Tax on arrears is the amount by which the rebated tax on the taxable income of the current year exceeds the rebated tax on the taxable income of the current year, being that taxable income reduced by the total arrears amount.
Notional tax on arrears is the total of the notional tax amounts for the accrual years.
159ZRC Notional tax amount for recent accrual years
The notional tax amount for a recent accrual year is calculated in accordance with the formula:
Tax on increased income – Tax on actual income
where:
Tax on increased income is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows:
(a) the annual arrears amount for the accrual year is to be added;
(b) if the accrual year is also a rebate year—the total arrears amount for the accrual year is to be deducted; and
(c) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the accrual year is to be added.
Tax on actual income is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows (if applicable):
(d) if the accrual year is also a rebate year—the total arrears amount for the accrual year is to be deducted; and
(e) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the accrual year is to be added.
159ZRD Notional tax amount for distant accrual years
(1) The notional tax amount for a distant accrual year is calculated in accordance with the formula:
Arrears amount Average tax rate on recent arrears
where:
Arrears amount is the annual arrears amount in relation to the accrual year.
Average tax rate on recent arrears is the average of the rates calculated in accordance with the following formula in respect of each of the recent accrual years:
Start formula start fraction Increased normal tax minus Normal tax over Arrears amount end fraction end formula
where:
Increased normal tax is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows:
(a) the annual arrears amount for the recent accrual year is to be added;
(b) if the recent accrual year is also a rebate year—the total arrears amount for the recent accrual year is to be deducted; and
(c) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the recent accrual year is to be added.
Normal tax is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows (if applicable):
(d) if the recent accrual year is also a rebate year—the total arrears amount for the recent accrual year is to be deducted; and
(e) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the recent accrual year is to be added.
Arrears amount is the annual arrears amount for the recent accrual year.
(2) A rate calculated for the purposes of subsection (1) in respect of a recent accrual year shall be calculated as a decimal fraction to 3 decimal places.
(3) If a rate so calculated would end with a number greater than 4 if it were calculated to 4 decimal places, the rate shall be increased by 0.001.
Subdivision B—Miscellaneous
160AAAA Tax rebate for low income aged persons and pensioners
(1) Subject to subsection 160AAA(4), a taxpayer who is an individual (other than in the capacity as trustee) is entitled to a rebate of tax in the taxpayer’s assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the taxpayer satisfies the conditions in subsections (2) and (3).
(2) The first condition is that:
(a) on at least one day during the year of income, the taxpayer:
(i) is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986 (other than Part VII); and
(ii) has reached pension age, within the meaning of that Act; and
(iii) is not in gaol; or
(b) on at least one day during the year of income, the taxpayer:
(i) is qualified for an age pension under the Social Security Act 1991; and
(ii) is not in gaol; or
(c) the assessable income of the taxpayer of the year of income includes an amount of:
(i) social security pension or education entry payment (within the meaning of the Social Security Act 1991); or
(ii) service pension, carer service pension or income support supplement under the Veterans’ Entitlements Act 1986;
and, on at least one day during the year of income, the taxpayer is not in gaol.
(3) The second condition is that the taxpayer’s rebate income for the year of income is less than an amount ascertained in accordance with the regulations.
(4) If the taxpayer is the spouse of another person, the amount applicable to the taxpayer under subsection (3) is half of the sum of:
(a) the taxpayer’s rebate income for the year of income; and
(b) the taxpayer’s spouse’s rebate income for the year of income (reduced by any amount included in the spouse’s assessable income under section 100); and
(c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer’s spouse.
(5) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations.
160AAAB Tax rebate for low income aged persons and pensioners—trustees assessed under section 98
(1) Subject to subsection 160AAA(4A), a trustee who is liable to be assessed under section 98 in respect of a beneficiary’s share of the net income of the trust estate is entitled to a rebate of tax in the trustee’s assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the conditions in subsections (2) and (3) are satisfied.
