Tax Law Improvement Act 1997 (121 of 1997)

Schedule 1 Amendment of the Income Tax Assessment Act 1997

11 After Part 2-10

Insert:

Part 2-15 - Exempt income

Division 50 - Exempt entities

Table of Subdivisions

50-A Various exempt entities

Subdivision 50-A - Various exempt entities

Table of sections

50-1 Entities whose ordinary income and statutory income is exempt

50-5 Charity, education, science and religion

50-10 Community service

50-15 Employees and employers

50-20 Finance

50-25 Government

50-30 Health

50-35 Mining

50-40 Primary and secondary resources, and tourism

50-45 Sports, culture, film and recreation

50-1 Entities whose ordinary income and statutory income is exempt

The total *ordinary income and *statutory income of the entities covered by the following tables is exempt from income tax. In some cases, the exemption is subject to special conditions.

Note 1: Ordinary and statutory income that is exempt from income tax is called exempt income: see section 6-20. The note to subsection 6-15(2) describes some of the other consequences of it being exempt income.

Note 2: Even if you are an exempt entity, the Commissioner can still require you to lodge an income tax return or information under section 161 of the Income Tax Assessment Act 1936.

50-5 Charity, education, science and religion

Charity, education, science and religion
Item	Exempt entity	Special conditions
1.1	charitable institution	none
1.2	religious institution	none
1.3	scientific institution	none
1.4	public educational institution	none
1.5	fund established for public charitable purposes by will or instrument of trust	fund applied for the purpose for which it was established
1.6	fund established to enable scientific research to be conducted by or in conjunction with a public university or public hospital	fund applied for the purpose for which it was established
1.7	society, association or club established for the encouragement of science	not carried on for the profit or gain of its individual members

50-10 Community service

Community service
Item	Exempt entity	Special conditions
2.1	society, association or club established for community service purposes (except political or lobbying purposes)	not carried on for the profit or gain of its individual members

50-15 Employees and employers

Employees and employers
Item	Exempt entity	Special conditions
3.1	(a) employee association; or (b) employer association	registered under an *Australian law relating to the settlement of industrial disputes
3.2	trade union	none

Note: Despite items 3.1 and 3.2, certain ordinary and statutory income of some associations of employees and some registered trade unions may be subject to income tax under Division 8A of Part III of the Income Tax Assessment Act 1936.

50-20 Finance

Finance
Item	Exempt entity	Special conditions
4.1	a friendly society (except a friendly society dispensary)	not carried on for the profit or gain of its individual members

50-25 Government

Government
Item	Exempt entity	Special conditions
5.1	(a) a municipal corporation; or (b) a local governing body	none
5.2	a public authority constituted under a *Commonwealth law	none

Note: The ordinary and statutory income of a State or Territory body is exempt: see Division 1AB of Part III of the Income Tax Assessment Act 1936.

50-30 Health

Health
Item	Exempt entity	Special conditions
6.1	public hospital	none
6.2	hospital carried on by a society or association	not carried on for the profit or gain of its individual members
6.3	the following organisations registered for the purposes of the National Health Act 1953: (a) a medical benefits organisation; (b) a health benefits organisation; (c) a hospital benefits organisation	not carried on for the profit or gain of its individual members

50-35 Mining

Mining
Item	Exempt entity	Special conditions
7.1	the Phosphate Mining Company of Christmas Island Limited (incorporated in the Australian Capital Territory)	none
7.2	the British Phosphate Commissioners Banaba Contingency Fund (established on 1 June 1981)	none

50-40 Primary and secondary resources, and tourism

Primary and secondary resources, and tourism
Item	Exempt entity	Special conditions
8.1	a society or association established for the purpose of promoting the development of: (a) aviation; or (b) tourism	not carried on for the profit or gain of its individual members
8.2	a society or association established for the purpose of promoting the development of any of the following Australian resources: (a) agricultural resources; (b) horticultural resources; (c) industrial resources; (d) manufacturing resources; (e) pastoral resources; (f) viticultural resources	not carried on for the profit or gain of its individual members

50-45 Sports, culture, film and recreation

Sports, culture, film and recreation
Item	Exempt entity	Special conditions
9.1	a society, association or club established for the encouragement of: (a) animal racing; or (b) art; or (c) a game or sport; or (d) literature; or (e) music	not carried on for the profit or gain of its individual members
9.2	a society, association or club established for musical purposes	not carried on for the profit or gain of its individual members
9.3	the Australian Film Finance Corporation Pty Limited (incorporated under the Companies Act 1981 on 12 July 1988)	none

[The next Division is Division 51.]

Division 51 - Exempt amounts

Table of sections

51-1 Amounts of ordinary income and statutory income that are exempt

51-5 Defence

51-10 Education and training

51-15 Vice-regal representatives

51-25 Mining

51-30 Welfare

51-45 Mining payments made to an Aboriginal or a distributing body

51-50 Maintenance payments to a spouse or child

51-1 Amounts of ordinary income and statutory income that are exempt

The amounts of *ordinary income and *statutory income covered by the following tables are exempt from income tax. In some cases, the exemption is subject to exceptions or special conditions, or both.

