Commonwealth Consolidated Acts

TAX LAW IMPROVEMENT ACT (NO. 1) 1998 - SCHEDULE 6

Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
1 At the end of the Act

Add:

[The next Division is Division 392.]

Division 392—Long-term averaging of primary producers' tax liability

Table of sections

392-1 Application of Division 392 of the Income Tax Assessment Act 1997
392-25 Transitional provision—election under section 158A of the Income Tax Assessment Act 1936

392-1 Application of Division 392 of the Income Tax Assessment Act 1997

(1)

Division 392 of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years.

(2)

It applies to your assessment as if:

(a) it had applied to your assessment for each income year before the 1998-99 income year for which Division 16 of Part III of the Income Tax Assessment Act 1936 applied in relation to your income; and
(b) you had carried on a primary production business during each income year before the 1998-99 income year when you carried on a business of primary production; and
(c) for each income year before the 1998-99 income year you had a basic taxable income equal to your taxable income for the income year for the purposes of Division 16 of Part III of the Income Tax Assessment Act 1936 .

Note: Section 149A of the Income Tax Assessment Act 1936 identifies what your taxable income for an income year is for the purposes of Division 16 of Part III of that Act.

[The next section is section 392-25.]

392-25 Transitional provision—election under section 158A of the Income Tax Assessment Act 1936

Division 392 of the Income Tax Assessment Act 1997 does not apply to your assessment for the 1998-99 income year or a later income year if you made an election under section 158A (Election that Division not apply) of the Income Tax Assessment Act 1936 relating to an income year before the 1998-99 income year.

Part 2—Consequential amendment of the Income Tax Assessment Act 1997
2 Subsection 4-10(3) (at the end of the note at the end of step 2 of the method statement)

Add "and section 4-25".

3 At the end of Division 4

Add:

[The next section is section 4-25.]

4-25 Special provisions for working out your basic income tax liability

Subsection 392-35(3) may increase your basic income tax liability beyond the liability worked out simply by applying the income tax rates to your taxable income.

Note: Subsection 392-35(3) increases some primary producers' tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392-C.

4 Section 12-5 (table item headed "averaging of incomes")

Repeal the item.

5 Section 13-1 (table item headed "primary production")

Omit:

substitute:

6 Before paragraph 42-295(3)(d)

Insert:

(da) Division 392 of this Act (which provides for long-term averaging of primary producers' tax liability) applies to your assessment; or
7 Section 385-5 (at the end of the table)

Add:

Part 3—Consequential amendment of the Income Tax Assessment Act 1936
8 Paragraph 86(2)(b)

After "Division 16", insert "of this Part or Division 392 (Long-term averaging of primary producers tax liability) of the Income Tax Assessment Act 1997 ".

9 Subsection 94(10A)

Omit "Division 16", substitute "Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 ".

10 Subsection 94(10B)

Omit "Division 16", substitute "Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 ".

12 Sub-subparagraph 94(10C)(a)(i)(A)

Omit "relevant primary production deductions", substitute "primary production deductions".

13 Sub-subp a ragraph 94(10C)(a)(i)(B) (definition of A )

Repeal the definition, substitute:

A is the amount shown in the following table:

14 Sub-subparagraph 94(10 C )(a)(i)(B) (definition of C )

Omit "actual taxable income from primary production", substitute "taxable primary production income".

15 Subparagraph 94(10C)(a)(ii)

Omit "aggregate of the relevant primary production deductions of the taxpayer of the year of income exceeds the assessable primary production income of the taxpayer of the year of income", substitute "taxpayer's primary production deductions for the year of income exceed the taxpayer's assessable primary production income for that year".

16 Subp a ragraph 94(10C)(a)(ii) (definition of A )

Repeal the definition, substitute:

A is the amount shown in the following table:

17 Subparagraph 94(10C)(a)(ii) ( d efinition of D )

Repeal the definition, substitute:

D is the number of whole dollars in the difference between the taxpayer's primary production deductions for the year of income and the taxpayer's assessable primary production income for that year; and
18 Subsection 94(14)

Omit " actual taxable income from primary production ,".

19 Subsection 94(14)

Omit ", notional taxable income from primary production ".

