12Transfer of unused base rebate amount from individual taxpayer to spouse or spouse’s trustee

12 Transfer of unused base rebate amount from individual taxpayer to spouse or spouse’s trustee

(1) This section applies if: (a) either: (i) an individual (referred to in this section as the individual and the taxpayer) is entitled to a rebate under section 160AAAA of the Act for a year of income; or (ii) a trustee (referred to in this section as the first trustee and the taxpayer) is entitled to a rebate under section 160AAAB of the Act for a year of income in respect of a beneficiary who is an individual (referred to in this section as the individual); and (b) the base rebate amount for the rebate exceeds: (i) if subparagraph (a)(i) applies—the tax payable by the taxpayer in respect of income of the year; or (ii) if subparagraph (a)(ii) applies—the tax payable by the taxpayer in respect of the individual for the year; (disregarding any credits or rebates); and

Note: See subsection (5).

(c) a person is at any time in the year the individual’s spouse; and
(d) the spouse (whether or not the same person as the first trustee):
(i) is entitled to a rebate of tax (the spouse’s rebate) under section 160AAAA of the Act for the year; or
(ii) is a beneficiary in respect of whom a trustee (whether or not the same person as the individual or the first trustee) is entitled to a rebate of tax (the spouse’s trustee’s rebate) under section 160AAAB of the Act for the year; and
(e) the amount of the spouse’s rebate, or the spouse’s trustee’s rebate, is less than the base rebate amount for that rebate.

(2) For the purposes of paragraph (1)(c), spouses living separately and apart on a permanent basis are treated as not being spouses of each other. (3) For the purposes of subsection 11(2) (but not section 10): (a) the base rebate amount for the taxpayer’s rebate is reduced by the amount of the excess mentioned in paragraph (1)(b) of this section; and (b) the base rebate amount for the spouse’s rebate, or the spouse’s trustee’s rebate, is increased by: (i) the amount of the excess mentioned in paragraph (1)(b) of this section; or (ii) if the conditions in subsection (4) are met—the greater of the amount worked out using the following formula and nil: Start formula Base rebate amount for the taxpayer's rebate minus open round bracket open round bracket Taxpayers's taxable income mentioned in paragraph (4)(a) minus $6000 close round bracket times 0.15 close round bracket end formula

Note: Changing the base rebate amount may also change the rebate threshold: see subsections 9(4) to (7).

(4) For the purposes of subparagraph (3)(b)(ii), the conditions are: (a) that the following is greater than $6 000: (i) if subparagraph (1)(a)(i) applies—the taxpayer’s taxable income for the year; (ii) if subparagraph (1)(a)(ii) applies—the taxpayer’s taxable income in relation to the individual for the year; and (b) that each rate of tax payable by the taxpayer is a rate set out in Part I of Schedule 7 to the Income Tax Rates Act 1986. Certain pensions treated as assessable income (5) For the purposes of this section, the amount of the taxpayer’s assessable income of the year is to be calculated as if a pension the taxpayer receives at any time in the year were assessable income, if: (a) the taxpayer receives the pension under: (i) Part 2.3, 2.4 or 2.5 of the Social Security Act 1991; or (ii) Division 4 or 5 of Part III of the Veterans’ Entitlements Act 1986; and (b) the pension payments are exempt payments under Subdivision 52‑A or 52‑B of the Income Tax Assessment Act 1997.