Note 2: Even if an exempt payment is made to you, the Commissioner can still require you to lodge an income tax return or information under section 161 of the Income Tax Assessment Act 1936.

51-5 Defence

Defence
Item	If you are:	... the following amounts are exempt from income tax:	... subject to these exceptions and special conditions:
1.1	a member of the Defence Force	(a) payments of allowances or bounty of a kind prescribed in the regulations; and (b) the market value of rations and quarters supplied to you without charge	none
1.2	a recipient of a payment in respect of a member of the Defence Force	payments of allowances or bounty of a kind prescribed in the regulations	none
1.3	a member of: (a) the Naval Emergency Reserve Force; or (b) the Regular Army Emergency Reserve; or (c) the Air Force Emergency Force	(a) pay and allowances as a member; and (b) gratuities for the calling out for continuous service of all or part of the force	except pay and allowances for continuous full time service
1.4	a member of: (a) the Australian Naval Reserve; or (b) the Australian Army Reserve; or (c) the Australian Air Force Reserve	pay and allowances as a member	except pay and allowances for continuous full time service

51-10 Education and training

Education and training
Item	If you are:	... the following amounts are exempt from income tax:	... subject to these exceptions and special conditions:
2.1	a recipient of a grant made by the Australian-American Educational Foundation	the grant	the grant is from funds made available to the Foundation under the agreement establishing it
2.2	an employer	payments under the CRAFT Scheme (the Commonwealth Rebate for Apprentice Full-Time Training Scheme)	none

51-15 Vice-regal representatives

Vice-regal representatives

Item

If you are:

... the following amounts are exempt from income tax:

... subject to these exceptions and special conditions:

3.1

(a) the Governor-General; or

(b) a State Governor

(a) official salary; and

(b) *ordinary income derived from a source outside Australia; and

none

[The next section is section 51-25.]

51-25 Mining

Mining
Item	If you are:	... the following amounts are exempt from income tax:	... subject to these exceptions and special conditions:
4.1	an *Aboriginal	a mining payment or a payment by a distributing body out of a *mining payment	see section 51-45
4.2	a *distributing body	a mining payment or a payment by a distributing body out of a *mining payment	see section 51-45

51-30 Welfare

Welfare
Item	If you are:	... the following amounts are exempt from income tax:	... subject to these exceptions and special conditions:
5.1	an individual in receipt of periodic payments in the nature of maintenance	the payments	see section 51-50
5.2	a person who pays or is liable to pay rent	rent subsidy payments under the Mortgage and Rent Relief Scheme by an *Australian government agency	none
5.3	a recipient of an open employment incentive bonus	payments under Part VIIIA of the Handicapped Persons Assistance Act 1974	none

[The next section is section 51-45.]

51-45 Mining payments made to an Aboriginal or a distributing body

(1) The following are exempt from income tax:

(a) a *mining payment made to a *distributing body;

(b) a *mining payment made to one or more *Aboriginals, or applied for their benefit.

(2) A payment:

(a) made to a *distributing body; or

(b) made to one or more *Aboriginals, or applied for their benefit;

is exempt from income tax if the payment is made by a *distributing body out of a *mining payment that it has received.

(3) A payment made to a *distributing body by another distributing body, out of a *mining payment received by the other distributing body, is taken to be a mining payment for the purposes of:

(a) any further applications of subsection (2); and

(b) any further applications of this subsection.

(4) Subsection (2) does not exempt a payment by a *distributing body for the purposes of meeting its administrative costs.

(5) An amount paid to or applied for the benefit of a person is not exempt from income tax because of section 51-25 if it is remuneration or consideration for goods or services provided by that person.

51-50 Maintenance payments to a spouse or child

(1) This section sets out the conditions on which a periodic payment, in the nature of maintenance, that:

(a) is made by an individual (the maintenance payer ); or

(b) is attributable to a payment made by an individual (also the maintenance payer );

is exempt from income tax under item 5.1 of the table in section 51-30.

(2) The maintenance payment is exempt from income tax only if it is made:

(a) to an individual who is or has been the maintenance payer’s *spouse; or

(b) to or for the benefit of an individual who is or has been:

(i) a child of the maintenance payer; or

(ii) a child who is or has been a child of an individual who is or has been a *spouse of the maintenance payer.

(3) The maintenance payment is not exempt if, in order to make it or a payment to which it is attributable, the maintenance payer:

(a) divested any income-producing assets; or

(b) diverted *ordinary income or *statutory income upon which the maintenance payer would otherwise have been liable to income tax.

Division 52 - Certain pensions, benefits and allowances are exempt from income tax

Guide to Division 52

52-1 What this Division is about

Certain payments made under various Acts are wholly or partly exempt from income tax. This Division tells you if a payment is exempt and how much is exempt.

Table of Subdivisions

52-A Exempt payments under the Social Security Act 1991

52-B Exempt payments under the Veterans’ Entitlements Act 1986

52-C Exempt payments made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986

Subdivision 52-A - Exempt payments under the Social Security Act 1991

Guide to Subdivision 52-A

52-5 What this Subdivision is about

This Subdivision tells you:

(a) the payments under the Social Security Act 1991 that are wholly or partly exempt from income tax; and

(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and

Table of sections

Operative provisions

52-10 How much of a social security payment is exempt?

