ATO Interpretative Decision

ATO ID 2001/487 (Withdrawn)

Income Tax

Pre-July 1983 Eligible Termination Payment - inclusion in taxable income for Medicare levy purposes
FOI status: may be released

This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2006-2007 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2006-2007 income year.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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's pre-July 1983 component of their Eligible Termination Payment (ETP) excluded under subsection 251S(1A) of the Income Tax Assessment Act 1936 (ITAA 1936) when calculating taxable income to which the Medicare levy will apply?

Decision

No, the taxpayer's pre-July 1983 component of their ETP is not excluded from taxable income under subsection 251S(1A) of the ITAA 1936 in calculating taxable income to which the Medicare levy will apply.

Facts

The taxpayer received an ETP which comprised a pre-July 1983 component.

Five per cent of this component is included in the taxpayer's assessable income and taxed at the marginal rate of tax.

Reasons for Decision

Section 251S of the ITAA 1936 provides that a Medicare levy is levied and shall be paid by an individual who is a resident of Australia at any time during the income year based on his or her taxable income for the year.

Subsection 251S(1A) of the ITAA 1936 provides that the Medicare levy is not payable on that portion of any ETP included in assessable income in respect of which a rebate under section 159SA of the ITAA 1936 will effectively reduce the primary rate of tax to 0%.

Five per cent of the pre-July 1983 component of an ETP is included in the taxpayer's assessable income, is taxed at marginal rates and is not eligible for the section 159SA rebate. As the exclusion in subsection 251S(1A) does not apply, the amount is not excluded from the taxable income to which the Medicare levy applies.

Date of decision: 5 October 2001

Legislative References:
Income Tax Assessment Act 1936
   section 159SA
   section 251S
   subsection 251S(1A)

Keywords
Income tax
Eligible termination payments
Medicare levy
Medicare levy exemptions

Business Line: Small Business/Individual Taxpayers

Date of publication: 19 October 2001

ISSN: 1445-2782

history

	Date:	Version:
	5 October 2001	Original statement
You are here	23 May 2014	Archived

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