(2) The first condition is that:
(a) on at least one day during the year of income, the beneficiary:
(i) is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986 (other than Part VII); and
(ii) has reached pension age, within the meaning of that Act; and
(iii) is not in gaol; or
(b) on at least one day during the year of income, the beneficiary:
(i) is qualified for an age pension under the Social Security Act 1991; and
(ii) is not in gaol; or
(c) the assessable income of the beneficiary of the year of income includes an amount of:
(i) social security pension or education entry payment (within the meaning of the Social Security Act 1991); or
(ii) service pension, carer service pension or income support supplement under the Veterans’ Entitlements Act 1986;
and, on at least one day during the year of income, the beneficiary is not in gaol.
(3) The second condition is that the beneficiary has an amount applicable under subsection (4) or (5) for the year of income less than an amount ascertained in accordance with the regulations.
(4) If the beneficiary is not the spouse of another person, the amount applicable to the beneficiary under subsection (3) is the amount that would be the beneficiary’s rebate income for the year of income if the beneficiary’s taxable income for that year were the beneficiary’s share of the net income of the trust estate.
(5) If the beneficiary is the spouse of another person, the amount applicable to the beneficiary under subsection (3) is half the sum of:
(a) the amount that would be applicable to the beneficiary under subsection (3) if the beneficiary were not the spouse of another person; and
(b) the beneficiary’s spouse’s rebate income for the year of income (reduced by any amount included in the spouse’s assessable income under section 100); and
(c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer’s spouse.
(6) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations.
160AAA Rebate in respect of certain benefits etc.
(1) In this section:
rebatable benefit means an amount:
(a) paid by way of a benefit under Part 2.11, 2.11A, 2.12, 2.15 or 2.23B of the Social Security Act 1991; or
(aa) paid by way of parenting payment that is PP (partnered) under the Social Security Act 1991, to the extent that the amount is not exempt under Division 52 of the Income Tax Assessment Act 1997; or
(ab) paid from the Commonwealth by way of an ex‑gratia payment to which subsection (2) applies; or
(b) consisting of a Commonwealth education or training payment (see subsection 6(1)), except where the recipient, or the individual on whose behalf the recipient receives the payment, is an employee of any person who is entitled to a Commonwealth subsidy in respect of the employment; or
(e) paid by way of income support to farmers and small business owners affected by Cyclone Larry or Cyclone Monica; or
(f) known as an interim income support payment and paid under section 65 of the Public Governance, Performance and Accountability Act 2013 (which deals with act of grace payments by the Commonwealth); or
(g) known as the Equine Workers Hardship Wage Supplement Payment.
(2) This subsection applies to an ex‑gratia payment known as income support allowance for special category visa (subclass 444) holders if the payment is for a disaster:
(a) occurring in Australia during the 2014‑15 financial year or a later financial year; and
(b) for which a determination under subsection 36A(1) of the Social Security Act 1991 has been made.
(3) Subject to subsections (4) and (4A), where the assessable income of a taxpayer of a year of income includes an amount of rebatable benefit, the taxpayer is entitled in the taxpayer’s assessment in respect of income of the year of income to a rebate of tax of an amount (if any) ascertained in accordance with the regulations.
(4) Where, apart from this subsection, the taxpayer would be entitled in his or her assessment in respect of income of a year of income to a rebate of tax under both section 160AAAA (Tax rebate for low income aged persons and pensioners) and this section:
(a) if the amounts of the rebates are the same—the taxpayer is entitled to only one of the rebates; and
(b) if the amounts of the rebates are not the same—the taxpayer is not entitled to the lesser of the rebates.
(4A) If, apart from this subsection:
(a) the taxpayer would be entitled in his or her assessment in respect of income of a year of income to a rebate of tax under this section; and
(b) the taxpayer is the beneficiary of a trust; and
(c) the trustee of the trust is entitled to a rebate of tax for the year of income under section 160AAAB in respect of the taxpayer;
then:
(d) if the amounts of the rebates are the same, or the amount of the rebate under this section is the lesser amount—the taxpayer is not entitled to the rebate under this section; or
(e) if the amount of the rebate under this section is the greater amount—the trustee is not entitled to the rebate under section 160AAAB.
(5) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations.