52-15 Supplementary amounts of payments

52-20 Tax-free amount of an ordinary payment after the death of your partner

52-25 Tax-free amount of certain bereavement lump sum payments

52-30 Tax-free amount of certain other bereavement lump sum payments

52-35 Tax-free amount of a lump sum payment made because of the death of a person you are caring for

52-40 Provisions of the Social Security Act 1991 under which payments are made

Operative provisions

52-10 How much of a social security payment is exempt?

(1) The table in this section tells you about the income tax treatment of social security payments.

Note: Section 52-40 sets out the provisions of the Social Security Act 1991 under which the payments are made.

(2) Expressions used in this Subdivision that are also used in the Social Security Act 1991 have the same meaning as in that Act.

(3) Ordinary payment means a payment other than a payment made because of a person’s death.

explanation of the table

Income tax treatment of social security payments
Item	Payment	Case 1	Case 2	Case 3	Case 4
1.1	Advance pharmaceutical supplement	Exempt	Exempt	Not applicable	Not applicable
2.1	Age pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
3.1	Bereavement allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Not applicable
4.1	Carer pension : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	(a) exempt up to the tax-free amount if it is made under section 236A of the Social Security Act 1991 (see section 52-35); or (b) exempt up to the tax-free amount if it is made under section 239 of that Act (see section 52-25)
4.2	Carer pension : the severely handicapped person is pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	(a) exempt up to the tax-free amount if it is made under section 236A of the Social Security Act 1991 (see section 52-35); or (b) exempt up to the tax-free amount if it is made under section 239 of that Act (see section 52-25)
4.3	Carer pension : both you and the severely handicapped person are under pension age	Exempt	Exempt	Exempt	(a) exempt up to the tax-free amount if it is made under section 236A of the Social Security Act 1991 (see section 52-35); or (b) exempt up to the tax-free amount if it is made under section 239 of that Act (see section 52-25)
4.4	Carer pension : you are under pension age and the severely handicapped person has died	Exempt	Exempt	Exempt	(a) exempt up to the tax-free amount if it is made under section 236A of the Social Security Act 1991 (see section 52-35); or (b) exempt up to the tax-free amount if it is made under section 239 of that Act (see section 52-25)
5.1	Child disability allowance	Exempt	Exempt	Exempt	Not applicable
6.1	Disability support pension : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
6.2	Disability support pension : you are under pension age	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
7.1	Disability wage supplement : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
7.2	Disability wage supplement : you are under pension age	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
8.1	Disaster relief payment	Exempt	Exempt	Not applicable	Not applicable
9.1	Double orphan pension	Exempt	Exempt	Exempt	Not applicable
10.1	Employment entry payment	Exempt	Exempt	Not applicable	Not applicable
11.1	Family payment	Exempt	Exempt	Not applicable	Not applicable
12.1	Family payment advance	Exempt	Exempt	Not applicable	Not applicable
13.1	Family tax payment	Exempt	Exempt	Not applicable	Not applicable
14.1	Maternity allowance	Exempt	Exempt	Not applicable	Not applicable
15.1	Mature age allowance (paid under Part 2.12A)	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
16.1	Mature age allowance (paid under Part 2.12B)	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-30)
17.1	Mature age partner allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Exempt up to the tax-free amount (see section 52-25)
18.1	Mobility allowance	Exempt	Exempt	Not applicable	Not applicable
19.1	Newstart allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-30)
20.1	Parenting allowance (benefit parenting allowance)	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Exempt up to the tax-free amount (see section 52-30)
21.1	Parenting allowance (non-benefit parenting allowance)	Exempt	Exempt	Not applicable	Not applicable
22.1	Partner allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Exempt up to the tax-free amount (see section 52-30)
23.1	Sickness allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-30)
24.1	Sole parent pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
25.1	Special benefit	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-30)
26.1	Special needs age pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
27.1	Special needs disability support pension : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
27.2	Special needs disability support pension : you are under pension age	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
28.1	Special needs sole parent pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Not applicable	Not applicable
29.1	Special needs widow B pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Not applicable	Not applicable
30.1	Special needs wife pension : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
30.2	Special needs wife pension : your partner is pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20)	Exempt	Exempt up to the tax-free amount (see section 52-25)
30.3	Special needs wife pension : both you and your partner are under pension age	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
30.4	Special needs wife pension : you are under pension age and your partner has died	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
31.1	Telephone allowance	Exempt	Exempt	Not applicable	Not applicable
32.1	Widow allowance	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Not applicable	Not applicable
33.1	Widow B pension	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Not applicable
34.1	Wife pension : you are pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Exempt up to the tax-free amount (see section 52-25)
34.2	Wife pension : your partner is pension age or over	Supplementary amount is exempt (see section 52-15)	Supplementary amount is exempt (see section 52-15)	Exempt	Exempt up to the tax-free amount (see section 52-25)
34.3	Wife pension : both you and your partner are under pension age	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)
34.4	Wife pension : you are under pension age and your partner has died	Exempt	Exempt	Exempt	Exempt up to the tax-free amount (see section 52-25)

52-15 Supplementary amounts of payments

You work out the supplementary amount of a social security payment using the following table:

