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 25 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.