160AAB Rebate in respect of amounts assessable under section 26AH
(1) In this section:
eligible 26AH amount, in relation to a year of income, means an amount included in assessable income under section 26AH in relation to an eligible policy within the meaning of that section issued by:
(a) a life assurance company, not being a life assurance company the whole of the income of which of the year of income is exempt from tax;
(c) the Government Insurance Office of New South Wales;
(d) Suncorp Insurance and Finance, being a body corporate established by a law of Queensland;
(e) the State Government Insurance Commission established by a law of South Australia;
(f) the State Insurance Office established by a law of Victoria; or
(g) the State Government Insurance Corporation established by a law of Western Australia.
statutory percentage means:
(a) if the policy concerned was issued by a friendly society:
(i) if the year of income is earlier than the 2002‑03 year of income—33%; or
(ii) if the year of income is the 2002‑03 year of income or a later year of income—30%; or
(b) otherwise:
(i) if the year of income is earlier than the 2001‑02 year of income—39%; or
(ii) if the year of income is the 2001‑02 year of income—34%; or
(iii) if the year of income is the 2002‑03 year of income or a later year of income—30%.
(2) A taxpayer, not being a taxpayer in the capacity of trustee of a trust estate, is entitled in his or her assessment in respect of income of a year of income to a rebate of tax equal to the statutory percentage of an eligible 26AH amount included in his or her assessable income of the year of income.
(3) Where:
(a) an amount is included under section 97, 98A or 100 in the assessable income of a year of income of a taxpayer being a beneficiary of a trust estate otherwise than in the capacity of trustee of another trust estate; and
(b) the whole or a part of the amount so included (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate;
the taxpayer is entitled in his or her assessment in respect of income of the year of income to a rebate of tax equal to the statutory percentage of the rebatable amount.
(4) Where:
(a) a taxpayer being the trustee of a trust estate is liable to be assessed and to pay tax in pursuance of section 98 in respect of a share of the net income of the trust estate of a year of income; and
(b) the whole or part of that share (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate;
the taxpayer is entitled in that assessment to a rebate of tax equal to the statutory percentage of the rebatable amount.
(5) Where:
(a) a taxpayer being the trustee of a trust estate is liable to be assessed and to pay tax in pursuance of section 99 or 99A in respect of the whole or a part (which whole or part is in this subsection referred to as the relevant trust income) of the net income of the trust estate of a year of income; and
(b) the whole or a part of the relevant trust income (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate;
the taxpayer is entitled in that assessment to a rebate of tax equal to the statutory percentage of the rebatable amount.
(5A) A taxpayer being the trustee of a complying superannuation fund, a non‑complying superannuation fund, a complying approved deposit fund, a non‑complying approved deposit fund or a pooled superannuation trust is entitled in the taxpayer’s assessment in respect of income of a year of income to a rebate of tax equal to the statutory percentage of any eligible section 26AH amount included in the taxpayer’s assessable income of the year of income.
(6) Where an eligible 26AH amount is included in the assessable income of a partnership of a year of income in the calculation of the net income or partnership loss of the partnership of the year of income, a partner in the partnership is entitled in his or her assessment in respect of income of the year of income to a rebate of tax equal to the statutory percentage of the amount by which the taxable income of the partner of the year of income exceeds the amount that could reasonably be expected to be that taxable income if the eligible 26AH amount had not been included in the assessable income of the partnership of the year of income.
160AD Maximum amount of rebates
Notwithstanding anything contained in this or any other Act, the sum of the rebates allowable under this Act shall not exceed the amount of tax which would otherwise be payable by the taxpayer.
160ADA Most tax offsets under the 1997 Assessment Act are treated as rebates
A tax offset under a provision of the Income Tax Assessment Act 1997 is taken to be a rebate for the purposes of this Act, unless that provision corresponds to a provision of this Act that provides for a credit.
Note: If the tax offset provision does correspond to a credit provision, the tax offset is treated as a credit: see section 6D.
Part IIIB—Australian branches of foreign banks
Division 1—Preliminary
160ZZVA Object
(1) The object of this Part is:
(a) to assist in calculating that part of a foreign bank’s taxable income that is referable to certain activities of its Australian branch; and
(b) to make it clear that withholding tax will apply to amounts that are taken by this Part to be interest paid by the branch to the bank.
Note: This Part also:
(a) applies to foreign entities that are financial entities in the same way as it applies to foreign banks; and
(b) applies to permanent establishments in Australia of foreign entities that are financial entities in the same way as it applies to Australian branches of foreign banks.