Supplementary amount of a social security payment
Item	For this category of social security payment:	the supplementary amount is the total of:
1	Age pension Bereavement allowance Carer pension Disability support pension Disability wage supplement Mature age allowance (paid under Part 2.12A) Mature age partner allowance Sole parent pension Special needs age pension Special needs disability support pension Special needs sole parent pension Special needs widow B pension Special needs wife pension Widow B pension Wife pension	(a) so much of the payment as is included by way of rental assistance; and (b) so much of the payment as is included by way of remote area allowance; and (c) so much of the payment as is included by way of pharmaceutical allowance; and (d) so much of the payment as is included by way of incentive allowance; and (e) so much of the payment as is included by way of residential care charge
2	Mature age allowance (paid under Part 2.12B) Newstart allowance Partner allowance Sickness allowance Special benefit Widow allowance	(a) so much of the payment as is included by way of rental assistance; and (b) so much of the payment as is included by way of remote area allowance; and (c) so much of the payment as is included by way of pharmaceutical allowance; and (d) so much of the payment as is included by way of residential care charge
3	Parenting allowance (benefit parenting allowance)	(a) so much of the payment as is included by way of rental assistance; and (b) so much of the payment as is included by way of remote area allowance; and (c) so much of the payment as is included by way of pharmaceutical allowance; and (d) so much of the payment as is included by way of residential care charge; and (e) so much of the payment as is included by way of provisional rate of parenting allowance up to the maximum basic component of the parenting allowance worked out using the method statement in point 1068A-A3 of the Social Security Act 1991

52-20 Tax-free amount of an ordinary payment after the death of your partner

(1) You work out under this section the *tax-free amount of an *ordinary payment made under the Social Security Act 1991 after the death of your partner if:

(a) you do not qualify for payments under a *bereavement Subdivision; and

(b) the ordinary payment became due to you on any of the
7 pension paydays after the death of your partner.

Note: For the provisions of the Social Security Act 1991 that tell you if you qualify for payments under a bereavement Subdivision: see subsection (3).

(2) This is how to work out the tax-free amount :

Method statement

Step 1. Work out the *supplementary amount of the payment.

Note: The supplementary amount is also exempt and is worked out under section 52-15.

Step 2. Subtract the *supplementary amount from the amount of the payment.

Step 3. Work out what would have been the amount of the payment if your partner had not died.

Step 4. Work out what would have been the *supplementary amount of the payment if your partner had not died.

Step 5. Subtract the amount at Step 4 from the amount at Step 3.

Step 6. Subtract the amount at Step 5 from the amount at Step 2: the result is the tax-free amount .

(3) This table sets out:

(a) the Subdivisions of the Social Security Act 1991 that are bereavement Subdivisions ; and

(b) the provision of that Act that tells you if you qualify for payments under the relevant bereavement Subdivision.

Bereavement Subdivisions
Item	For this bereavement Subdivision:	This provision tells you if you qualify for payments under it:
1	Subdivision A of Division 9 of Part 2.2	paragraph 82(1)(e)
2	Subdivision A of Division 10 of Part 2.3	paragraph 146F(1)(e)
3	Subdivision B of Division 9 of Part 2.5	paragraph 237(1)(e)
4	Subdivision B of Division 9 of Part 2.6	paragraph 303(1)(e)
5	Subdivision A of Division 10 of Part 2.9	paragraph 469(1)(e)
6	Subdivision AA of Division 9 of Part 2.12	paragraph 660LA(1)(f)
7	Subdivision A of Division 11 of Part 2.12A	paragraph 660XKA(1)(e)
8	Subdivision C of Division 11 of Part 2.12B	paragraph 660YKC(1)(e)
9	Subdivision AA of Division 9 of Part 2.14	paragraph 728PA(1)(f)
10	Subdivision AA of Division 9 of Part 2.15	paragraph 768A(1)(f)
11	Subdivision A of Division 10 of Part 2.16	paragraph 822(1)(e)

52-25 Tax-free amount of certain bereavement lump sum payments

(1) This section applies if a lump sum of any of these categories of social security payments becomes due to you because of your partner’s death.

