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Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014

Schedule 1 Temporary budget repair levy

   

Income Tax Assessment Act 1997

1  At the end of subsection 4-10(3)

Add:

Note 3:       Section 4-11 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section.

Income Tax (Transitional Provisions) Act 1997

2  At the end of Division 4

Add:

4-11   Temporary budget repair levy

Temporary budget repair levy

             (1)  You must pay extra income tax ( temporary budget repair levy ) for a financial year if:

                     (a)  you are an individual; and

                     (b)  your taxable income for the corresponding income year exceeds $180,000; and

                     (c)  the financial year is a temporary budget repair levy year.

Note:          This section will also affect the income tax payable by some trustees who are taxed as if certain trust income were income of individuals. See sections 98 and 99 of the Income Tax Assessment Act 1936 .

Amount of temporary budget repair levy

             (2)  Your temporary budget repair levy is worked out by reference to your taxable income for the corresponding income year using the rate or rates that apply to you.

Note:          See Part IV of the Income Tax Rates Act 1986 .

Interaction with other provisions

             (3)  For the purpose of working out your income tax for the financial year:

                     (a)  section 4-10 of the Income Tax Assessment Act 1997 has effect as if it made you liable to pay the extra tax mentioned in subsection (1) of this section; and

                     (b)  subsection 4-10(3) of that Act has effect as if step 4 of the method statement in that subsection were omitted and the following were substituted:

Step 3A. Subtract your tax offsets from your basic income tax liability.

For the list of tax offsets, see section 13-1.

Step 3B. Add the extra income tax you must pay as mentioned in subsection 4-11(1) of the Income Tax (Transitional Provisions) Act 1997 .

Step 4.   If an amount of your tax offset for foreign income tax under Division 770 remains after applying section 63-10, subtract the remaining amount from the result of step 3B. The result is how much income tax you owe for the financial year.

             (4)  To avoid doubt, temporary budget repair levy is not included in your basic income tax liability.

Note:          As a result, you cannot apply any tax offsets against temporary budget repair levy under Part 2-20 of the Income Tax Assessment Act 1997 (apart from the foreign income tax offset applied under step 4 of the method statement in subsection (3)).

Meaning of temporary budget repair levy year

             (5)  Each of the following is a temporary budget repair levy year :

                     (a)  the 2014-15 financial year;

                     (b)  the 2015-16 financial year;

                     (c)  the 2016-17 financial year.