Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 392 - Long-term averaging of primary producers ' tax liability  

Subdivision 392-B - What kind of averaging adjustment must you make?  

Tax offset or extra income tax

SECTION 392-35   Will you get a tax offset or have to pay extra income tax?  

392-35(1)    
Compare:

(a) the amount (the income tax you would pay at the comparison rate ) worked out using the formula:

*Basic taxable income for *current year

×

*Comparison rate

(b) the amount of income tax that you would pay on your ^* basic taxable income for the ^* current year at ^* basic rates.

Note:

You must disregard some provisions of this Act in working out amounts of income tax for the purposes of this subsection: see subsection (5).

Tax offset

392-35(2)    
You are entitled to a ^* tax offset equal to the ^* averaging adjustment worked out under Subdivision 392-C if the income tax you would pay at the comparison rate is less than the amount of income tax you would pay at ^* basic rates.

Extra income tax

392-35(3)    
You must pay extra income tax on the ^* averaging component of your ^* basic taxable income if the income tax you would pay at the comparison rate is more than the amount of income tax you would pay at ^* basic rates.

Note 1:

Section 12A of the Income Tax Rates Act 1986 sets the rate at which you must pay extra income tax on the averaging component of your basic taxable income.

Note 2:

It does so in such a way that, generally, the extra income tax you must pay equals the averaging adjustment worked out under Subdivision 392-C .

Meaning of basic rates

392-35(4)    
The basic rates at which you would pay income tax are:

(a) if you are a resident taxpayer as defined in the Income Tax Rates Act 1986 - the rates of income tax in paragraph (1)(b) of Part I of Schedule 7 to that Act, taking into account the way it would apply with any changes to your tax-free threshold under section 20 of that Act; or

(b) if you are a non-resident taxpayer as defined in the Income Tax Rates Act 1986 - the rates of income tax in paragraph 1(b) of Part II of Schedule 7 to that Act.

Disregard certain provisions in working out amounts

392-35(5)    
Work out the amount of income tax mentioned in paragraph (1)(b) as if:

(a) the following provisions did not apply:

(i) this Division;

(ii) section 94 (Partner not having control and disposal of share in partnership income) of the Income Tax Assessment Act 1936 ;

(iii) Division 6AA (Income of certain children) of Part III of the Income Tax Assessment Act 1936 ;

(iv) Part VIIB (Medicare levy) of the Income Tax Assessment Act 1936 ; and

(b) you were not entitled to any rebate or credit under the Income Tax Assessment Act 1936 or to any ^* tax offset under this Act.

No adjustment

392-35(6)    
This Division does not affect your income tax for the ^* current year if the income tax you would pay at the ^* comparison rate equals the amount of income tax you would pay at ^* basic rates.

Note:

The 2 amounts will be equal if:

• your basic taxable income and your average income are both below the tax-free threshold; or

• your average income equals your basic taxable income for the current year.