ATO Interpretative Decision
ATO ID 2001/546
Income Tax
Part-year Resident and Tax-free ThresholdFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the taxpayer, who is a resident for part of the year of income, entitled to a pro-rating of the tax-free threshold under section 20 of the Income Tax Rates Act 1986 (ITRA)?
Decision
Yes, the taxpayer, who is a resident for part of the year of income, is entitled to a pro-rating of the tax-free threshold under section 20 of the ITRA.
Facts
The taxpayer is an Australian citizen who departed Australia in August 1999 to work overseas. The taxpayer had no definite plan for returning to Australia, although intended to return eventually. The taxpayer ceased to be a resident of Australia for taxation purposes. The taxpayer returned to Australia in May 2001 and resumed residency of Australia for taxation purposes.
Reasons for Decision
Where a taxpayer either becomes a resident or ceases to be a resident of Australia during a year of income, the period of part-year residency for calculating the pro-rating of the tax-free threshold is determined under section 18 of the ITRA.
If the taxpayer was a resident at the start of the year of income, the period of residency is from the first month of the year of income to the end of the month in which they ceased to be a resident. If the taxpayer was a resident at the end of the year of income, the period of residency is from the start of the month they became a resident to the end of the year of income. If the taxpayer becomes a resident and ceases to be a resident during a year of income, the period of residency is from the start of the month they became a resident to the end of the month they ceased to be a resident.
Section 20 of the ITRA provides the calculation for the pro-rating of the tax-free threshold for taxpayers who have part-year residency. The pro rata tax-free threshold for the 1999-2000 income year is calculated as $450 multiplied by the number of months of the part-year residency period of the taxpayer.
As the taxpayer was a resident of Australia for two months of the 1999-2000 income year (including the month the taxpayer ceased to be a resident), the tax-free threshold for that year will be $900.
For the 2000-2001 and subsequent income years the monthly tax-free threshold amount increased to $500. As the taxpayer was a resident of Australia for two months in the 2000-2001 income year (including the month in which the taxpayer became a resident), the tax-free threshold for that year will be $1000.
Date of decision: 28 September 2001Year of income: Year ended 30 June 2000 Year ended 30 June 2001
Legislative References:
Income Tax Rates Act 1986
section 18
section 20
Keywords
Tax-free Threshold
Part year Resident
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 28 September 2001 | Original statement |
| 6 June 2008 | Archived |