Commonwealth Numbered Acts

INCOME TAX RATES AMENDMENT (FAMILY TAX INITIATIVE) ACT 1996 No. 64 of 1996 - SCHEDULE 1

Schedule 1 - Amendment of the Income Tax Rates Act 1986 1 After section 16
Insert: 16A Division to apply before any tax-free threshold increase under
Division 5
If this Division applies in respect of a year of income to a taxpayer to whom
section 20C or 20D applies, or would apart from section 20E apply, this
Division is to be applied in relation to the taxpayer in respect of that year
of income before Division 5 is applied. 2 At the end of Part II Add: Division
5 - Family tax assistance: increased tax-free threshold for certain taxpayers
with dependent children 20A Object of Division
This Division provides for family tax assistance by way of an increased
tax-free threshold for certain taxpayers with dependent children. 20B
Definitions
In this Division: dependant has the meaning given by section 20K. family
income ceiling has the meaning given by section 20Q. lowest marginal rate of
tax means the lowest percentage set out in column 2 of the table in clause 1
of Part 1 of Schedule 7. relevant part of the 1996-97 year of income means the
part of that year of income occurring after the commencement of this Division.
relevant period means:

   (a)  the relevant part of the 1996-97 year of income; or

   (b)  the year of income 1997-98; or

   (c)  a later year of income. spouse, in relation to a taxpayer, does not
        include a person who lives separately and apart from the taxpayer on a
        permanent basis. taxable income, in relation to a beneficiary of a
        trust estate, includes (except in section 20J) any amount that would
        have been included in the beneficiary's assessable income under
        section 100 of the Assessment Act if paragraph 100(1)(b), and the
        words "or of each of the trust estates" in paragraphs 100(1)(c) and
        (d), of that Act were omitted. taxpayer's income ceiling has the
        meaning given by section 20R. 20C Increase in tax-free threshold

(1) Subject to this Division, if:

   (a)  a taxpayer who was a resident during the relevant part of the 1996-97
        year of income had, during that part of that year of income, at least
        one dependant; and

   (b)  the taxpayers' taxable income of that year of income or, if the
        taxpayer had a spouse on the last day of that year of income, the sum
        of the taxable incomes of that year of income of the taxpayer and that
        spouse was less than the family income ceiling for the taxpayer for
        that year of income; the amount of $5,400 set out in column 1 of the
        table in clause 1 of Part 1 of Schedule 7 is taken, for the purposes
        of the application of that Schedule to the taxpayer in respect of that
        year of income, to be increased by $500 for each person who, during
        the relevant part of that year of income, was a dependant of the
        taxpayer.

(2) Subject to this Division, if:

   (a)  a taxpayer who was a resident during the 1997-98 year of income or a
        later year of income had, during that year of income, at least one
        dependant; and

   (b)  the taxpayers' taxable income of that year of income or, if the
        taxpayer had a spouse on the last day of that year of income, the sum
        of the taxable incomes of that year of income of the taxpayer and that
        spouse was less than the family income ceiling for the taxpayer for
        that year of income; the amount of $5,400 set out in column 1 of the
        table in clause 1 of Part 1 of Schedule 7 is, for the purposes of the
        application of that Schedule to the taxpayer in respect of that year
        of income, taken to be increased by $1,000 for each person who, during
        that year of income, was a dependant of the taxpayer. 20D Further
        increase in tax-free threshold

(1) Subject to this Division, if:

   (a)  a taxpayer who was a resident during the relevant part of the 1996-97
        year of income had, during that part of that year of income, at least
        one dependant under the age of 5 years; and

   (b)  the taxpayers' taxable income of that year of income was less than the
        taxpayers' income ceiling for that year of income; and

   (c)  in respect of a taxpayer who had a spouse on the last day of that year
        of income - the spouse's taxable income of that year of income was
        less than the spouse income ceiling for that year of income; the
        amount of $5,400 set out in column 1 of the table in clause 1 of Part
        1 of Schedule 7 is, for the purposes of the application of that
        Schedule to the taxpayer in respect of that year of income, in
        addition to any amount by which that amount of $5,400 is increased
        under section 20C, taken to be increased by $1,250.