Category of social security payment
Age pension
Carer pension
Disability support pension
Disability wage supplement
Mature age allowance (paid under Part 2.12A)
Mature age partner allowance
Sole parent pension
Special needs age pension
Special needs disability support pension
Special needs wife pension
Wife pension
(2) The total of the following are exempt up to the tax-free amount: (a) the lump sum payment; (b) all other payments that become due to you under the Social Security Act 1991* on pension paydays that occur during the bereavement lump sum period. (3) This is how to work out the tax-free amount : Method statement Step 1. Work out the payments under the Social Security Act 1991 that would have become due to you on each of the pension paydays during the bereavement lump sum period if: (a) your partner had not died; and (b) your partner had been under pension age; and (c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple. Step 2. Work out how much of those payments would have been exempt in those circumstances. Step 3. Work out the payments under the Social Security Act 1991 or Part III of the Veterans’ Entitlements Act 1986 that would have become due to your partner on each of the pension paydays during the bereavement lump sum period if: (a) your partner had not died; and (b) immediately before your partner died, you and your partner were neither an illness separated couple nor a respite care couple; even if the payments would not have been exempt. Step 4. Total the payments worked out at Steps 2 and 3: the result is the tax-free amount . Example: You are receiving a disability support pension of $300 a fortnight and a pharmaceutical allowance of $5 a fortnight. You are over pension age. Your partner is receiving a partner allowance of $250 a fortnight and rental assistance of $75 a fortnight. Your partner dies. There are 7 pension paydays during the bereavement lump sum period. You work out the tax-free amount as follows: Step 1: The payments that would have become due to you on each of those 7 paydays are $300 + $5 = $305. The total for the 7 paydays is $2,135. Step 2: The exempt component of the $305 you receive on each of the 7 paydays is $5. The total for the 7 paydays is $35. Step 3: The payments that would have become due to your partner on each of those 7 paydays are $250 + $75 = $325. The total for the 7 paydays is $2,275. Step 4: The tax-free amount is $35 + $2,275 = $2,310. 52-30 Tax-free amount of certain other bereavement lump sum payments (1) This section applies if a lump sum of any of these categories of social security payments becomes due to you because of your partner’s death. Category of social security payment
Mature age allowance (paid under Part 2.12B)
Newstart allowance
Parenting allowance (benefit parenting allowance)
Partner allowance
Sickness allowance
Special benefit
(2) The total of the following are exempt up to the tax-free amount: (a) the lump sum payment; (b) all other payments that become due to you under the Social Security Act 1991* on pension paydays that occur during the bereavement lump sum period. (3) This is how to work out the tax-free amount : Method statement Step 1. Work out the payments under the Social Security Act 1991 that would have become due to you on each of the pension paydays during the bereavement lump sum period if: (a) your partner had not died; and (b) your partner had been under pension age; and (c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple. Step 2. Work out how much of those payments would have been exempt in those circumstances. Step 3. Work out the payments under the Social Security Act 1991 that would have become due to your partner on each of the pension paydays during the bereavement lump sum period if your partner had not died, even if the payments would not have been exempt. Step 4. Total the payments worked out at Steps 2 and 3: the result is the tax-free amount . 52-35 Tax-free amount of a lump sum payment made because of the death of a person you are caring for (1) This section applies if a lump sum payment becomes due to you under section 236A of the Social Security Act 1991 because of the death of the severely handicapped person you are caring for. (2) The total of the following are exempt up to the tax-free amount: (a) the lump sum payment; (b) all other payments that become due to you under the Social Security Act 1991* on pension paydays that occur during the bereavement lump sum period. (3) This is how to work out the tax-free amount : Method statement Step 1. Work out the payments under the Social Security Act 1991 that would have become due to you on each of the pension paydays during the bereavement lump sum period if: (a) the severely handicapped person had not died; and (b) the severely handicapped person had been under pension age. Step 2. Work out how much of those payments would have been exempt in those circumstances. Step 3. Work out the payments under the Social Security Act 1991 that would have become due to the severely handicapped person on each of the pension paydays during the bereavement lump sum period if the severely handicapped person had not died, even if the payments would not have been exempt. Step 4. Total the payments worked out at Steps 2 and 3: the result is the tax-free amount . 52-40 Provisions of the Social Security Act 1991 under which payments are made This table lists the provisions of the Social Security Act 1991 under which social security payments are made that are wholly or partly exempt from income tax under this Subdivision. Provisions under which social security payments are made
Item	Category of social security payment	Ordinary payment	Payment made because of a person’s death (unless covered by next column)	Lump sum payment made because of your partner’s death
1	Advance pharmaceutical supplement	Part 2.23	Not applicable	Not applicable
2	Age pension	Part 2.2	Sections 83, 86 and 91	Section 84
3	Bereavement allowance	Part 2.7	Section 359	Not applicable
4	Carer pension	Part 2.5	Sections 238, 241 and 246	Sections 236A and 239
5	Child disability allowance	Part 2.19	Sections 992 and 992A	Not applicable
6	Disability support pension	Part 2.3	Sections 146G, 146K and 146Q	Section 146H
7	Disability wage supplement	Part 2.9	Sections 470, 473, 475 and 476	Section 471
8	Disaster relief payment	Part 2.24	Not applicable	Not applicable
9	Double orphan pension	Part 2.20	Sections 1034 and 1034A	Not applicable
10	Employment entry payment	Part 2.13	Not applicable	Not applicable
11	Family payment	Part 2.17	Not applicable	Not applicable
12	Family payment advance	Part 2.17	Not applicable	Not applicable
13	Family tax payment	Part 2.17AA or section 1070	Not applicable	Not applicable
14	Maternity allowance	Part 2.17A	Not applicable	Not applicable
15	Mature age allowance (paid under Part 2.12A)	Part 2.12A	Sections 660XKB, 660XKE and 660XKG	Section 660XKC
16	Mature age allowance (paid under Part 2.12B)	Part 2.12B	Section 660YKD	Section 660YKE
17	Mature age partner allowance	Part 2.12A	Sections 660XKK and 660XKM	Section 660XKL
18	Mobility allowance	Part 2.21	Not applicable	Not applicable
19	Newstart allowance	Part 2.12	Section 660LB	Section 660LC
20	Parenting allowance (benefit parenting allowance)	Part 2.18	Sections 951Y and 951ZB	Section 951ZC
21	Parenting allowance (non-benefit parenting allowance)	Part 2.18	Not applicable	Not applicable
22	Partner allowance	Part 2.15A	Section 771NW	Section 771NX
23	Sickness allowance	Part 2.14	Section 728PB	Section 728PC
24	Sole parent pension	Part 2.6	Sections 304, 307 and 312	Section 305
25	Special benefit	Part 2.15	Section 768B	Section 768C
26	Special needs age pension	Section 772	Sections 823, 826 and 830	Section 824
27	Special needs disability support pension	Section 773	Sections 823, 826 and 830	Section 824
28	Special needs sole parent pension	Section 775	Not applicable	Not applicable
29	Special needs widow B pension	Section 778	Not applicable	Not applicable
30	Special needs wife pension	Section 774	Sections 823, 826 and 830	Section 824
31	Telephone allowance	Part 2.25	Not applicable	Not applicable
32	Widow allowance	Part 2.8A	Not applicable	Not applicable
33	Widow B pension	Part 2.8	Section 407	Not applicable
34	Wife pension	Part 2.4	Sections 189 and 191	Section 190

