Income Tax Assessment Act 1997
CHAPTER 2
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LIABILITY RULES OF GENERAL APPLICATION
PART 2-20
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TAX OFFSETS
Division 65
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Tax offset carry forward rules
Operative provisions
SECTION 65-35
How to apply carried forward tax offsets
65-35(1)
A *tax offset that you have carried forward decreases the amount of income tax that you would otherwise have to pay under section 4-10 in a later income year. 65-35(2)
You apply a *tax offset that is carried forward to a later year in accordance with the priorities set out in Division 63 as if it were a tax offset for that later year.
65-35(3)
Before you apply a *tax offset to reduce the amount of income tax that you pay in a later income year in which you have a taxable income, you must apply it to reduce to nil any *net exempt income for:
(a) that later income year; or
(b) any income year after the year in which the tax offset arose and before the later income year in which you had a taxable income but did not apply the tax offset to reduce the amount of income tax you had to pay.
65-35(3A)
In reducing *net exempt income for an income year under subsection (3):
(a) if you were a base rate entity (within the meaning of the Income Tax Rates Act 1986 ) for the year - each 25 cents of *tax offset reduces the net exempt income by $1; or
(b) otherwise - each 30 cents of tax offset reduces the net exempt income by $1.
65-35(4)
You can only apply a *tax offset that you have carried forward to the extent that it has not already been applied.
View history note
Hide history noteA *tax offset that you have carried forward decreases the amount of income tax that you would otherwise have to pay under section 4-10 in a later income year. 65-35(2)
You apply a *tax offset that is carried forward to a later year in accordance with the priorities set out in Division 63 as if it were a tax offset for that later year.
Before you apply a *tax offset to reduce the amount of income tax that you pay in a later income year in which you have a taxable income, you must apply it to reduce to nil any *net exempt income for:
(a) that later income year; or
(b) any income year after the year in which the tax offset arose and before the later income year in which you had a taxable income but did not apply the tax offset to reduce the amount of income tax you had to pay.
Note:
Paragraph (b) would apply to cases such as where your taxable income was below your tax-free threshold or where you had other tax offsets that reduced your income tax to nil.
In reducing *net exempt income for an income year under subsection (3):
(a) if you were a base rate entity (within the meaning of the Income Tax Rates Act 1986 ) for the year - each 25 cents of *tax offset reduces the net exempt income by $1; or
(b) otherwise - each 30 cents of tax offset reduces the net exempt income by $1.
You can only apply a *tax offset that you have carried forward to the extent that it has not already been applied.
Note:
Section 65-40 contains special restrictions on applying carried forward tax offsets.
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