ATO Interpretative Decision

ATO ID 2002/544 (Withdrawn)

Income Tax

Aged persons savings bonus - using an amount other than taxable income to calculate entitlement
FOI status: may be released
Status of this decision: Decision Withdrawn 26 August 2005
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can the taxpayer use an amount other than the taxable income shown on their assessment to calculate their entitlement to the 'aged persons savings bonus component' (APSBC) of the bonus for older Australians (BOA) under subsection 45(4) of the A New Tax System (Bonuses for Older Australians) Act 1999 (BOA Act) where their taxable income was inflated due to the receipt of amounts on retirement?

Decision

No. The taxpayer cannot use an amount other than the taxable income shown on their assessment to calculate their APSBC entitlement under subsection 45(4) of the BOA Act. There is no discretion in the BOA Act to alter the taxable income to reflect circumstances which inflates the taxable income.

Facts

The taxpayer:

•
is aged 60 or more on the 1 July 2000;
•
is an Australian resident on 1 July 2000;
•
has taxable income as shown on their 2000 income year assessment more than $20 000 and less than $30 000; and
•
has an adjusted savings and investment income exceeding $1000.

The adjusted savings and investment income comprised of

•
eligible termination payments;
•
other Australian pensions and annuities;
•
net interest income; and
•
other net foreign source income.

The taxable income shown on the taxpayer's 2000 income year assessment would be less than $20 000 if the taxpayer had not retired during the year.

Reasons for Decision

Subsection 41(1) of the BOA Act provides that a taxpayer will be entitled to the APSBC of the BOA if they satisfy the following conditions:

•
are aged 60 or more on 1 July 2000;
•
are an Australian resident on 1 July 2000;
•
the taxable income as shown on their assessment is less than $30 000 and they have adjusted savings and investment income for the qualifying year; and
•
the amount worked out under subsection 45(4) of the BOA Act is greater than nil.

'Qualifying year' is defined in section 34 of the BOA Act to be either the 1998-1999 income year or the 1999-2000 income year.

If a taxpayer's taxable income as shown on their assessment for the qualifying year is $20 000 or less, Item 1 of the Table in subsection 45(4) of the BOA Act provides that the APSBC amount will be the adjusted savings and investment income for that year up to a maximum of $1000.

If a taxpayer's taxable income as shown on their assessment for the qualifying year is more than $20 000 but less than $30 000, Item 2 of the Table in subsection 45(4) of the BOA Act provides that the APSBC amount will be the adjusted savings and investment income for that year up to a maximum of $1000 less a 'phasing out fraction' of that amount calculated in accordance with the formula in subsection 45(8) of the BOA Act.

The 'phasing out fraction' under subsection 45(8) of the BOA Act is the taxable income as shown on the taxpayer's assessment for the qualifying year reduced by $20 000 and the result divided by $10 000.

The taxpayer's taxable income as shown on the 2000 income year assessment exceeds $20 000 but is less than $30 000 and their adjusted savings and investment income exceeds $1000. For the purposes of calculating the APSBC of the BOA, subsection 45(4) of the BOA Act provides no discretion to use any other amount other than the taxable income as shown on the taxpayer's assessment for the 2000 year of income.

Accordingly, the taxpayer will only be entitled under subsection 45(4) of the BOA Act to an APSBC of the BOA of $1000 reduced by the product of the 'phasing out fraction' and $1000.

Date of decision:  10 October 2001

Year of income:  Year ended 30 June 2000

Legislative References:
A New Tax System (Bonuses for Older Australians) Act 1999
   section 34
   subsection 41(1)
   subsection 45(4)
   subsection 45(8)

Keywords
Bonuses for older Australians

Business Line:  Small Business/Individual Taxpayers

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
  10 October 2001 Original statement
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