ATO Interpretative Decision
ATO ID 2002/469
Income Tax
Low income tax offset - whether refundableFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 entitled to a refund of the low income tax offset under section 159N of the Income Tax Assessment Act 1936 (ITAA 1936) where the amount of the tax offset exceeds the amount of the tax payable?
Decision
No. The taxpayer is not entitled to a refund of the low income tax offset under section 159N of the ITAA 1936 where the amount of the tax offset exceeds the amount of the tax payable.
Facts
The taxpayer's taxable income (for the 1993-94 or later years) is below the tax-free threshold.
The taxpayer was below age pension age.
Reasons for Decision
A low income tax offset is available under section 159N of the ITAA 1936 for a taxpayer whose taxable income is less than $24 450 in the year of income.
The maximum allowable tax offset of $150 applies if taxable income is $20 700 or less. This amount is reduced by 4 cents for each dollar over $20 700. The tax offset for low income earners was introduced from the 1993-94 year of income onwards.
Section 160AD of the ITAA 1936 provides that the sum of any tax offsets allowable shall not exceed the amount of tax which would otherwise be payable by the taxpayer.
Therefore generally the amount of a tax offset is limited to the amount of tax payable. The exception to this is where the tax offset is a refundable tax offset under Division 67 of the Income Tax Assessment Act 1997 (ITAA 1997). Division 67 of the ITAA 1997 allows for a refund of certain tax offsets where the taxpayer's offsets exceed the tax payable. Section 67-25 of the ITAA 1997 lists the tax offsets which are refundable. The tax offset available under section 159N of the ITAA 1936 is not included in this list and therefore is not refundable.
The taxpayer's taxable income was under the tax-free threshold and therefore there was no tax payable. As the low income tax offset under section 159N of the ITAA 1936 is not a refundable tax offset, the taxpayer is not entitled to receive a refund of that tax offset.
Date of decision: 19 December 2001Year of income: Year ended 30 June 1994 Year ended 30 June 1995 Year ended 30 June 1996 Year ended 30 June 1997 Year ended 30 June 1998 Year ended 30 June 1999 Year ended 30 June 2000 Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1936
section 159N
section 160AD
Division 67
section 67-25
Keywords
Low income rebates
Rebates
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 19 December 2001 | Original statement |
| 4 July 2008 | Archived |
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