(2) Subject to this Division, if:

   (a)  a taxpayer who was a resident during the 1997-98 year of income or a
        later year of income had, during that year of income, at least one
        dependant under the age of 5 years; and

   (b)  the taxpayers' taxable income of that year of income was less than the
        taxpayers' income ceiling for that year of income; and

   (c)  in respect of a taxpayer who had a spouse on the last day of that year
        of income - that spouse's taxable income of that year of income was
        less than the spouse income ceiling for that year of income; the
        amount of $5,400 set out in column 1 of the table in clause 1 of Part
        1 of Schedule 7 is, for the purposes of the application of that
        Schedule to the taxpayer in respect of that year of income, in
        addition to any amount by which that amount of $5,400 is increased
        under section 20C, taken to be increased by $2,500.

(3) In calculating the taxable income of a year of income of a taxpayers'
spouse for the purposes of this section, any amount of Commonwealth pension,
benefit or allowance included in that spouse's assessable income of that year
of income is taken not to have been so included.

(4) For the purposes of this section, the spouse income ceiling for a year of
income is the amount worked out using the formula:

  Income ceiling of the breadwinner's partner   X   26


where: income ceiling of the breadwinner's partner means the amount per
fortnight worked out under the Method statement in Table E of point 1070-E5 of
the Rate Calculator at the end of section 1070 of the Social Security Act
1991. The reference in that table to the current maximum basic component of
parenting allowance is a reference to the amount of that component on 21 March
in the year of income.

(5) In this section: Commonwealth labour market program means a program
administered by the Commonwealth under which:

   (a)  unemployed people are trained in skills to improve their prospects of
        obtaining employment; or

   (b)  unemployed people are helped to obtain employment; or

   (c)  employed people are trained in skills, or given other assistance, to
        help them in continuing to be employed by their current employer or in
        obtaining other employment. Commonwealth pension, benefit or allowance
        means any of the following payments:

   (a)  a payment that is a rebatable benefit within the meaning of section
        160AAA of the Assessment Act;

   (b)  a payment that is a rebatable pension within the meaning of section
        160AAA of the Assessment Act;

   (c)  a non-subsidised payment by the Commonwealth of an allowance or
        reimbursement to, or to a person on behalf of, a participant in a
        Commonwealth labour market program;

   (d)  a non-subsidised payment by the Commonwealth of an allowance or
        reimbursement to, or to a person on behalf of, a student under a
        scheme of assistance to students, other than a payment:

   (i)  by way of a scholarship or bursary; or

   (ii) made on the condition that the student, or the person receiving the
        payment on behalf of the student, will (if required) render services
        to the Commonwealth. non-subsidised payment means a payment made to a
        person who is not an employee, or receives the payment on behalf of
        another person who is not an employee, of someone who is entitled to a
        Commonwealth subsidy in respect of the employment. 20E Where adjusted
        tax-free threshold exceeds $20,700

(1) If the adjusted tax-free threshold of a taxpayer to whom, apart from this
subsection, section 20C or 20D would apply exceeds $20,700, those sections do
not apply to the taxpayer but the following provisions of this section have
effect.

(2) The table in clause 1 of Part 1 of Schedule 7 is taken, for the purposes
of the application of that clause to the taxpayer, to be replaced by the
following table:

Column 1                                                 Column 2
Parts of ordinary taxable income of taxpayer              % rate
The part of the ordinary taxable income that: exceeds $20,700 but does not
exceed the adjusted
tax-free threshold                                         14%
exceeds the adjusted tax-free threshold but does
not exceed $38,000                                         34%

exceeds $38,000 but does not exceed $50,000                43%

exceeds $50,000	                                           47%


(3) In this section: adjusted tax-free threshold means the amount worked out
using the formula:
            $5,400  +   tax-free threshold increase


tax-free threshold increase means the sum of the amounts by which, subject to
this Division, the amount of $5,400 set out in column 1 of the table in clause
1 of Part 1 of Schedule 7 would be taken to be increased in relation to the
taxpayer in respect of the year of income under sections 20C and 20D if those
sections applied to the taxpayer. 20F Where taxable income includes special
income or capital gains component

