INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-20 - TAX OFFSETS  

Division 65 - 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.

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.

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 27.5 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.

Note:

Section 65-40 contains special restrictions on applying carried forward tax offsets.


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