Subdivision 52-B - Exempt payments under the Veterans’ Entitlements Act 1986

Guide to Subdivision 52-B

52-60 What this Subdivision is about

This Subdivision tells you:

(a) the payments under the Veterans’ Entitlements Act 1986 that are wholly or partly exempt from income tax; and

(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and

Table of sections

Operative provisions

52-65 How much of a veterans’ affairs payment is exempt?

52-70 Supplementary amounts of payments

52-75 Provisions of the Veterans’ Entitlements Act 1986 under which payments are made

Operative provisions

52-65 How much of a veterans’ affairs payment is exempt?

(1) The table in this section tells you about the income tax treatment of veterans’ affairs payments.

Note: Section 52-75 sets out the provisions of the Veterans’ Entitlements Act 1986 under which the payments are made.

(2) Expressions (except “pension age”) used in this Subdivision that are also used in the Veterans’ Entitlements Act 1986 have the same meaning as in that Act.

(3) Pension age has the meaning given by subsection 23(1) of the Social Security Act 1991.

(4) Ordinary payment means a payment other than a payment made because of a person’s death.

Income tax treatment of veterans’ affairs payments
Item	Category of veterans’ affairs payment	Ordinary payment	Payment made because of a person’s death
1.1	Age service pension	Supplementary amount is exempt (see section 52-70)	Exempt
2.1	Attendant allowance	Exempt	Not applicable
3.1	Carer service pension : unless covered by item 3.2 or 3.3	Supplementary amount is exempt (see section 52-70)	Exempt
3.2	Carer service pension : both you and your partner are under pension age and your partner is receiving an invalidity service pension	Exempt	Exempt
3.3	Carer service pension : you are under pension age, your partner has died and was receiving an invalidity service pension at death	Exempt	Exempt
4.1	Clothing allowance	Exempt	Not applicable
5.1	Decoration allowance	Exempt	Not applicable
6.1	Income support supplement : unless covered by item 6.2, 6.3, 6.4 or 6.5	Supplementary amount is exempt (see section 52-70)	Exempt
6.2	Income support supplement : you are under pension age and receiving the supplement on the grounds of permanent incapacity	Exempt	Exempt
6.3	Income support supplement : both you and the severely handicapped person you are caring for are under pension age and you are receiving the supplement for providing constant care for that person	Exempt	Exempt
6.4	Income support supplement : both you and your partner are under pension age and your partner is an invalidity service pensioner or a disability support pensioner	Exempt	Exempt
6.5	Income support supplement : both you and your partner are under pension age and your partner is receiving the supplement on the grounds of permanent incapacity	Exempt	Exempt
7.1	Invalidity service pension : you are pension age or over	Supplementary amount is exempt (see section 52-70)	Exempt
7.2	Invalidity service pension : you are under pension age	Exempt	Exempt
8.1	Loss of earnings allowance	Exempt	Not applicable
9.1	Partner service pension : unless covered by item 9.2 or 9.3	Supplementary amount is exempt (see section 52-70)	Exempt
9.2	Partner service pension : both you and your partner are under pension age and your partner is receiving an invalidity service pension	Exempt	Exempt
9.3	Partner service pension : you are under pension age, your partner has died and was receiving an invalidity service pension at death	Exempt	Exempt
10.1	Pension for defence-caused death or incapacity	Exempt	Not applicable
11.1	Pension for war-caused death or incapacity	Exempt	Not applicable
12.1	Pharmaceutical allowance	Exempt	Not applicable
13.1	Recreation transport allowance	Exempt	Not applicable
14.1	Section 98A Bereavement payment	Not applicable	Exempt
15.1	Section 99 funeral benefit	Not applicable	Exempt
16.1	Section 100 funeral benefit	Not applicable	Exempt
17.1	Special assistance	Exempt	Not applicable
18.1	Telephone allowance	Exempt	Not applicable
19.1	Temporary incapacity allowance	Exempt	Not applicable
20.1	Travelling expenses	Exempt	Not applicable
21.1	Vehicle Assistance Scheme	Exempt	Not applicable
22.1	Victoria Cross allowance	Exempt	Not applicable

52-70 Supplementary amounts of payments

The supplementary amount of a veterans’ affairs payment is the total of:

(a) so much of the payment as is included by way of rental assistance; and

(b) so much of the payment as is included by way of an additional amount for each of your dependent children; and

(d) so much of the payment as is included by way of residential care charge.

