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Legal database

Draft Taxation Determination

TD 93/D154

Income tax: does 'separate net income' include the imputation credits attached to franked dividends?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 94/27.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. Imputation credits are not included in 'separate net income' by section 159J of the Income Tax Assessment Act 1936.

2. For 'separate net income' purposes, only amounts which are income according to ordinary concepts (eg dividends actually paid or credited to the shareholder) are separate net income.

3. Imputation credits are not income according to ordinary concepts and are included as assessable income only because of section 160AQT of the Act.

Example: Mary Smith includes a claim of $1,149 for a full dependant spouse rebate (no children) in respect of her husband John for the year ended 30 June 1992. John's only income for the year is a dividend received from XYZ P/L of $200. The imputation credit attached to this dividend is $127. Therefore, John's assessable income is $327. However, the amount to be included in Mary's tax return as separate income of the spouse is only $200 (being the fully franked dividend).
Accordingly, Mary is entitled to the full dependant spouse rebate claim.

Commissioner of Taxation
17/6/93

References


BO CWD Case 220

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 2391

Subject References:
Imputation system
dependant rebate
separate net income

Legislative References:
ITAA 159J
ITAA 160AQT


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