ATO Interpretative Decision
ATO ID 2002/256
Income Tax
Senior Australians Tax Offset and ETP'sFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 entitled to the senior Australians tax offset (SATO) under section 160AAAA of the Income Tax Assessment Act 1936 (ITAA 1936) where they received an eligible termination payment (ETP) which increased their taxable income above the cut-out threshold?
Decision
No. The taxpayer is not entitled to the SATO under section 160AAAA of the ITAA 1936 as their taxable income exceeds the cut-out threshold.
Facts
The taxpayer received an ETP during the year of income.
The ETP was made up of both a pre July 1983 component and a post June 1983 tax element.
The taxpayer's taxable income (including the ETP) exceeded the senior Australians tax offset threshold.
The taxpayer reached pension age within the meaning of the Social Security Act 1991 (SAA 1991) during the year of income.
The taxpayer has resided in Australia for more than 10 years and has not been in gaol.
The taxpayer is not entitled to any tax offsets for pensions, benefits or other payments under section 160AAA of the ITAA 1936.
Reasons for Decision
Section 160AAAA of the ITAA 1936 allows eligible senior Australians to claim a SATO if they have on at least one day in the year of income:
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- reached pension age within the meaning of the SAA 1991;
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- has 10 years qualifying Australian residence or has a qualifying residence exemption for an age pension within the meaning of the SAA 1991; and
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- is not in gaol.
Subsection 160AAAA(3) of the ITAA 1936 requires the taxpayer to have a taxable income that is less than the cut-out threshold (determined under Regulation 150AB of the Income Tax Regulations 1936) and not be entitled to a tax offset under section 160AAA of the ITAA 1936 for certain pensions, benefits or other payments to be eligible for the SATO.
Section 6-10 of the Income Tax Assessment Act 1997 includes in assessable income amounts that are included by provisions about assessable income.
Subsection 27B(1) of the ITAA 1936 provides that assessable income includes the taxed element of the retained amount of a post-June 1983 component of an ETP. Section 27C of the ITAA 1936 includes in assessable income 5% of the retained amount of a pre-June 1983 component of an ETP.
The combination of the taxpayer's:
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- post-June 1983 taxed element,
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- 5% of the pre-July 1983 component, and
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- other income and deductions,
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- results in a taxable income that exceeds the cut-out threshold for the SATO.
Accordingly, the taxpayer is not entitled to a SATO under section 160AAAA of the ITAA 1936.
Date of decision: 01/02/2002Year of income: Year ending 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 6-10
subsection 27B(1)
section 27C
section 160AAAA
subsection 160AAAA(3) Income Tax Regulations 1936
Regulation 150AB Social Security Act 1991
The Act
Keywords
ETP
Rebates
Low income aged person's rebate
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 1 February 2002 | Original statement |
| 30 August 2005 | Archived |