52-75 Provisions of the Veterans’ Entitlements Act 1986 under which payments are made

This table lists the provisions of the Veterans’ Entitlements Act 1986 under which veterans’ affairs payments are made that are wholly or partly exempt from income tax under this Subdivision.

Provisions under which veterans’ affairs payments are made
Item	Category of veterans’ affairs payment	Ordinary payment	Payment made because of a person’s death
1	Age service pension	Division 3 of Part III	Parts III and IIIA
2	Attendant allowance	Section 98	Not applicable
3	Carer service pension	Division 6 of Part III	Parts III and IIIA
4	Clothing allowance	Section 97	Not applicable
5	Decoration allowance	Section 102	Not applicable
6	Income support supplement	Part IIIA	Parts III and IIIB
7	Invalidity service pension	Division 3 of Part III	Parts III and IIIA
8	Loss of earnings allowance	Section 108	Not applicable
9	Partner service pension	Division 5 of Part III	Parts III and IIIA
10	Pension for defence-caused death or incapacity	Part IV	Not applicable
11	Pension for war-caused death or incapacity	Part II	Not applicable
12	Pharmaceutical allowance	Part VIIA	Not applicable
13	Recreation transport allowance	Section 104	Not applicable
14	Section 98A Bereavement payment	Not applicable	Section 98A
15	Section 99 funeral benefit	Not applicable	Section 99
16	Section 100 funeral benefit	Not applicable	Section 100
17	Special assistance	Section 106	Not applicable
18	Telephone allowance	Part VIIB	Not applicable
19	Temporary incapacity allowance	Section 107	Not applicable
20	Travelling expenses	Section 110	Not applicable
21	Vehicle Assistance Scheme	Section 105	Not applicable
22	Victoria Cross allowance	Section 103	Not applicable

Subdivision 52-C - Exempt payments made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986

Guide to Subdivision 52-C

52-100 What this Subdivision is about

This Subdivision tells you:

(a) the payments made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 that are wholly or partly exempt from income tax; and

(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and

Table of sections

Operative provisions

52-105 Supplementary amount of a payment made under the Repatriation Act 1920 is exempt

52-110 Other exempt payments

Operative provisions

52-105 Supplementary amount of a payment made under the Repatriation Act 1920 is exempt

(1) The *supplementary amount of a payment made to you is exempt from income tax if:

(a) you are a parent of a *member of the Forces who has died (but you are neither a widow nor a woman divorced or deserted by her husband) and you are of *pension age or over; or

(b) you are the mother of a *member of the Forces who has died and you are also a widow, or divorced or deserted by your husband;

and the payment is covered by subsection (2).

(2) The payment must be made in circumstances that are a prescribed case under:

(a) Table A in Schedule 3 to the Repatriation Act 1920; or

(b) that Table as applying because of the Repatriation (Far East Strategic Reserve) Act 1956; or

(d) that Table as applying because of the Interim Forces Benefits Act 1947;

as in force because of subsection 4(6) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986.

(3) The supplementary amount is the total of:

(a) so much of the payment as is included by way of rental assistance; and

(b) so much of the payment as is included by way of an additional amount for each of your dependent children; and

(4) Member of the Forces has the same meaning as in the Act referred to in the relevant paragraph of subsection (2).

(5) Expressions (except pension age ) used in this Subdivision that are also used in the Veterans’ Entitlements Act 1986 have the same meaning as in that Act.

(6) Pension age has the meaning given by subsection 23(1) of the Social Security Act 1991.

52-110 Other exempt payments

Payments (except those covered by section 52-105) made because of subsection 4(6) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 are exempt from income tax.

Division 53 - Various exempt payments

Guide to Division 53

53-1 What this Division is about

This Division tells you:

(a) about various payments that are wholly or partly exempt from income tax; and

(b) any special conditions that apply to a payment in order for it to be exempt; and

Table of sections

Operative provisions

53-10 Exemption of various types of payments

53-15 Supplementary amount of a drought relief payment

53-20 Exemption of similar Australian and United Kingdom veterans’ payments

Operative provisions

53-10 Exemption of various types of payments

This table tells you about the income tax treatment of various types of payments.

Exemption of various payments
Item	This type of payment:	... made under:	... is exempt subject to these exceptions and special conditions:
1	Disability services payment	Part III of the Disability Services Act 1986	None
2	Domiciliary nursing care benefit	Part VB of the National Health Act 1953	None
3	Drought relief payment : payment made other than because of a person’s death	The Farm Household Support Act 1992	Only the supplementary amount is exempt (see section 53-15)
4	Drought relief payment : payment made because of a person’s death	Paragraph 49(b) of the Farm Household Support Act 1992	None
5	Wounds and disability pension	Not applicable	The payment must be: (a) of a kind specified in subsection 315(2) of the Income and Corporation Taxes Act 1988 of the United Kingdom; and (b) similar in nature to payments that are exempt under Division 52 or this Division

53-15 Supplementary amount of a drought relief payment

The supplementary amount of a drought relief payment is the total of:

(a) so much of the payment as is included by way of rental assistance; and

(b) so much of the payment as would have been included by way of remote area allowance if it had been a payment of newstart allowance under the Social Security Act 1991 instead of a drought relief payment; and

(c) so much of the payment as is included because of paragraph 24A(1)(c) (about family payment) of the Farm Household Support Act 1992.

