Treasury Laws Amendment (Personal Income Tax Plan) Act 2018 (47 of 2018)

Schedule 1   Low and Middle Income tax offset and Low Income tax offset

Part 1   Main amendments

Income Tax Assessment Act 1997

1   After Subdivision 61-A

Insert:

Subdivision 61-D - Low and Middle Income tax offset and Low Income tax offset

Guide to Subdivision 61-D

61-100 What this Subdivision is about

You may be entitled to a tax offset if you:

(a) are a lower-income earner; or

(b) are the trustee of a trust who is liable to be assessed in respect of a share of the trust's net income to which a beneficiary is presently entitled.

Table of sections

Operative provisions

61-105 Entitlement to the Low and Middle Income tax offset

61-107 Amount of the Low and Middle Income tax offset

61-110 Entitlement to the Low Income tax offset

61-115 Amount of the Low Income tax offset

Operative provisions

61-105 Entitlement to the Low and Middle Income tax offset

(1) You are entitled to a *tax offset for the 2018-19, 2019-20, 2020-21 or 2021-22 income year if:

(a) you are an individual who is an Australian resident at any time during the income year; and

(b) your taxable income for the income year does not exceed $125,333.

(2) You are entitled to a *tax offset for the 2018-19, 2019-20, 2020-21 or 2021-22 income year if:

(a) for the income year, you are a trustee who is liable to be assessed under section 98 of the Income Tax Assessment Act 1936 in respect of a share of the *net income of a trust; and

(b) the beneficiary who is presently entitled to that share is an individual who is an Australian resident at any time during the income year; and

(c) that share does not exceed $125,333.

(3) If you are entitled to a *tax offset under subsection (2), you are entitled to a separate tax offset for each beneficiary who is presently entitled to a share for which subsection (2) is satisfied.

Note: This section will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018.

61-107 Amount of the Low and Middle Income tax offset

General rule

(1) The amount of your *tax offset is set out in the following table in respect of the following income (your relevant income ):

(a) if you are an individual - your taxable income for the income year;

(b) if you are a trustee - the amount of the share of *net income referred to in subsection 61-105(2).

Note: This section will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018.

If you are less than 18 years of age

(2) Despite subsection (1), the amount of your *tax offset for the income year cannot exceed a cap if:

(a) you are an individual who is a prescribed person in relation to the income year for the purposes of Division 6AA of Part III of the Income Tax Assessment Act 1936; and

(b) part (the excluded part ) of your basic income tax liability for the income year is attributable to your eligible taxable income (within the meaning of section 102AD of that Act).

The cap is an amount equal to the remaining part of your basic income tax liability for the income year.

Note: Division 6AA (including section 102AD) is about income that particular kinds of children derive from particular sources.

(3) When working out the remaining part of your basic income tax liability, if you are also entitled to a *tax offset under section 160AAA of the Income Tax Assessment Act 1936, treat that tax offset as having been applied, to the extent possible, against the excluded part of your basic income tax liability.

Note: That tax offset is for individuals eligible for certain benefits.

If you are a trustee and the beneficiary is less than 18 years of age

(4) Despite subsection (1), the amount of your *tax offset for the income year cannot exceed a cap if:

(a) you are a trustee; and

(b) the beneficiary who is presently entitled to the share of *net income to which the tax offset relates is a prescribed person in relation to the income year for the purposes of Division 6AA of Part III of the Income Tax Assessment Act 1936; and

(c) part of your basic income tax liability for the income year is attributable to the portion of that share to which that Division applies.

The cap is an amount equal to the part of your basic income tax liability attributable to the remaining portion of that share.

Note 1: Division 6AA is about income that particular kinds of children derive from particular sources.

Note 2: To work out the portion of that share to which Division 6AA applies, see section 102AG of the Income Tax Assessment Act 1936.

61-110 Entitlement to the Low Income tax offset

(1) You are entitled to a *tax offset for the 2022-23 income year or a later income year if:

(a) you are an individual who is an Australian resident at any time during the income year; and

(b) your taxable income for the income year does not exceed $66,667.

(2) You are entitled to a *tax offset for the 2022-23 income year or a later income year if:

(a) for the income year, you are a trustee who is liable to be assessed under section 98 of the Income Tax Assessment Act 1936 in respect of a share of the *net income of a trust; and

(b) the beneficiary who is presently entitled to that share is an individual who is an Australian resident at any time during the income year; and

(c) that share does not exceed $66,667.

(3) If you are entitled to a *tax offset under subsection (2), you are entitled to a separate tax offset for each beneficiary who is presently entitled to a share for which subsection (2) is satisfied.

61-115 Amount of the Low Income tax offset

General rule

(1) The amount of your *tax offset is set out in the following table in respect of the following income (your relevant income ):

(a) if you are an individual - your taxable income for the income year;

(b) if you are a trustee - the amount of the share of *net income referred to in subsection 61-110(2).

If you are less than 18 years of age

(2) Despite subsection (1), the amount of your *tax offset for the income year cannot exceed a cap if:

(a) you are an individual who is a prescribed person in relation to the income year for the purposes of Division 6AA of Part III of the Income Tax Assessment Act 1936; and

(b) part (the excluded part ) of your basic income tax liability for the income year is attributable to your eligible taxable income (within the meaning of section 102AD of that Act).

The cap is an amount equal to the remaining part of your basic income tax liability for the income year.

Note: Division 6AA (including section 102AD) is about income that particular kinds of children derive from particular sources.

(3) When working out the remaining part of your basic income tax liability, if you are also entitled to a *tax offset under section 160AAA of the Income Tax Assessment Act 1936, treat that tax offset as having been applied, to the extent possible, against the excluded part of your basic income tax liability.

Note: That tax offset is for individuals eligible for certain benefits.

If you are a trustee and the beneficiary is less than 18 years of age

(4) Despite subsection (1), the amount of your *tax offset for the income year cannot exceed a cap if:

(a) you are a trustee; and

(b) the beneficiary who is presently entitled to the share of *net income to which the tax offset relates is a prescribed person in relation to the income year for the purposes of Division 6AA of Part III of the Income Tax Assessment Act 1936; and

(c) part of your basic income tax liability for the income year is attributable to the portion of that share to which that Division applies.

The cap is an amount equal to the part of your basic income tax liability attributable to the remaining portion of that share.

Note 1: Division 6AA is about income that particular kinds of children derive from particular sources.

Note 2: To work out the portion of that share to which Division 6AA applies, see section 102AG of the Income Tax Assessment Act 1936.