(1)

In this Part, an individual's adjusted savings and investment income for a qualifying year is worked out as follows:

Method statement

Step 1. Work out the individual's savings and investment income for the year: see subsections (3) and (4). Step 2. Add to the Step 1 amount any contributions to a complying superannuation fund or an RSA (retirement savings account) that the individual made during the year to get superannuation benefits for himself or herself, or for his or her dependants in the event of his or her death. Step 3. Subtract from the Step 2 amount the sum of the individual's deductions for the year, to the extent that the deductions relate to any or all of his or her savings and investment income. Step 4. Subtract from the Step 3 amount any amount that the individual can deduct under section 82AAT of the Income Tax Assessment Act 1936 , as specified in a notice that he or she gives under that section, for the contributions counted at Step 2. Step 5. If the final result is nil or negative, the individual does not have any adjusted savings and investment income.

Deductions unrelated to any particular income

(2)

To avoid doubt, deductions that are not related to the derivation by the individual of any particular amount of savings and investment income are not subtracted under Step 3 of the Method statement in subsection (1).

Example: A deduction under Division 30 of the Income Tax Assessment Act 1997 for a gift the individual makes to a charity is not related to any particular savings and investment income of the individual. Therefore, it is not subtracted under Step 3.

Savings and investment income

(3)

In this Part, an individual's savings and investment income is the sum of the following:

(a)

all of the individual's assessable income that is not PAYE earnings;

(b)

any amount paid to the individual that is included in the individual's 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 the Income Tax Assessment Act 1997 ; 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 the individual purchased.

(c)

so much of the amount of any eligible termination payment (as defined in section 27A of the Income Tax Assessment Act 1936 ) made to the individual as is included in the individual's assessable income under section 27B or 27C of that Act.

(4)

However, an individual's 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 the Income Tax Assessment Act 1997 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 the Income Tax Assessment Act 1997 or section 74 of the Income Tax Assessment Act 1936 .

Note: Those 2 sections basically deal with election expenses.