ATO Interpretative Decision
ATO ID 2002/1073 (Withdrawn)
Income Tax
Medicare Levy Surcharge - Family Surcharge Threshold - Eligible Termination Payment included in taxable incomeFOI status: may be released
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This ATO ID is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 24 August 2007
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 an eligible termination payment (ETP) included in a taxpayer's taxable income for the purpose of the medicare levy surcharge (MLS) under section 8D of the Medicare Levy Act 1986 (MLA 1986)?
Decision
Yes. The taxable income for the purpose of calculating the MLS under section 8D of the MLA 1986 must include an ETP.
Facts
The taxpayer's taxable income for the income year includes an ETP and the taxable income is more than $13,807.
The combined taxable income of the taxpayer and their spouse exceeded $100,000.
The taxpayer did not have private health insurance during the income year.
Rasons for Decision
Section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that assessable income comprises statutory income. Section 10-5 of the ITAA 1997 provides that statutory income includes ETP which is discussed in Part III, Division 2, subdivision AA of the Income Tax Assessment Act 1936 (ITAA 1936). Subsection 4-15 of the ITAA 1997 provides that taxable income is calculated as follows:
Taxable income = assessable income - deductions.
Subsection 3(2A) of the MLA 1986 provides that in section 8D, "net income" and "taxable income" have the meanings that they would have in that section if subsection 271-105(1) of Schedule 2F to the ITAA 1936 was ignored. Section 271-105 of the ITAA 1936 provides adjustments for amounts subject to family trust distribution tax before it has been classified as assessable income.
As the taxpayer was not in receipt of amounts subject to family trust distribution tax no adjustments to assessable income is required.
Accordingly, the ETP is assessable income and is included in a taxpayer's taxable income for the purposes of determining MLS under section 8D of the MLA 1986.
Date of decision: 13 August 1997Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
subsection 4-15
section 6-10
Part III, Division 2, subdivision AA
subsection 271-105(1) Medicare Levy Act 1986
subsection 3(2A)
section 8D
Other References:
Case Decision Summary 10064
Keywords
Redundancy & retrenchment
Eligible termination payments
Medicare levy surcharge
ISSN: 1445-2782
| Date: | Version: | |
| 13 August 1997 | Original statement | |
| You are here → | 24 August 2007 | Archived |
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