(1) If 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, sections 20C, 20D and 20E do not apply,
but the rate of tax for every $1 of the taxable income, as worked out under
clause 2 or 3 of Part 1 of Schedule 7, clause 2 of Part 1 of Schedule 9 or
clause 3 of Part 1 of Schedule 11, as the case may be, and apart from sections
20C, 20D and 20E, is reduced by the rate worked out using the formula:

  Tax-free threshold increase         X    Lowest marginal rate of tax
Taxable income

(2) 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; sections 20C, 20D and 20E do not apply, but the rate
        of tax for every $1 of the share, as worked out under clause 3 of Part
        1 of Schedule 12 and apart from sections 20C, 20D and 20E, is reduced
        by the rate worked out using the formula:

 Tax-free threshold increase         X    Lowest marginal rate of tax
Share of net income

(3) In this section: tax-free threshold increase means the number of whole
dollars in the sum of the amounts by which, subject to this Division, the
amount of $5,400 set out in column 1 of the table in clause 1 of Part 1 of
Schedule 7 is increased in relation to the taxpayer in respect of the year of
income under sections 20C and 20D, or would be so increased if those sections
applied to the taxpayer. taxable income means the number of whole dollars in
the taxpayers' taxable income of the year of income. share of net income means
the number of whole dollars in the beneficiary's share of the net income of
the trust estate of the year of income. 20G Complementary tax

(1) If:

   (a)  a taxpayer to whom section 20C or 20D applies, or would apart from
        section 20E apply, 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; and

   (b)  the adjusted tax-free threshold exceeds the taxable income; and

   (c)  the taxable income exceeds $5,400; the rate of complementary tax, as
        determined under subsection 12(3), is reduced by the rate worked out
        using the formula:

 (Adjustable tax-free threshold - Taxable income)   X  Lowest marginal
  Deemed taxable income from primary production          rate of tax


(2) If:

   (a)  a taxpayer to whom section 20C or 20D applies, or would apart from
        section 20E apply, 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; and

   (b)  the adjusted tax-free threshold exceeds the taxable income; and

   (c)  the taxable income does not exceed $5,400; the rate of complementary
        tax, as determined under subsection 12(3), is reduced by the rate
        worked out using the formula:

          Tax-free threshold increase               X  Lowest marginal
  Deemed taxable income from primary production          rate of tax


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

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

   (d)  the adjusted tax-free threshold exceeds the share of net income; and

   (e)  the share of net income exceeds $5,400; the rate of complementary tax,
        as determined under subsection 12(4), is reduced by the rate worked
        out using the formula:

(Adjustable tax-free threshold) - Share of net income   X   Lowest
 Deemed net income from primary production                  marginal 
rate of tax

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

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

   (d)  the adjusted tax-free threshold exceeds the share of net income; and

   (e)  the share of net income does not exceed $5,400; the rate of
        complementary tax, as determined under subsection 12(4), is reduced by
        the rate worked out using the formula:

  Tax-free threshold increase           X        Lowest marginal rate
Deemed net income from primary production              of tax
(5) In this section: adjusted tax-free threshold means the number of whole
dollars in the amount worked out using the formula:

     $5,400    +    tax-free threshold increase


tax-free threshold increase means the number of whole dollars in the sum of
the amounts by which, subject to this Division, the amount of $5,400 set out
in column 1 of the table in clause 1 of Part 1 of Schedule 7 is increased in
relation to the taxpayer in respect of the year of income under sections 20C
and 20D, or would be so increased if those sections applied to the taxpayer.
taxable income means the number of whole dollars in the taxpayers' taxable
income of the year of income. deemed taxable income from primary production
means the number of whole dollars in the amount that is the deemed taxable
income from primary production of the taxpayer of the year of income for the
purposes of section 156 of the Assessment Act. share of net income means the
number of whole dollars in the beneficiary's share of the net income of the
trust estate of the year of income. deemed net income from primary production
means the number of whole dollars in the amount that is the deemed net income
from primary production of the trust estate of the year of income for the
purposes of section 156 of the Assessment Act. 20H Notional income
If a taxpayer to whom section 20C or 20D applies, or would apart from section
20E apply, has in a year of income a notional income as determined under
section 59AB or 86 of the Assessment Act, sections 20C, 20D and 20E do not
apply, but the rate of tax for every $1 of the ordinary taxable income, as
worked out under clause 1 of Part 1 of Schedule 9 and apart from sections 20C,
20D and 20E, is reduced by the rate worked out using the formula:

    Tax-free threshold increase    X    Lowest marginal rate of tax
Ordinary taxable income

where: tax-free threshold increase means the number of whole dollars in the
sum of the amounts by which, subject to this Division, the amount of $5,400
set out in column 1 of the table in clause 1 of Part 1 of Schedule 7 is
increased in relation to the taxpayer in respect of the year of income under
sections 20C and 20D, or would be so increased if those sections applied to
the taxpayer. ordinary taxable income means the number of whole dollars in the
taxpayers' ordinary taxable income of the year of income. 20J Trustee
assessment where section 20C or 20D applies to beneficiary

(1) If:

   (a)  a trustee 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 a trust estate; and

   (b)  section 20C or 20D applies, or would apart from section 20E apply, to
        the beneficiary; the references in clause 1 of Part 1 of Schedule 10
        and clauses 1 and 3 of Part 1 of Schedule 12 to one individual are
        taken to be references to the beneficiary.

(2) For the purpose of determining whether section 20C or 20D applies, or
would apart from section 20E apply, to the beneficiary, the beneficiary's
taxable income is taken to be the beneficiary's share of the net income of the
trust estate in respect of which the trustee is liable to be assessed and to
pay tax under section 98 of the Assessment Act. 20K Dependants

(1) Subject to this section, a person is a dependant of a taxpayer during a
period for the purposes of this Division only if, during that period:

   (a)  either:

   (i)  the person was under the age of 16 years; or

   (ii) the person had reached the age of 16 years, was under the age of 18
        years and was receiving full-time secondary education; and

   (b)  the person was a resident; and

   (c)  the taxpayer contributed to the maintenance of the person.

(2) The spouse of a taxpayer is not a dependant of the taxpayer for the
purposes of this Division.

(3) If:

   (a)  a person to whom paragraphs (1)(a) and (b) apply and a taxpayer
        resided together during a period; and

   (b)  the person referred to in paragraph (a) derived income during the
        period; the taxpayer is taken to have contributed to the maintenance
        of the person during the period unless the contrary is established to
        the satisfaction of the Commissioner.

(4) A person is taken not to be a dependant of a taxpayer for the purposes of
this Division during a period that is, or occurs during, the relevant part of
the 1996-97 year of income if:

   (a)  in respect of a person who, during that year of income, had not
        reached the age of 16 years and did not receive full-time education -
        the amount that would have been the person's taxable income of that
        period if that period had been a year of income exceeded the dependant
        (under 16) ceiling for that period; or

   (b)  in respect of a person who, before or during that year of income,
        reached the age of 16 years - the amount that would have been the
        person's taxable income of that period if that period had been a year
        of income exceeded the dependant (over 16) ceiling for that period.

(5) A person is taken not to be a dependant of a taxpayer for the purposes of
this Division during a period that is, or occurs during, the 1997-98 year of
income or a later year of income if:

   (a)  in respect of a person who, during the year of income concerned had
        not reached the age of 16 years and did not receive full-time
        education:

   (i)  where the period is the year of income concerned - the person's
        taxable income of that year of income exceeded the dependant (under
        16) ceiling for that year of income; or

   (ii) where the period occurs during the year of income concerned - the
        amount that would have been the person's taxable income of that period
        if that period had been a year of income exceeded the dependant (under
        16) ceiling for that period; or

   (b)  in respect of a person who, before or during the year of income
        concerned, reached the age of 16 years:

   (i)  where the period is the year of income concerned - the person's
        taxable income of that year of income exceeded the dependant (over 16)
        ceiling for the year of income; or

   (ii) where the period occurs during the year of income concerned - the
        amount that would have been the person's taxable income of that period
        if that period had been a year of income exceeded the dependant (over
        16) ceiling for that period.

(6) In calculating a person's taxable income of a year of income for the
purposes of this section, any amount of Commonwealth assistance included in
the person's assessable income of that year of income is taken not to have
been so included.

(7) This section has effect subject to sections 20L, 20M, 20N and 20P.

