Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Income Tax Assessment Act 1997
1 Section 13‑1 (table entry relating to eligible termination payments)
Before the sub‑entry relating to superannuation contributions, insert:
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savings and investment income, payments included in..................................................................................... |
Subdivision 61‑A |
2 Section 13‑1 (table, before the entry relating to shipping income)
Insert:
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savings and investment income |
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.............................................................................................. |
Subdivision 61‑A |
3 Section 13‑1 (table entry relating to superannuation)
Repeal the entry, substitute:
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superannuation |
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undeducted contributions...................................................... |
Subdivision 61‑A |
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see also eligible termination payments |
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4 After the heading to Division 61
Insert:
Table of Subdivisions
61‑A Savings tax offset
61‑G Private health insurance tax offset
Subdivision 61‑A -- Savings tax offset
61‑50 What this Subdivision is about
You get a tax offset equal to 15% (up to a maximum of $450) of the sum of your savings and investment income and certain of your superannuation contributions. In most cases, you must be a resident individual to get the offset.
Table of sections
Operative provisions
61‑55 Entitlement to the savings tax offset
61‑60 What is savings and investment income?
61‑65 Trustees also get the tax offset, if a beneficiary is under a legal disability
61‑70 This tax offset is additional to the one under section 159SZ
[This is the end of the Guide.]
61‑55 Entitlement to the savings tax offset
Who gets the tax offset
(1) You are entitled to a * tax offset for an income year if you are:
(a) an individual; and
(b) an Australian resident at any time during the income year.
Note: Trustees can also get the tax offset in some situations if a beneficiary of the trust is under a legal disability--see section 61‑65.
Amount of the tax offset
(2) The amount of the * tax offset is 15% of the amount worked out as follows:
Method statement
Step 1. Take your * savings and investment income (see section 61‑60) for the income year.
Step 2. Add to the Step 1 amount any contributions to a * complying superannuation fund or an * RSA that you make during the income year to get superannuation benefits for yourself, or for your dependants in the event of your death.
Step 3. Subtract from the Step 2 amount the sum of your deductions for the income year, to the extent that the deductions relate to any or all of your * savings and investment income.
Step 4. Subtract from the Step 3 amount any amount that you can deduct under section 82AAT of the Income Tax Assessment Act 1936 , as specified in a notice that you give under that section, for the contributions counted at Step 2.
Step 5. If the final result is nil or negative, you don't get a tax offset under this section.
Maximum tax offset allowed is $450
(3) However, the maximum amount of * tax offset you can get under this section for an income year is $450.
Deductions unrelated to any particular income
(4) To avoid doubt, deductions that are not related to the * derivation by you of any particular amount of * savings and investment income are not subtracted under Step 3 of the method statement in subsection (2).
Example: A deduction under Division 30 for a gift that you make to a charity is not related to any particular savings and investment income of yours. Therefore, it is not subtracted under Step 3.
61‑60 What is savings and investment income?
(1) Your savings and investment income is the sum of the following:
(a) all of your assessable income that is not * PAYE earnings;
(b) any amount paid to you that is included in your assessable income and that is covered by paragraph (c) of the definition of salary or wages in subsection 221A(1) of the Income Tax Assessment Act 1936 , so long as:
(i) the payment is from an * Australian source and is not a rebatable benefit, or a rebatable pension, within the meaning of section 160AAA of that Act or a payment of the kind mentioned in subsection 52‑105(2) of this Act; or
(ii) the payment is not from an * Australian source and there is or has been a deductible amount in relation to the annuity concerned within the meaning of section 27H of the Income Tax Assessment Act 1936 ;
Note: This basically covers annuities and pensions etc. that you purchased yourself.
(c) so much of the amount of any eligible termination payment (as defined in section 27A of that Act) made to you as is included in your assessable income under section 27B or 27C of that Act.
Exceptions
(2) However, your * savings and investment income does not include the following amounts:
(a) payments covered by paragraph (pa) of the definition of salary or wages in subsection 221A(1) of the Income Tax Assessment Act 1936 ;
Note: That paragraph covers payments by way of remuneration or allowances to members of certain local government bodies.
(b) * assessable recoupments of amounts deductible under section 25‑5 of this Act or section 69 of the Income Tax Assessment Act 1936 ;
Note: Those 2 sections basically deal with tax‑related expenses.
(c) * assessable recoupments of amounts deductible under section 25‑60 of this Act or section 74 of the Income Tax Assessment Act 1936 .
Note: Those 2 sections basically deal with election expenses.
