Commonwealth Numbered Acts

INCOME TAX RATES AMENDMENT ACT (No. 1) 1997 No. 124 of 1997 - SCHEDULE 1

Schedule 1ÐFamily tax initiative Income Tax Rates Act 1986 1 Paragraph
12(7)(a) (definition of B) After "subsection (3)", insert ", Division 5 of
Part II". 2 Paragraph 12(8)(a) (definition of B) After "subsection (3)",
insert ", Division 5 of Part II". 3 Subsection 20F(1) Repeal the subsection,
substitute:

(1) If:

   (a)  the taxable income of a year of income of a taxpayer to whom section
        20C or 20D applies, or would apart from section 20E apply, consists of
        or includes a special income component; and

   (b)  the rate of tax for every $1 of the taxable income, as worked out
        under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of
        Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be,
        and apart from sections 20C, 20D and 20E, exceeds the section 20F rate
        adjustment; then:

   (c)  sections 20C, 20D and 20E do not apply; and

   (d)  the rate referred to in paragraph (b) is reduced by the section 20F
        rate adjustment.

(1A) If:

   (a)  the taxable income of a year of income of a taxpayer to whom section
        20C or 20D applies, or would apart from section 20E apply, consists of
        or includes a special income component; and

   (b)  the rate of tax for every $1 of the taxable income, as worked out
        under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of
        Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be,
        and apart from sections 20C, 20D and 20E, does not exceed the section
        20F rate adjustment; then:

   (c)  sections 20C, 20D and 20E do not apply; and

   (d)  the rate referred to in paragraph (b) is reduced to nil. 4 Subsection
        20F(2) Omit all the words after paragraph (d), substitute: and (e) the
        rate of tax for every $1 of the taxable income, as worked out under
        clause 3 of Part I of Schedule 12 and apart from sections 20C, 20D and
        20E, exceeds the section 20F rate adjustment; then:

   (f)  sections 20C, 20D and 20E do not apply; and

   (g)  the rate referred to in paragraph (e) is reduced by the section 20F
        rate adjustment. 5 After subsection 20F(2) Insert:

(2A) If:

   (a)  a trustee of a trust estate is liable to be assessed and to pay tax
        under section 98 of the Assessment Act in respect of a share of a
        resident beneficiary of the net income of the trust estate of a year
        of income; and

   (b)  Division 6AA of Part III of that Act applies to a part of that share;
        and

   (c)  that share consists of or includes a capital gains component; and

   (d)  section 20C or 20D applies, or would apart from section 20E apply, to
        the beneficiary; and

   (e)  the rate of tax for every $1 of the taxable income, as worked out
        under clause 3 of Part I of Schedule 12 and apart from sections 20C,
        20D and 20E, does not exceed the section 20F rate adjustment; then:

   (f)  sections 20C, 20D and 20E do not apply; and

   (g)  the rate referred to in paragraph (e) is reduced to nil. 6 Subsection
        20F(3) Insert: section 20F rate adjustment means:

   (a)  for the purposes of subsections (1) and (1A)Ðthe rate worked out using
        the formula:
Tax-free threshold increase x Lowest marginal rate of tax
Taxable income

   (b)  for the purposes of subsections (2) and (2A)Ðthe rate worked out using
        the formula:
Tax-free threshold increase x Lowest marginal rate of tax
Share of net income 7 Paragraphs 20G(1)(c), (2)(c), (3)(e) and (4)(e) Omit
"$5,400", substitute "the tax-free threshold" 8 After subsection 20G(2)
Insert:

(2A) If a taxpayer to whom subsection 20F(1A) applies in respect of a year of
income is liable to pay complementary tax under subsection 156(4A) of the
Assessment Act in respect of the whole or a part of the taxable income of the
year of income, the rate of complementary tax, as determined under subsection
12(3), is reduced by the rate worked out using the formula:
         Taxable income    x    Balance of section 20F rate adjustment

Deemed taxable income
from primary production 9 After subsection 20G(4) Insert:

(4A) If:

   (a)  a trustee of a trust estate is liable to be assessed and to pay tax
        under subsection 98(1) or (2) of the Assessment Act in respect of a
        beneficiary's share of the net income of a trust estate of the year of
        income; and

   (b)  subsection 20F(2A) applies in respect of that share; and

   (c)  the trustee is liable to pay complementary tax under subsection
        156(5A) of that Act in respect of the share; the rate of complementary
        tax, as determined under subsection 12(4), is reduced by the rate
        worked out using the formula:
     Share of net income   x   Balance of section 20F rate adjustment

Deemed taxable income
from primary production 10 Subsection 20G(5) (formula in the definition of
adjusted tax-free threshold) Repeal the formula, substitute:
Tax-free threshold + Tax-free threshold increase 11 Subsection 20G(5) Insert:
balance of section 20F rate adjustment, in relation to a taxpayer to whom
subsection 20F(1A) or (2A) applies, means the rate obtained by subtracting:

   (a)  the rate of tax for every $1 of the taxable income, as worked out
        under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of
        Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be,
        and apart from sections 20C, 20D and 20E; from:

   (b)  the section 20F rate adjustment. 12 Subsection 20G(5) Insert: section
        20F rate adjustment, in relation to a taxpayer to whom subsection
        20F(1A) or (2A) applies, has the same meaning as in whichever of those
        subsections applies to the taxpayer. 13 Subsection 20G(5) Insert:
        tax-free threshold means:

   (a)  $5,400; or

   (b)  if Division 4 applies to the taxpayer in respect of the year of
        incomeÐthe amount calculated under whichever of subsection 20(1) or
        20(2) applies to the taxpayer. 14 Application The amendments made by
        this Schedule apply in relation to the 1996-97 year of income and to
        all later years of income.