(8) In this section: annual young person ceiling means the amount applicable
under paragraph 5(4)(b) of the Social Security Act 1991 (after indexation
under that Act) on 2 January in the year of income. Commonwealth assistance
means a payment by the Commonwealth of an allowance or reimbursement to, or to
a person on behalf of, a student under a scheme of assistance to students,
other than a payment:

   (a)  by way of a scholarship or bursary; or

   (b)  made on condition that the student, or the person receiving the
        payment on behalf of the student, will (if required) render services
        to the Commonwealth. dependant (over 16) ceiling, in relation to a
        period that is the relevant part of the 1996-97 year of income, means
        the amount worked out using the formula:

Annual young person ceiling
2

dependant (over 16) ceiling, in relation to a period that occurs during the
relevant part of the 1996-97 year of income, means the amount worked out using
the formula:

     Annual young person ceiling     X     Number of days in period
                 2                                     181


dependant (over 16) ceiling, in relation to a period that is the 1997- 98 year
of income or a later year of income, means the annual young person ceiling.
dependant (over 16) ceiling, in relation to a period that occurs during the
1997-98 year of income or during a later year of income, means the amount
worked out using the formula:

     Annual young person ceiling     X     Number of days in period
365

dependant (under 16) ceiling, in relation to a period that is the relevant
part of the 1996-97 year of income, means the amount worked out using the
formula:

     Weekly young person ceiling   X    26


dependant (under 16) ceiling, in relation to a period that occurs during the
relevant part of the 1996-97 year of income, means the amount worked out using
the formula:

 Weekly young person ceiling  X  26  X   Number of days in period
181

dependant (under 16) ceiling, in relation to a period that is the 1997-98 year
of income or a later year of income, means the amount worked out using the
formula:

     Weekly young person ceiling   X    52


dependant (under 16) ceiling, in relation to a period that occurs during the
1997-98 year of income or during a later year of income, means the amount
worked out using the formula:
  Weekly young person ceiling   X  52  X   Number of days in period    

365

weekly young person ceiling means the amount per week applicable under
paragraph 5(3)(c) of the Social Security Act 1991 (after indexation under that
Act) on 2 January in the year of income. 20L Where a person is a dependant of
2 or more persons who do not reside together

(1) This section applies to a person (the child) in respect of a period (the
allocation period) that is, or is a part of, a relevant period if, during the
allocation period, the child would, apart from this section, be a dependant of
each of 2 or more persons (the relevant persons) who do not all reside
together.

(2) Subject to subsections (3) and (4), the child is taken to be a dependant
of a relevant person only during a number of days in the allocation period
(the number of days of care) equal to the number of nights in that period for
which the relevant person had the care of the child.

(3) Subject to subsection (4), a child is taken not to be a dependant of a
relevant person during any part of the allocation period if the number of days
of care is less than 30% of the number of days in the allocation period.

(4) If, as a result of the application of subsections (2) and (3), the child
is taken to be a dependant of one only of the relevant persons, the child is
taken to be a dependant of that person during the whole of the allocation
period.

(5) For the purposes of subsection (1), persons who ordinarily reside together
are taken to reside together during any period in which they are temporarily
residing apart. 20M Where a person is a dependant of 2 or more persons who
reside together and section 20D applies to one only of them

(1) This section applies to a person (the child) in respect of a period (the
allocation period) that is a relevant period, or is a part of a relevant
period that includes the last day of the relevant period, if, during the
allocation period:

   (a)  the child is, or apart from section 20L would be, a dependant of a
        person (the relevant person); and

   (b)  the child would, apart from this section and section 20L, also be a
        dependant of another person or other persons; and

   (c)  the relevant person and the other person or other persons reside
        together.

(2) If subsection 20D(1) or (2) applies to the relevant person in respect of
the year of income that is the allocation period or in which the allocation
period occurs but does not apply to the other person or any of the other
persons in respect of that year of income, the child is taken not to be a
dependant of the other person or any of the other persons during the
allocation period.

(3) If:

   (a)  the child is taken not to be a dependant of the other person or any of
        the other persons during the allocation period because of the
        operation of subsection (2); and

   (b)  another person (the other child) is a dependant, or other persons (the
        other children) are dependants, of the relevant person and would,
        apart from this section, also be a dependant or dependants of the
        other person or any of the other persons during any period in which
        they reside together that is the whole or a part of the relevant
        period; the other child is also taken not to be a dependant, or the
        other children are also taken not to be dependants, of the other
        person or any of the other persons during the allocation period.

