Commonwealth Consolidated Acts

INCOME TAX RATES AMENDMENT ACT (NO. 1) 1997 - SCHEDULE 1

Income Tax Rates Act 1986

1  Paragraph 12(7)(a) (definition of B )

After "subsection (3)", insert ", Division 5 of Part II".

2  Paragraph 12(8)(a) (definition of B )

After "subsection (4)", insert ", Division 5 of Part II".

3  Subsection 20F(1)

Repeal the subsection, substitute:

             (1)  If:

                     (a)  the taxable income of a year of income of a taxpayer to whom section 20C or 20D applies, or would apart from section 20E apply, consists of or includes a special income component; and

                     (b)  the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E, exceeds the section 20F rate adjustment;

then:

                     (c)  sections 20C, 20D and 20E do not apply; and

                     (d)  the rate referred to in paragraph (b) is reduced by the section 20F rate adjustment.

          (1A)  If:

                     (a)  the taxable income of a year of income of a taxpayer to whom section 20C or 20D applies, or would apart from section 20E apply, consists of or includes a special income component; and

                     (b)  the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E, does not exceed the section 20F rate adjustment;

then:

                     (c)  sections 20C, 20D and 20E do not apply; and

                     (d)  the rate referred to in paragraph (b) is reduced to nil.

4  Subsection 20F(2)

Omit all the words after paragraph (d), substitute:

               and (e)  the rate of tax for every $1 of the taxable income, as worked out under clause 3 of Part I of Schedule 12 and apart from sections 20C, 20D and 20E, exceeds the section 20F rate adjustment;

then:

                      (f)  sections 20C, 20D and 20E do not apply; and

                     (g)  the rate referred to in paragraph (e) is reduced by the section 20F rate adjustment.

5  After subsection 20F(2)

Insert:

          (2A)  If:

                     (a)  a trustee of a trust estate is liable to be assessed and to pay tax under section 98 of the Assessment Act in respect of a share of a resident beneficiary of the net income of the trust estate of a year of income; and

                     (b)  Division 6AA of Part III of that Act applies to a part of that share; and

                     (c)  that share consists of or includes a capital gains component; and

                     (d)  section 20C or 20D applies, or would apart from section 20E apply, to the beneficiary; and

                     (e)  the rate of tax for every $1 of the taxable income, as worked out under clause 3 of Part I of Schedule 12 and apart from sections 20C, 20D and 20E, does not exceed the section 20F rate adjustment;

then:

                      (f)  sections 20C, 20D and 20E do not apply; and

                     (g)  the rate referred to in paragraph (e) is reduced to nil.

6  Subsection 20F(3)

Insert:

section 20F rate adjustment means:

                     (a)  for the purposes of subsections (1) and (1A)--the rate worked out using the formula:

                     (b)  for the purposes of subsections (2) and (2A)--the rate worked out using the formula:

7  Paragraphs 20G(1)(c), (2)(c), (3)(e) and (4)(e)

Omit "$5,400", substitute "the tax-free threshold"

8  After subsection 20G(2)

Insert:

          (2A)  If a taxpayer to whom subsection 20F(1A) applies in respect of a year of income is liable to pay complementary tax under subsection 156(4A) of the Assessment Act in respect of the whole or a part of the taxable income of the year of income, the rate of complementary tax, as determined under subsection 12(3), is reduced by the rate worked out using the formula:

9  After subsection 20G(4)

Insert:

          (4A)  If:

                     (a)  a trustee of a trust estate is liable to be assessed and to pay tax under subsection 98(1) or (2) of the Assessment Act in respect of a beneficiary's share of the net income of a trust estate of the year of income; and

                     (b)  subsection 20F(2A) applies in respect of that share; and

                     (c)  the trustee is liable to pay complementary tax under subsection 156(5A) of that Act in respect of the share;

the rate of complementary tax, as determined under subsection 12(4), is reduced by the rate worked out using the formula:

10  Subsection 20G(5) (formula in the definition of adjusted tax-free threshold )

Repeal the formula, substitute:

11  Subsection 20G(5)

Insert:

balance of section 20F rate adjustment , in relation to a taxpayer to whom subsection 20F(1A) or (2A) applies, means the rate obtained by subtracting:

                     (a)  the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E;

from:

                     (b)  the section 20F rate adjustment.

12  Subsection 20G(5)

Insert:

section 20F rate adjustment , in relation to a taxpayer to whom subsection 20F(1A) or (2A) applies, has the same meaning as in whichever of those subsections applies to the taxpayer.

13  Subsection 20G(5)

Insert:

"tax-free threshold" means:

                     (a)  $5,400; or

                     (b)  if Division 4 applies to the taxpayer in respect of the year of income--the amount calculated under whichever of subsection 20(1) or 20(2) applies to the taxpayer.

14  Application

The amendments made by this Schedule apply in relation to the 1996-97 year of income and to all later years of income.