61‑65 Trustees also get the tax offset, if a beneficiary is under a legal disability
(1) You are entitled to a * tax offset for an income year if you are a trustee liable to pay tax under subsection 98(1) of the Income Tax Assessment Act 1936 on a share of the trust's net income in respect of a beneficiary under a legal disability who is:
(a) an individual; and
(b) an Australian resident at any time during the income year.
Amount of the tax offset
(2) The amount of the * tax offset, in respect of each such beneficiary, is 15% of that share.
Maximum tax offset $450 for each beneficiary
(3) However, the maximum amount of * tax offset you can get under this section in respect of a particular beneficiary for an income year is $450.
No other trustees get the offset
(4) You are not otherwise entitled to the * tax offset as a trustee.
61‑70 This tax offset is additional to the rebate under section 159SZ of the 1936 Act
To avoid doubt, a * tax offset under this Subdivision is in addition to any rebate you may be entitled to under section 159SZ of the Income Tax Assessment Act 1936 (which deals with superannuation contributions by low income earners).
5 Subsection 995‑1(1)
Insert:
"RSA" has the same meaning as in the Retirement Savings Accounts Act 1997 .
6 Subsection 995‑1(1)
Insert:
"savings and investment income" has the meaning given by section 61-60.
Part 2 -- Income Tax Assessment Act 1936
7 After section 160AD
Insert:
160ADA Most tax offsets under the 1997 Assessment Act are treated as rebates
A tax offset under a provision of the Income Tax Assessment Act 1997 is taken to be a rebate for the purposes of this Act, unless that provision corresponds to a provision of this Act that provides for a credit.
Note: If the tax offset provision does correspond to a credit provision, the tax offset is treated as a credit: see section 160AHA.
8 After section 160AH
Insert:
160AHA Some tax offsets under the 1997 Assessment Act are treated as credits
A tax offset under a provision of the Income Tax Assessment Act 1997 that corresponds to a provision of this Act that provides for a credit is taken to be a credit for the purposes of this Act.
Note: All other tax offsets under the Income Tax Assessment Act 1997 are treated as rebates: see section 160ADA.
9 Paragraph 221YAB(1)(b) (definition of Qualifying rebates )
After "and 160ACE", insert "of this Act and the tax offset under Subdivision 61‑A of the Income Tax Assessment Act 1997 ".
10 At the end of paragraph 221YCAA(2)(m)
Add:
Note: A reference in this Act to rebates generally also includes a reference to a tax offset under the Income Tax Assessment Act 1997 : see section 160ADA of this Act.
11 Paragraph 221YDA(1)(da)
After "or 160AQZ", insert "and the tax offset to which he or she will be entitled for that year of income under Subdivision 61‑A of the Income Tax Assessment Act 1997 ".
12 Subparagraph 221YDA(2)(a)(ii)
After "or 160AQZ", insert "and the tax offset under Subdivision 61‑A of the Income Tax Assessment Act 1997 ".
13 Subparagraph 221YDA(2)(a)(ii)
After "those rebates", insert "and that tax offset".
Part 3 -- Application and transitional
14 Application
The amendments made by this Schedule apply to assessments for the 1998‑99 income year and later income years.
15 Transitional--lower tax offset for the 1998‑99 income year
(1) For the 1998‑99 income year, the rate of tax offset specified in subsections 61‑55(2) and 61‑65(2) of the Income Tax Assessment Act 1997 is taken to be 7.5%; not 15%.
(2) Accordingly, for that income year, the maximum amount of tax offset specified in subsections 61‑55(3) and 61‑65(3) of that Act is taken to be $225; not $450.
(3) In working out your provisional tax for the 1999‑2000 income year under Division 3 of Part VI of the Income Tax Assessment Act 1936 , work out your tax offset under Subdivision 61‑A of the Income Tax Assessment Act 1997 for the 1998‑99 income year disregarding subitems (1) and (2) of this item.
16 Transitional--provisional tax for the 1998‑99 income year
In working out your provisional tax for the 1998‑99 income year under Division 3 of Part VI of the Income Tax Assessment Act 1936 , it is to be assumed that:
(a) Subdivision 61‑A of the Income Tax Assessment Act 1997 had applied to your assessment for the 1997‑98 income year; and
(b) subitems 15(1) and (2) had applied for that income year (as well as the 1998‑99 income year); and
(c) any tax offset under that Subdivision were worked out for the 1998‑99 income year disregarding Steps 2 and 4 of the method statement in subsection 61‑55(2) of that Act (which deal with certain superannuation contributions).