(4) For the purposes of paragraph (1)(c), persons who ordinarily reside
together are taken to reside together during any period in which they are
temporarily residing apart.

(5) For the purpose only of determining whether a period includes the last day
of a relevant period, if a person (the child) who ceases during the relevant
period but before that day to be a dependant of another person merely because
the child dies or ceases to be a person to whom subsection 20K(1) applies, the
child is taken to continue to be a dependant of the other person until the end
of the relevant period. 20N Where a person to whom section 20M does not apply
is a dependant of 2 or more persons who reside together and make an agreement
about dependency

(1) This section applies to a person (the child) in respect of a period (the
allocation period) that is, or is a part of, a relevant period if:

   (a)  the child would, apart from this section and section 20L, be a
        dependant of 2 or more persons (the relevant persons) during the
        allocation period; and

   (b)  the relevant persons reside together during the allocation period; and

   (c)  section 20M does not apply to the child; and

   (d)  the relevant persons have made a written agreement (the family
        agreement) in accordance with subsection (2) in relation to the child
        nominating one of them (the nominee) as the person of whom the child
        is the dependant in respect of the allocation period.

(2) The family agreement must be made on or before:

   (a)  the day on which the first return of income of any of the relevant
        persons was lodged for:

   (i)  if the allocation period is, or occurs in, the relevant part of the
        1996-97 year of income - that year of income; or

   (ii) if the allocation period is, or occurs in, the 1997-98 year of income
        or a later year of income - that year of income; or

   (b)  such later day as the Commissioner allows.

(3) Subject to this section, the child is taken, in respect of the allocation
period, to be the dependant of the nominee and not to be the dependant of the
other relevant person or any of the other relevant persons.

(4) Subsection (3) does not apply in respect of the child unless:

   (a)  there is no person (other than the child) who would, apart from this
        section, be a dependant of all the relevant persons during any period
        in which they reside together that is the whole or a part of the
        relevant period; or

   (b)  if there is any such person (the other child) or there are any such
        persons (the other children) - the agreement nominates the nominee as
        the person of whom the other child is the dependant, or the other
        children are the dependants, in respect of any period referred to in
        paragraph (a).

(5) Subsection (3) does not apply, and is taken never to have applied, if none
of the relevant persons retain the family agreement for the period of 5 years
starting on the day on which the agreement was made.

(6) If the family agreement is lost or destroyed and the Commissioner is
satisfied that one of the relevant persons has a document (the substitute
family agreement) that:

   (a)  is a copy of the family agreement; or

   (b)  properly records all the matters set out in the family agreement and
        was in existence when the family agreement was lost or destroyed; the
        substitute family agreement is taken, for the purposes of this
        section, to be, and to have been at all times after the family
        agreement was lost or destroyed, the family agreement.

(7) If:

   (a)  the family agreement is lost or destroyed; and

   (b)  the Commissioner is satisfied that the loss or destruction occurred
        because of circumstances beyond the control of the relevant persons;
        and

   (c)  subsection (6) does not apply; the operation of subsection (3) is not
        affected, and is taken never to have been affected, by subsection (5).

(8) Section 170 does not prevent the amendment of an assessment at any time
for the purposes of giving effect to this section.

(9) For the purposes of this section, persons who ordinarily reside together
are taken to reside together during any period in which they are temporarily
residing apart. 20P Where a person is a dependant of 2 or more persons who
reside together and do not make an agreement about dependency

(1) This section applies to a person (the child) in respect of a period (the
allocation period) that is, or is a part of, a relevant period if:

   (a)  the child would, apart from this section and section 20L, be a
        dependant of 2 or more persons (the relevant persons) during the
        allocation period; and

   (b)  the relevant persons reside together during the allocation period; and

   (c)  the relevant persons have not made a written agreement in relation to
        the child as mentioned in paragraph 20N(1)(d).

(2) Subject to subsection (3), the child is taken, in respect of the
allocation period, not to be a dependant of any of the relevant persons.

