Tax Law Improvement Act (No. 1) 1998 (46 of 1998)

6   Averaging primary producers' tax liability (new Division 392)

4   Consequential amendment of the Income Tax Rates Act 1986

32   After section 12

Insert:

12A Rate of extra income tax for primary producers

(1) This section sets the rate of extra income tax payable under subsection 392-35(3) of the Income Tax Assessment Act 1997 on every dollar of a taxpayer's averaging component for a year of income.

(2) The rate is worked out using the formula:

Averaging adjustment / Averaging component

Rate if taxable income is less than tax-free threshold adjusted by family tax assistance

(3) If:

(a) section 20C or 20D applies to the taxpayer for the year of income, or would apply apart from section 20E; and

(b) the taxpayer's taxable income is more than $5,400 but less than the taxpayer's adjusted tax-free threshold;

the rate is worked out using the formula:

(Averaging adjustment - [(Adjusted tax-free threshold - Taxable income) * Lowest marginal rate of tax]) / Averaging component

(4) If:

(a) section 20C or 20D applies to the taxpayer for the year of income, or would apply apart from section 20E; and

(b) the taxpayer's taxable income is $5,400 or less and is less than the taxpayer's adjusted tax-free threshold;

the rate is worked out using the formula:

(Averaging adjustment - [Tax-free threshold increase * lowest marginal rate of tax]) / Averaging component

(5) Subsections (3) and (4) have effect despite subsection (2).

(6) In this section:

adjusted tax-free threshold means the sum of $5,400 and the tax-free threshold increase, in whole dollars.

averaging adjustment means the taxpayer's smoothing adjustment, worked out for the year of income under section 392-75 of the Income Tax Assessment Act 1997.

averaging component means the taxpayer's averaging component in whole dollars, worked out for the year of income under Subdivision 392-C of the Income Tax Assessment Act 1997.

lowest marginal rate of tax has the meaning given by section 20B.

taxable income means the taxpayer's taxable income (as defined in section 20B) for the year of income, in whole dollars.

tax-free threshold increase means the sum of the amounts by which sections 20C and 20D increase the amount of $5,400 set out in column 1 of the table in clause 1 of Part I of Schedule 7 in relation to the taxpayer (or would increase that amount of $5,400 if they applied to the taxpayer), in whole dollars.