Commonwealth Numbered Acts

INCOME TAX (ARRANGEMENTS WITH THE STATES) ACT 1978 No. 87 of 1978 - SECT 7

7. (1) The State income tax law shall provide-

   (a)  that any tax that is or may be imposed under that law shall be imposed
        in respect of and only in respect of, and any payment by the State to
        the Commonwealth that is or may be made under that law in partial
        discharge of the liability of residents of the State for income tax
        shall be made by reference to and only by reference to-

        (i)    the taxable income of the year of income of each natural person
               who is a resident of that State in respect of that
               year of income;

        (ii)   in the case of each person in the capacity of a trustee of a
               trust estate who is required to be assessed and liable to pay
               tax in pursuance of section 98 of the Income Tax Assessment Act
               in respect of a share of the net income of the trust estate of
               the year of income, being a share to which a beneficiary who is
               a resident of the State in respect of that year of income is
               presently entitled-that share of that net income;

        (iii)  in the case of each person in the capacity of a trustee of a
               trust estate who is required to be assessed and liable to pay
               tax in pursuance of section 99 or 99A of the Income Tax
               Assessment Act in respect of the whole or a part of the net
               income of the trust estate of the year of income, being a trust
               that resulted from the death of a person who, immediately
               before his death, was a resident of the State-that net income,
               or that part of that net income, as the case may be;

        (iv)   in the case of each person in the capacity of a trustee of a
               trust estate who is required to be assessed and liable to pay
               tax in pursuance of section 99 or 99A of the Income Tax
               Assessment Act in respect of the whole or a part of the net
               income of the trust estate of the year of income, being a
               trust-

                (A)  that did not result from the death of a person; and

                (B)  the administration of which in relation to that
                     year of income was wholly or mainly carried out in that
                     State,

that net income, or that part of that net income, as the case may be; and

        (v)    in the case of each person in the capacity of a trustee of a
               trust estate who is required to be assessed and liable to pay
               tax in pursuance of section 102 of the Income Tax Assessment
               Act in respect of the whole or a part of the net income of the
               trust estate of the year of income, being a trust created by a
               person who is a resident of the State in respect of the year of
               income-that net income, or that part of that net income, as the
               case may be,

and shall be so imposed at, or made by reference to, a rate per dollar that is
a fixed proportion of the average rate of basic Commonwealth tax payable on
that taxable income or on the whole or part of that net income of the trust
estate, as the case may be, of that year of income;

   (b)  that, for the purposes of the State income tax law, a person shall be
        deemed to be a resident of the State in respect of a year of income
        if, and only if, that person was a resident of Australia for the
        purposes of the Income Tax Assessment Act in respect of that
        year of income, otherwise than by virtue of the operation of
        sub-section 7A (2) of that Act, and-

        (i)    his sole or principal place of residence in Australia at the
               commencement of the last day of the year of income was in that
               State; or

        (ii)   in the case of a person who did not have a sole or principal
               place of residence in Australia at the commencement of the last
               day of the year of income-

                (A)  he was, at the commencement of the last day of the
                     year of income, domiciled in that State; or

                (B)  he was not, at the commencement of the last day of the
                     year of income, domiciled in Australia but, at the
                     commencement of that day, he was, having regard to his
                     personal affairs, and to his business affairs or his
                     employment, more closely connected with that State than
                     with any other State or any internal Territory;

   (c)  that, in applying the provision of the State income tax law referred
        to in paragraph (b), the last day of a year of income in relation to a
        person shall-

        (i)    where the person ceased, on one or more occasions during the
               year of income, to be a resident of Australia for the purposes
               of the Income Tax Assessment Act-be taken to be the last day of
               the year of income that was a day during which he was a
               resident of Australia for the purposes of that Act; or

        (ii)   where the person died during the year of income and, at the
               date of his death, was a resident of Australia for the purposes
               of that Act-be taken to be the day on which he died;

   (d)  that, for the purposes of the State income tax law, a person who has
        died shall be taken to have been a resident of the State immediately
        before his death if he would, by virtue of the provisions of that law
        referred to in paragraph (b) and sub-paragraph (c) (ii), be taken to
        be a resident of the State in respect of the year of income in which
        he died;

