Taxation Laws Amendment Act (No. 3) 1998 (47 of 1998)
Schedule 9
Part 1 Income Tax Assessment Act 1997
4 After the heading to Division 61
Insert:
Table of Subdivisions
61-A Savings tax offset
61-G Private health insurance tax offset
Subdivision 61-A - Savings tax offset
Guide to Subdivision 61-A
61-50 What this Subdivision is about
You get a tax offset equal to 15% (up to a maximum of $450) of the sum of your savings and investment income and certain of your superannuation contributions. In most cases, you must be a resident individual to get the offset.
Table of sections
Operative provisions
61-55 Entitlement to the savings tax offset
61-60 What is savings and investment income?
61-65 Trustees also get the tax offset, if a beneficiary is under a legal disability
61-70 This tax offset is additional to the one under section 159SZ
[This is the end of the Guide.]
Operative provisions
61-55 Entitlement to the savings tax offset
Who gets the tax offset
(1) You are entitled to a *tax offset for an income year if you are:
(a) an individual; and
(b) an Australian resident at any time during the income year.
Note: Trustees can also get the tax offset in some situations if a beneficiary of the trust is under a legal disability - see section 61-65.
Amount of the tax offset
(2) The amount of the *tax offset is 15% of the amount worked out as follows:
Method statement
Step 1. Take your *savings and investment income (see section 61-60) for the income year.
Step 2. Add to the Step 1 amount any contributions to a *complying superannuation fund or an *RSA that you make during the income year to get superannuation benefits for yourself, or for your dependants in the event of your death.
Step 3. Subtract from the Step 2 amount the sum of your deductions for the income year, to the extent that the deductions relate to any or all of your *savings and investment income.
Step 4. Subtract from the Step 3 amount any amount that you can deduct under section 82AAT of the Income Tax Assessment Act 1936, as specified in a notice that you give under that section, for the contributions counted at Step 2.
Step 5. If the final result is nil or negative, you don't get a tax offset under this section.
Maximum tax offset allowed is $450
(3) However, the maximum amount of *tax offset you can get under this section for an income year is $450.
Deductions unrelated to any particular income
(4) To avoid doubt, deductions that are not related to the *derivation by you of any particular amount of *savings and investment income are not subtracted under Step 3 of the method statement in subsection (2).
Example: A deduction under Division 30 for a gift that you make to a charity is not related to any particular savings and investment income of yours. Therefore, it is not subtracted under Step 3.
61-60 What is savings and investment income?
(1) Your savings and investment income is the sum of the following:
(a) all of your assessable income that is not *PAYE earnings;
(b) any amount paid to you that is included in your assessable income and that is covered by paragraph (c) of the definition of salary or wages in subsection 221A(1) of the Income Tax Assessment Act 1936, so long as:
(i) the payment is from an *Australian source and is not a rebatable benefit, or a rebatable pension, within the meaning of section 160AAA of that Act or a payment of the kind mentioned in subsection 52-105(2) of this Act; or
(ii) the payment is not from an *Australian source and there is or has been a deductible amount in relation to the annuity concerned within the meaning of section 27H of the Income Tax Assessment Act 1936;
Note: This basically covers annuities and pensions etc. that you purchased yourself.
(c) so much of the amount of any eligible termination payment (as defined in section 27A of that Act) made to you as is included in your assessable income under section 27B or 27C of that Act.
Exceptions
(2) However, your *savings and investment income does not include the following amounts:
(a) payments covered by paragraph (pa) of the definition of salary or wages in subsection 221A(1) of the Income Tax Assessment Act 1936;
Note: That paragraph covers payments by way of remuneration or allowances to members of certain local government bodies.
(b) *assessable recoupments of amounts deductible under section 25-5 of this Act or section 69 of the Income Tax Assessment Act 1936;
Note: Those 2 sections basically deal with tax-related expenses.
(c) *assessable recoupments of amounts deductible under section 25-60 of this Act or section 74 of the Income Tax Assessment Act 1936.
Note: Those 2 sections basically deal with election expenses.
61-65 Trustees also get the tax offset, if a beneficiary is under a legal disability
(1) You are entitled to a *tax offset for an income year if you are a trustee liable to pay tax under subsection 98(1) of the Income Tax Assessment Act 1936 on a share of the trust's net income in respect of a beneficiary under a legal disability who is:
(a) an individual; and
(b) an Australian resident at any time during the income year.
Amount of the tax offset
(2) The amount of the *tax offset, in respect of each such beneficiary, is 15% of that share.
Maximum tax offset $450 for each beneficiary
(3) However, the maximum amount of *tax offset you can get under this section in respect of a particular beneficiary for an income year is $450.
No other trustees get the offset
(4) You are not otherwise entitled to the *tax offset as a trustee.
61-70 This tax offset is additional to the rebate under section 159SZ of the 1936 Act
To avoid doubt, a *tax offset under this Subdivision is in addition to any rebate you may be entitled to under section 159SZ of the Income Tax Assessment Act 1936 (which deals with superannuation contributions by low income earners).