20 At the end of section 94

Add:

(15)

In this section, the following terms have the same meanings that they have in Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 :

(a) assessable primary production income;
(b) basic taxable income;
(c) non-primary production shade-out amount;
(d) primary production deductions;
(e) taxable non-primary production income;
(f) taxable primary production income.
21 Before subsection 156(1)

Insert:

(1A)

Subsections (4) and (4A) do not apply to an assessment for the 1998-99 income year or a later income year.

Note: This means that an individual taxpayer is not entitled to a rebate or required to pay complementary tax under this section for those income years (and that subsections (1), (2) and (3) are not relevant to those income years). Division 392 of the Income Tax Assessment Act 1997 provides for averaging of individual primary producers' tax liability for years of income after 1997-98, taking into account the tax on their average incomes.

22 Section 159S (paragraph (a) of the definition of taxable part of the taxable income )

Omit "Division 16 does not apply to the income of the taxpayer of", substitute "neither Division 16 of this Part (Averaging of incomes) nor Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 applies to the taxpayer's assessment for".

23 Subsection 159ZR(1) (definition of rebated tax )

After "156 or 160AA", insert "of this Act, and of any tax offset under subsection 392-35(2) of the Income Tax Assessment Act 1997 (which allows some primary producers tax offsets),".

24 Paragraph 221YBA(2)(a)

Repeal the paragraph, substitute:

(a) the taxpayer's taxable primary production income worked out under section 392-80 of the Income Tax Assessment Act 1997 (Working out your taxable primary production income); or
25 Subsection 221YCAA(2) (before paragraph (g) of the definition of adjusted preceding year's tax )

Insert:

(ga) any averaging component of the taxpayer worked out under section 392-90 of the Income Tax Assessment Act 1997 for the preceding year of income had been increased by the provisional tax uplift factor for the current year of income; and
26 Subsection 221YCAA(2) (paragraph (h) of the definition of adjusted preceding year's tax )

Omit "Division 16 of Part III", substitute "Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 or Division 16 of Part III of this Act".

27 Subsection 221YCAA(2) (paragraph (j) of the definition of adjusted preceding year's tax )

Omit "other than a rebate under section 156", substitute "except a tax offset under subsection 392-35(2) of the Income Tax Assessment Act 1997 (which provides tax offsets for some primary producers), or a rebate under section 156 of this Act,".

28 Subsection 221YCAA(2) (paragraph (m) of the definition of qualifying reductions )

After "160AQZ", insert "or a tax offset under subsection 392-35(2) of the Income Tax Assessment Act 1997 ".

29 Subparagraph 221YCAA(3)(b)(ii)

Omit "Division 16 of Part III, the deemed taxable income from primary production of the taxpayer", substitute "Division 392 of the Income Tax Assessment Act 1997 (Long-term averaging of primary producers' tax liability), the taxpayer's averaging component".

30 Application of amendments made by items 25 to 29

The amendments made by items 25 to 29 (inclusive) of this Schedule apply for the purposes of working out amounts of provisional tax payable for the 1999-2000 year of income and later years of income.

Part 4—Consequential amendment of the Income Tax Rates Act 1986
31 Subsection 12(3)

Repeal the subsection.

32 After section 12

Insert:

12A Rate of extra income tax for primary producers

(1)

This section sets the rate of extra income tax payable under subsection 392-35(3) of the Income Tax Assessment Act 1997 on every dollar of a taxpayer's averaging component for a year of income.

(2)

The rate is worked out using the formula:

Rate if taxable income is less than tax-free threshold adjusted by family tax assistance

(3)

If:

(a) section 20C or 20D applies to the taxpayer for the year of income, or would apply apart from section 20E; and
(b) the taxpayer's taxable income is more than $5,400 but less than the taxpayer's adjusted tax-free threshold;

the rate is worked out using the formula:

(4)

If:

(a) section 20C or 20D applies to the taxpayer for the year of income, or would apply apart from section 20E; and
(b) the taxpayer's taxable income is $5,400 or less and is less than the taxpayer's adjusted tax-free threshold;

the rate is worked out using the formula:

(5)

Subsections (3) and (4) have effect despite subsection (2).

(6)

In this section: