Income Tax (Transitional Provisions) Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-40 - RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS  

Division 82 - Pre-10 May 2006 entitlements to life benefit termination payments  

Subdivision 82-B - Transitional termination payments: general  

SECTION 82-10A   Recipient has reached preservation age  

Application

82-10A(1)    
This section applies to a transitional termination payment you receive (except any part of the payment that is a directed termination payment) if you are your preservation age or older on the last day of the income year in which you receive the payment.

Note 1:

You do not pay income tax on directed termination payments: see section 82-10G .

Note 2:

Under section 82-10C , you may also be entitled to a tax offset on the taxable component of a transitional termination payment you receive in an income year before the year in which you reached your preservation age.

Tax free component

82-10A(2)    
The tax free component of the payment is not assessable income and is not exempt income.

Taxable component

82-10A(3)    
The taxable component of the payment is assessable income.

82-10A(4)    
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (6) (the low rate part ) does not exceed 15%.

82-10A(5)    
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (7) (the middle rate part ) does not exceed 30%.

Note:

The remaining part is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 .

82-10A(6)    
The low rate part is so much of the taxable component of the payment as does not exceed your lower cap amount under section 82-10B .

82-10A(7)    
The middle rate part is so much of the taxable component of the payment as:

(a) exceeds your low rate part (if any); and

(b) does not exceed the amount worked out as follows:

Your upper cap amount under section 82-10D

−

Your lower cap amount under section 82-10B

Note:

If you have received another life benefit termination payment in the same income year (or in an earlier income year) that is not a transitional termination payment, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the other payment (under section 82-10 of the Income Tax Assessment Act 1997 ).