(3) If:

   (a)  the allocation period does not include the last day of the relevant
        period; or

   (b)  the following subparagraphs apply:

   (i)  the allocation period includes the last day of the relevant period;

   (ii) section 20M does not apply to the child;

   (iii) the Commissioner is satisfied that the reason why the relevant
        persons did not make the agreement referred to in paragraph (1)(c) was
        that they did not reside together after the relevant period; then, the
        child is taken to be a dependant of each of the relevant persons
        during a part of the allocation period consisting of the number of
        days worked out using the formula:

Number of days in the allocation period
Number of relevant persons

(4) For the purposes of the formula in subsection (3), the number of days in
the allocation period is taken to be reduced by the number of days (if any) in
that period during which the child is taken under section 20L not to be the
dependant of any of the relevant persons.

(5) For the purposes of this section, persons who ordinarily reside together
are taken to reside together during any period in which they are temporarily
residing apart.

(6) For the purpose only of determining whether a period includes the last day
of a relevant period, if a person (the child) who ceases during the relevant
period but before that day to be a dependant of another person merely because
the child dies or ceases to be a person to whom subsection 20K(1) applies, the
child is taken to continue to be a dependant of the other person until the end
of the relevant period. 20Q Family income ceiling

(1) Subject to subsection (2), the family income ceiling for a taxpayer for
the purposes of the application of subsection 20C(1) for the 1996-97 year of
income is $70,000.

(2) If a taxpayer had more than one dependant at any time during the relevant
part of the 1996-97 year of income, the family income ceiling for the
taxpayer, for the purposes of the application of subsection 20C(1) for that
year of income, is the amount worked out using the formula:

$70,000 + $3,000 (Number of dependants - 1)

where: number of dependants means the maximum number of dependants that the
taxpayer had at any time during the relevant part of that year of income.

(3) Subject to subsection (4), the family income ceiling for a taxpayer for
the purposes of the application of subsection 20C(2) for the 1997-98 year of
income or a later year of income is $70,000.

(4) If a taxpayer had more than one dependant at any time during the 1997-98
year of income or a later year of income, the family income ceiling for the
taxpayer for the purposes of the application of subsection 20C(2), for the
year of income concerned is the amount worked out using the formula:

$70,000 + $3,000 (Number of dependants - 1)

where: number of dependants means the maximum number of dependants that the
taxpayer had at any time during the year of income concerned. 20R Taxpayer's
income ceiling

(1) Subject to subsection (2), the taxpayers' income ceiling for a taxpayer
for the purposes of the application of subsection 20D(1) for the 1996-97 year
of income is $65,000.

(2) If a taxpayer had more than one dependant at any time during the relevant
part of the 1996-97 year of income, the taxpayers' income ceiling for the
taxpayer for the purposes of the application of subsection 20D(1) for that
year of income is the amount worked out using the formula:

$65,000 + $3,000 (Number of dependants - 1)

where: number of dependants means the maximum number of dependants that the
taxpayer had at any time during the relevant part of that year of income.

(3) Subject to subsection (4), the taxpayers' income ceiling for a taxpayer,
for the purposes of the application of subsection 20D(2), for the 1997-98 year
of income or a later year of income is $65,000.

(4) If a taxpayer had more than one dependant at any time during the 1997-98
year of income or a later year of income, the taxpayers' income ceiling for
the taxpayer, for the purposes of the application of subsection 20D(2) for the
year of income concerned, is the amount worked out using the formula:

$65,000 + $3,000 (Number of dependants - 1)

where: number of dependants means the maximum number of dependants that the
taxpayer had at any time during the year of income concerned. 20S Person a
dependant for part only of relevant period

(1) This section has effect for the purposes of the application of section 20C
in respect of a relevant period to a taxpayer in relation to a person (the
child) if the child was a dependant of the taxpayer during part only of the
relevant period.

(2) If the relevant period is the relevant part of the 1996-97 year of income,
subsection 20C(1) has effect as if the amount of $500 referred to in that
subsection were replaced by the amount worked out using the following formula:



     $500   X    Period of dependency
181

where: period of dependency means the number of days in the relevant period on
which the child was a dependant of the taxpayer.

(3) If the relevant period is the 1997-98 year of income or a later year of
income, subsection 20C(2) has effect as if the amount of $1,000 referred to in
that subsection were replaced by the amount worked out using the following
formula:

     $1,000   X    Period of dependency
365

where: period of dependency means the number of days in the relevant period on
which the child was a dependant of the taxpayer.