53-20 Exemption of similar Australian and United Kingdom veterans’ payments

The following payments made by the Government of Australia, or the Government of the United Kingdom, are exempt from income tax:

(a) payments similar to payments under the Veterans’ Entitlements Act 1986 that are exempt under Subdivision 52-B;

(b) payments similar to payments that are made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 and are exempt under Subdivision 52-C.

[The next Division is Division 55.]

Division 55 - Payments that are not exempt from income tax

Guide to Division 55

55-1 What this Division is about

A variety of payments are not exempt from income tax even though they are similar in nature to payments that are wholly or partly exempt under this Part.

Table of sections

Operative provisions

55-5 Occupational superannuation payments

55-10 Education entry payments

Operative provisions

55-5 Occupational superannuation payments

(1) This Part does not exempt from income tax any amount or pension paid under the following provisions or Acts, or under schemes established under any of them:

(a) Defence Force Retirement and Death Benefits Act 1973;

(b) Defence Forces Retirement Benefits Act 1948;

(d) Papua New Guinea (Staffing Assistance) Act 1973;

(e) Parliamentary Contributory Superannuation Act 1948;

(f) section 10 of the Superannuation (Pension Increases) Act 1971;

(g) section 9 or 14 of the Superannuation Act (No. 2) 1956;

(h) subsection 8(1) of the Superannuation Act 1948;

(i) Superannuation Act 1922;

(j) Superannuation Act 1976;

(k) Superannuation Act 1990.

(2) This section operates despite anything contained in any other provision of this Part.

55-10 Education entry payments

This Part does not exempt from income tax an education entry payment under Part 2.13A of the Social Security Act 1991.

[The next Part is Part 2-20.]

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Tax Law Improvement Act 1997 (121 of 1997)

Schedule 1 Amendment of the Income Tax Assessment Act 1997

11 After Part 2-10

Part 2-15 - Exempt income

Division 50 - Exempt entities

Table of Subdivisions

Subdivision 50-A - Various exempt entities

Table of sections

50-1 Entities whose ordinary income and statutory income is exempt

50-5 Charity, education, science and religion

50-10 Community service

50-15 Employees and employers

50-20 Finance

50-25 Government

50-30 Health

50-35 Mining

50-40 Primary and secondary resources, and tourism

50-45 Sports, culture, film and recreation

Division 51 - Exempt amounts

Table of sections

51-1 Amounts of ordinary income and statutory income that are exempt

51-5 Defence

51-10 Education and training

51-15 Vice-regal representatives

51-25 Mining

51-30 Welfare

51-45 Mining payments made to an Aboriginal or a distributing body

51-50 Maintenance payments to a spouse or child

Division 52 - Certain pensions, benefits and allowances are exempt from income tax

Guide to Division 52

52-1 What this Division is about

Table of Subdivisions

Subdivision 52-A - Exempt payments under the Social Security Act 1991

Guide to Subdivision 52-A

52-5 What this Subdivision is about

Table of sections

Operative provisions

Operative provisions

52-10 How much of a social security payment is exempt?

52-15 Supplementary amounts of payments

52-20 Tax-free amount of an ordinary payment after the death of your partner

52-25 Tax-free amount of certain bereavement lump sum payments

52-30 Tax-free amount of certain other bereavement lump sum payments

52-35 Tax-free amount of a lump sum payment made because of the death of a person you are caring for

52-40 Provisions of the Social Security Act 1991 under which payments are made

Subdivision 52-B - Exempt payments under the Veterans’ Entitlements Act 1986

Guide to Subdivision 52-B

52-60 What this Subdivision is about

Table of sections

Operative provisions

Operative provisions

52-65 How much of a veterans’ affairs payment is exempt?

52-70 Supplementary amounts of payments

52-75 Provisions of the Veterans’ Entitlements Act 1986 under which payments are made

Subdivision 52-C - Exempt payments made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986

Guide to Subdivision 52-C

52-100 What this Subdivision is about

Table of sections

Operative provisions

Operative provisions

52-105 Supplementary amount of a payment made under the Repatriation Act 1920 is exempt

52-110 Other exempt payments

Division 53 - Various exempt payments

Guide to Division 53

53-1 What this Division is about

Table of sections

Operative provisions

Operative provisions

53-10 Exemption of various types of payments

53-15 Supplementary amount of a drought relief payment

53-20 Exemption of similar Australian and United Kingdom veterans’ payments

Division 55 - Payments that are not exempt from income tax

Guide to Division 55

55-1 What this Division is about

Table of sections

Operative provisions

Operative provisions

55-5 Occupational superannuation payments

55-10 Education entry payments