INCOME TAX ASSESSMENT ACT 1997 - SECT 392.35 Will you get a tax offset or have to pay extra income tax?

INCOME TAX ASSESSMENT ACT 1997 - SECT 392.35

  (1)   Compare:

  (a)   the amount (the income tax you would pay at the comparison rate ) worked out using the formula:

  (b)   the amount of income tax that you would pay on your * basic taxable income for the * current year at * basic rates.

Note:   You must disregard some provisions of this Act in working out amounts of income tax for the purposes of this subsection: see subsection   (5).

Tax offset

  (2)   You are entitled to a * tax offset equal to the * averaging adjustment worked out under Subdivision   392 - C if the income tax you would pay at the comparison rate is less than the amount of income tax you would pay at * basic rates.

Extra income tax

  (3)   You must pay extra income tax on the * averaging component of your * basic taxable income if the income tax you would pay at the comparison rate is more than the amount of income tax you would pay at * basic rates.

Note 1:   Section   12A of the Income Tax Rates Act 1986 sets the rate at which you must pay extra income tax on the averaging component of your basic taxable income.

Note 2:   It does so in such a way that, generally, the extra income tax you must pay equals the averaging adjustment worked out under Subdivision   392 - C.

Meaning of basic rates

  (4)   The basic rates at which you would pay income tax are:

  (a)   if you are a resident taxpayer as defined in the Income Tax Rates Act 1986 --the rates of income tax in paragraph   (1)(b) of Part   I of Schedule   7 to that Act, taking into account the way it would apply with any changes to your tax - free threshold under section   20 of that Act; or

  (b)   if you are a non - resident taxpayer as defined in the Income Tax Rates Act 1986 --the rates of income tax in paragraph   1(b) of Part   II of Schedule   7 to that Act.

Disregard certain provisions in working out amounts

  (5)   Work out the amount of income tax mentioned in paragraph   (1)(b) as if:

  (a)   the following provisions did not apply:

  (i)   this Division;

  (ii)   section   94 (Partner not having control and disposal of share in partnership income) of the Income Tax Assessment Act 1936 ;

  (iii)   Division   6AA (Income of certain children) of Part   III of the Income Tax Assessment Act 1936 ;

  (iv)   Part   VIIB (Medicare levy) of the Income Tax Assessment Act 1936 ; and

  (b)   you were not entitled to any rebate or credit under the Income Tax Assessment Act 1936 or to any * tax offset under this Act.

No adjustment

  (6)   This Division does not affect your income tax for the * current year if the income tax you would pay at the * comparison rate equals the amount of income tax you would pay at * basic rates.

Note:   The 2 amounts will be equal if:

• your basic taxable income and your average income are both below the tax - free threshold; or
• your average income equals your basic taxable income for the current year.