(4) If the amount worked out under subsection (2) or (3) is an amount of
dollars and cents, the amount is to be rounded up to the nearest whole dollar.
20T Taxpayer qualified under section 20D for part only of relevant period

(1) This section has effect for the purposes of the application of section 20D
in respect of a relevant period to a taxpayer if the taxpayer had, during part
only of the relevant period, at least one dependant under the age of 5 years.

(2) If the relevant period is the relevant part of the 1996-97 year of income,
subsection 20D(1) has effect as if the amount of $1,250 referred to in that
subsection were replaced by the amount worked out using the following formula:

     $1,250   X    Period of dependency
181



where: period of dependency means the number of days in the relevant period on
which the taxpayer had at least one dependant under the age of 5 years.

(3) If the relevant period is the 1997-98 year of income or a later year of
income, subsection 20D(2) has effect as if the amount of $2,500 referred to in
that subsection were replaced by the amount worked out using the following
formula:

     $2,500   X    Period of dependency
365

where: period of dependency means the number of days in the relevant period on
which the taxpayer had at least one dependant under the age of 5 years.

(4) If the amount worked out under subsection (2) or (3) is an amount of
dollars and cents, the amount is to be rounded up to the nearest whole dollar.
20U Provision applying where family tax payments received under
Social Security Act

(1) In this section: section 20C tax-free threshold increase means the amount
(if any) by which the amount of $5,400 in column 1 of the table in clause 1 of
Part 1 of Schedule 7 would, apart from this section, be increased by section
20C or be increased by that section if it applied to the taxpayer. section 20D
tax-free threshold increase means the amount (if any) by which the amount of
$5,400 in column 1 of the table in clause 1 of Part 1 of Schedule 7 would,
apart from this section, be increased by section 20D or be increased by that
section if it applied to the taxpayer.

(2) If, during the relevant part of the 1996-97 year of income or during the
1997-98 year of income or a later year of income:

   (a)  the taxpayer or his or her spouse received any payments of family tax
        payment under the Social Security Act 1991; or

   (b)  another person received any payments of family tax payment under the
        Social Security Act 1991 in respect of a child at a time when:

   (i)  the taxpayer and the other person resided together; and

   (ii) the child was a dependant of each of them; the following provisions
        have effect.

(3) Any section 20C tax-free threshold increase in relation to the taxpayer in
respect of the year of income concerned is reduced (but not below nil) by the
amount worked out using the formula:



   Part A payments    X                   100
The number per cent that is the
lowest marginal rate of tax

where: Part A payments means the sum of so much of the payments of family tax
payment as represented payments made at the fortnightly Part A rate of family
tax payment referred to in Module A of the Family Tax Payment Rate Calculator
at the end of section 1070 of the Social Security Act 1991.

(4) Any section 20D tax-free threshold increase in relation to the taxpayer in
respect of the year of income concerned is reduced (but not below nil) by the
amount worked out using the formula:

   Part A payments    X                   100
The number per cent that is the
lowest marginal rate of tax

where: Part B payments means the sum of so much of the payments of family tax
payment as represented payments made at the fortnightly Part B rate of family
tax payment referred to in Module A of the Family Tax Payment Rate Calculator
at the end of section 1070 of the Social Security Act 1991.

(5) If an amount worked out under subsection (3) or (4) is an amount of
dollars and cents, the amount is to be rounded up to the nearest whole dollar.
20V Quotation of spouse's tax file number

(1) A taxpayer's spouse may tell the taxpayer the spouse's tax file number for
the purposes of this Division.

(2) A taxpayer may, but is not obliged to, quote the spouse's tax file number
for the purposes of this Division. 3 Clause 2 of Division 1 of Part I of
Schedule 8 Omit "The notional", substitute "Subject to clause 3, the
notional". 4 After Clause 2 of Division 1 of Part I of Schedule 8 Insert:
3.The notional rate in respect of income to which this Division applies is to
be calculated under clause 2 as if Division 5 of Part II had not been enacted.
[Minister's second reading speech made in - House of Representatives on 11
September 1996 Senate on 11 October 1996]