INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 392 - Long-term averaging of primary producers' tax liability  

Subdivision 392-B - What kind of averaging adjustment must you make?  

Tax offset or extra income tax

SECTION 392-35   Will you get a tax offset or have to pay extra income tax?  

392-35(1)  
Compare:


(a) the amount (the income tax you would pay at the comparison rate ) worked out using the formula:


*Basic taxable income
for *current year
×   *Comparison rate


(b) the amount of income tax that you would pay on your * basic taxable income for the * current year at * basic rates.

Note:

You must disregard some provisions of this Act in working out amounts of income tax for the purposes of this subsection: see subsection (5).

Tax offset

392-35(2)  
You are entitled to a * tax offset equal to the * averaging adjustment worked out under Subdivision 392-C if the income tax you would pay at the comparison rate is less than the amount of income tax you would pay at * basic rates. Extra income tax

392-35(3)  
You must pay extra income tax on the * averaging component of your * basic taxable income if the income tax you would pay at the comparison rate is more than the amount of income tax you would pay at * basic rates.

Note 1:

Section 12A of the Income Tax Rates Act 1986 sets the rate at which you must pay extra income tax on the averaging component of your basic taxable income.

Note 2:

It does so in such a way that, generally, the extra income tax you must pay equals the averaging adjustment worked out under Subdivision 392-C .

Meaning of basic rates

392-35(4)  
The basic rates at which you would pay income tax are:


(a) if you are a resident taxpayer as defined in the Income Tax Rates Act 1986 - the rates of income tax in paragraph (1)(b) of Part I of Schedule 7 to that Act, taking into account the way it would apply with any changes to your tax-free threshold under section 20 of that Act; or


(b) if you are a non-resident taxpayer as defined in the Income Tax Rates Act 1986 - the rates of income tax in paragraph 1(b) of Part II of Schedule 7 to that Act.

Disregard certain provisions in working out amounts

392-35(5)  
Work out the amount of income tax mentioned in paragraph (1)(b) as if:


(a) the following provisions did not apply:


(i) this Division;

(ii) section 94 (Partner not having control and disposal of share in partnership income) of the Income Tax Assessment Act 1936 ;

(iii) Division 6AA (Income of certain children) of Part III of the Income Tax Assessment Act 1936 ;

(iv) Part VIIB (Medicare levy) of the Income Tax Assessment Act 1936 ; and


(b) you were not entitled to any rebate or credit under the Income Tax Assessment Act 1936 or to any * tax offset under this Act. No adjustment

392-35(6)  
This Division does not affect your income tax for the * current year if the income tax you would pay at the * comparison rate equals the amount of income tax you would pay at * basic rates.

Note:

The 2 amounts will be equal if:

  • · your basic taxable income and your average income are both below the tax-free threshold; or
  • · your average income equals your basic taxable income for the current year.

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