintenance expenditure incurred by the individual is the amount of the payment paid or the value of the benefits to the individual who provided them.

Value of a benefit provided

(4)

For the purposes of subclause (3), the value of a benefit , in relation to the individual providing the benefit, has the meaning set out in subclauses (5) and (6).

Value of benefit where provider is a party to a child support agreement

(5)

If:

(a)

an individual providing a benefit is a party to a child support agreement under the Child Support (Assessment) Act 1989 ; and

(b)

the agreement contains:

(i)

provisions under which the individual is providing child support to an individual for a child otherwise than in the form of a periodic payment; and

(ii)

a statement of the annual value of a specified amount that the child support has; and

(c)

the individual provides the support;