(e) that, for the purposes of the State income tax law, ''basic Commonwealth
tax'', in relation to a person other than a person in the capacity of a
trustee of a trust estate, in relation to a year of income, means the amount
of income tax (not being additional tax (if any) payable under section 207 or
section 226 of the Income Tax Assessment Act, health insurance levy payable
under Part VIIB of the Income Tax Assessment Act or special surcharge) that-

        (i)    in a case to which sub-paragraph (ii) does not apply-is payable
               by that person under the Income Tax Assessment Act in respect
               of his taxable income of the year of income after the allowance
               of any rebates (other than a rebate of health insurance levy)
               but before the allowance of any credits to which he is
               entitled; or

        (ii)   in a case where that person derived Government loan interest in
               the year of income or in any year of income preceding the
               year of income-would be payable by that person under the Income
               Tax Assessment Act in respect of his taxable income of the
               year of income if he had not derived Government loan interest
               in the year of income or in any preceding year of income, after
               the allowance of any rebates (other than a rebate under section
               160AB or a rebate of health insurance levy) but before the
               allowance of any credits to which he is entitled;

(f) that, for the purposes of the State income tax law, ''basic Commonwealth
tax'', in relation to a person in the capacity of a trustee of a trust estate,
in relation to a year of income, means the amount of income tax (not being
additional tax (if any) payable under section 207 or section 226 of the
Income Tax Assessment Act, health insurance levy payable under Part VIIB of
the Income Tax Assessment Act or special surcharge) that-

        (i)    in a case to which sub-paragraph (ii) does not apply-is payable
               by that person under the Income Tax Assessment Act in respect
               of the net income or the part of the net income, as the case
               may be, of the trust estate of the year of income after the
               allowance of any rebates (other than a rebate of health
               insurance levy) but before the allowance of any credits to
               which he is entitled; or

        (ii)   in a case where the trust estate derived
               Government loan interest in the year of income or in any
               year of income preceding the year of income-would be payable by
               that person under the Income Tax Assessment Act in respect of
               the net income or the part of the net income, as the case may
               be, of the trust estate of the year of income if the trust
               estate had not derived Government loan interest in the
               year of income or in any preceding year of income, after the
               allowance of any rebates (other than a rebate under section
               160AB or a rebate of health insurance levy) but before the
               allowance of any credits to which he is entitled;

   (g)  that, in calculating the basic Commonwealth tax as mentioned in
        paragraph (e)-

        (i)    a reference in that paragraph to a rebate shall, where in
               relation to the year of income a special surcharge is payable
               or a special rebate is allowable, be construed as a reference
               to the rebate (if any) to which the person would have been
               entitled if that special surcharge had not been payable, or
               that special rebate had not been allowable, as the case may be;
               and

        (ii)   a reference in that paragraph to a credit shall, in the case of
               a beneficiary who is under a legal disability, be construed as
               including a reference to any amount deducted, in accordance
               with sub-section 100 (2) of the Income Tax Assessment Act, from
               the income tax assessed in respect of that beneficiary;

   (h)  that, in calculating the basic Commonwealth tax as mentioned in
        paragraph (f), a reference in that paragraph to a rebate shall, where
        in relation to the year of income a special surcharge is payable or a
        special rebate is allowable, be construed as a reference to the rebate
        (if any) to which the person would have been entitled if that
        special surcharge had not been payable, or that special rebate had not
        been allowable, as the case may be;

   (j)  that, for the purposes of the State income tax law, the average rate
        of basic Commonwealth tax payable on a taxable income, or on the whole
        or part of the net income of a trust estate, is the amount per dollar
        ascertained by dividing the amount of that basic Commonwealth tax by
        the number of whole dollars in that taxable income, or in, or in that
        part of, that net income, as the case may be; and

   (k)  that, where the State makes any payment to the Commonwealth in partial
        discharge of the liability of residents of the State for income tax,
        the State will also make a payment to the Commonwealth of an amount
        agreed upon between the Treasurer and the Treasurer of the State to
        reimburse the Commonwealth the costs of administering the
        State income tax law.

(2) The provisions of a State income tax law shall not be taken not to comply
with the requirements set out in sub-section (1) by reason only that that law
does not provide for the making of a payment by the State to the Commonwealth
in partial discharge of the liability of a person in the capacity of a trustee
for income tax as mentioned in sub-paragraph (1)(a) (iv) in a case where the
Commissioner is of the opinion that the administration of the trust was wholly
or mainly carried out in that State for the purpose of obtaining the benefit
of such a payment.