Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 (70 of 2015)

Schedule 2   Dependent spouse tax offset

Part 1   Main amendments

Income Tax Assessment Act 1997

17   After Division 960

Insert:

Division 961 - Notional tax offsets

Table of Subdivisions

961-A Dependant (non-student child under 21 or student) notional tax offset

961-B Dependant (sole parent of a non-student child under 21 or student) notional tax offset

Subdivision 961-A - Dependant (non-student child under 21 or student) notional tax offset

Guide to Subdivision 961-A

961-1 What this Subdivision is about

This Subdivision provides for a notional tax offset for an income year if you contribute to the maintenance of a non-student child or a student dependant. The notional tax offset can only be taken into account in working out certain tax offsets under the Income Tax Assessment Act 1936.

Table of sections

Entitlement to the notional tax offset

961-5 Who is entitled to the notional tax offset

Amount of the notional tax offset

961-10 Amount of the dependant (non-student child under 21 or student) notional tax offset

961-15 Reduced amounts of the dependant (non-student child under 21 or student) notional tax offset

961-20 Reductions to take account of the dependant's income

Entitlement to the notional tax offset

961-5 Who is entitled to the notional tax offset

(1) You are entitled to a notional tax offset for an income year if:

(a) you are an individual; and

(b) you are an Australian resident; and

(c) during the year you contribute to the maintenance of another individual (the dependant ) who:

(i) is less than 25 years of age, and is a full-time student at a school, college or university; or

(ii) if subparagraph (i) does not apply - is less than 21 years of age; and

(d) during the year:

(i) the dependant is an Australian resident; or

(ii) you had a domicile in Australia.

(2) You may be entitled to more than one notional tax offset for the year under subsection (1) if you contributed to the maintenance of more than one dependant during the year.

Note: The amount of the notional tax offset in relation to each subsequent dependant may only be part of the full amount: see subsection 961-15(1).

(3) The notional tax offset only affects your income tax liability as provided for by sections 23AB, 79A and 79B of the Income Tax Assessment Act 1936.

Note: Section 23AB of that Act provides a tax offset for service with an armed force under the control of the United Nations; section 79A provides a tax offset for residents of isolated areas; section 79B provides a tax offset for members of the Defence Force who are serving overseas.

Amount of the notional tax offset

961-10 Amount of the dependant (non-student child under 21 or student) notional tax offset

(1) The amount of the notional tax offset to which you are entitled in relation to a dependant under section 961-5 for an income year is $376.

(2) However, if you are entitled to 2 or more such notional tax offsets for the income year in relation to individuals covered by subparagraph 961-5(1)(c)(ii), the amount of the notional tax offset under section 961-5 is:

(a) in relation to the oldest of those individuals - $376; and

(b) in relation to each of the others - $282.

961-15 Reduced amounts of the dependant (non-student child under 21 or student) notional tax offset

(1) The amount of the notional tax offset under section 961-10 is reduced by the amount in accordance with subsection (2) of this section if one or more of the following applies:

(a) paragraph 961-5(1)(c) applies during part only of the year;

(b) paragraph 961-5(1)(d) applies during part only of the year;

(c) during the whole or part of the year, 2 or more individuals contribute to the maintenance of the dependant;

(d) the dependant only meets the description of the individual covered by subparagraph 961-5(1)(c)(i) or (ii) for part of the year.

(2) The amount of a notional tax offset is reduced to an amount that, in the Commissioner's opinion, is a reasonable apportionment in the circumstances, having regard to the applicable matters referred to in paragraphs (1)(a) to (d).

961-20 Reductions to take account of the dependant's income

The amount of the notional tax offset under sections 961-10 and 961-15 in relation to the dependant for the year is reduced by $1 for every $4 by which the following exceeds $282:

(a) if you contribute to the maintenance of the dependant for the whole of the year - the dependant's *adjusted taxable income for offsets for the year;

(b) if paragraph (a) does not apply - the dependant's adjusted taxable income for offsets for that part of the year during which you contribute to the dependant's maintenance.

Subdivision 961-B - Dependant (sole parent of a non-student child under 21 or student) notional tax offset

Guide to Subdivision 961-B

961-50 What this Subdivision is about

This Subdivision provides for a notional tax offset for an income year if you are the sole contributor to the maintenance of a non-student child or a student dependant. The notional tax offset can only be taken into account in working out certain tax offsets under the Income Tax Assessment Act 1936.

Table of sections

Operative provisions

961-55 Who is entitled to the notional tax offset

961-60 Amount of the dependant (sole parent of a non-student child under 21 or student) notional tax offset

961-65 Reductions to take account of change in circumstances

Operative provisions

961-55 Who is entitled to the notional tax offset

(1) You are entitled to a notional tax offset for an income year if:

(a) during the year you have the sole care of another individual (the dependant ) who:

(i) is less than 25 years of age, and is a full-time student at a school, college or university; or

(ii) if subparagraph (i) does not apply - is less than 21 years of age; and

(b) you are entitled to a notional tax offset under Subdivision 961-A for the dependant; and

(c) during the year you did not have a *spouse.

(2) Paragraph (1)(c) does not apply if, in the opinion of the Commissioner, because of special circumstances, the paragraph should not apply.

(3) The notional tax offset only affects your income tax liability as provided for by sections 79A and 79B of the Income Tax Assessment Act 1936.

Note: Section 79A of that Act provides a tax offset for residents of isolated areas; section 79B provides a tax offset for members of the Defence Force who are serving overseas.

961-60 Amount of the dependant (sole parent of a non-student child under 21 or student) notional tax offset

The amount of the notional tax offset to which you are entitled under section 961-55 for an income year is $1,607.

Note: The amount of the offset under this section applies regardless of whether you have one or more dependants that satisfy section 961-55.

961-65 Reductions to take account of change in circumstances

(1) The amount of the notional tax offset under section 961-60 is reduced in accordance with subsection (2) if:

(a) paragraph 961-55(1)(a) applies during only part of the year; or

(b) paragraph 961-55(1)(c) does not apply because of subsection 961-55(2).

(2) The amount of the notional tax offset is reduced to an amount that, in the Commissioner's opinion, is a reasonable apportionment in the circumstances, having regard to the matters referred to in paragraphs (1)(a) and (b).