Commonwealth: Treasury Laws Amendment (Personal Income Tax Plan) Act 2018 (Cth)

Treasury Laws Amendment (Personal Income Tax Plan) Act 2018 No. 47, 2018 Compilation No. 1 Compilation date: 15 October 2020 Includes amendments up to: Act No. 92, 2020 Registered: 27 October 2020 About this compilation This compilation This is a compilation of the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018 that shows the text of the law as amended and in force on 15 October 2020 (the compilation date). The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law. Application, saving and transitional provisions for provisions and amendments If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law. Self-repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents 1 Short title 2 Commencement 3 Schedules Schedule 1—Low and Middle Income tax offset and Low Income tax offset Part 1—Main amendments Income Tax Assessment Act 1997 Part 2—Related amendments Income Tax Assessment (1936 Act) Regulation 2015 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Schedule 2—Personal income tax reform Part 1—Main amendments Income Tax Rates Act 1986 Part 2—Related amendments Income Tax Rates Act 1986 Income Tax (Transitional Provisions) Act 1997 Endnotes Endnote 1—About the endnotes Endnote 2—Abbreviation key Endnote 3—Legislation history Endnote 4—Amendment history An Act to amend the law relating to taxation, and for related purposes 1 Short title This Act is the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provisions Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 21 June 2018 2. Schedule 1, Parts 1 and 2 The first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives the Royal Assent. 1 July 2018 4. Schedule 2, Parts 1 and 2 The first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives the Royal Assent. 1 July 2018 Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedules Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Note: The provisions of the Income Tax Assessment (1936 Act) Regulation 2015 amended or inserted by this Act, and any other provisions of that Regulation, may be amended or repealed by regulations made under section 266 of the Income Tax Assessment Act 1936 (see subsection 13(5) of the Legislation Act 2003). 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). Amount of your tax offset Item If your relevant income: The amount of your tax offset is: 1 does not exceed $37,000 $200 2 exceeds $37,000 but is not more than $48,000 $200, plus an amount equal to 3% of the excess 3 exceeds $48,000 but is not more than $90,000 $530 4 exceeds $90,000 but is not more than $125,333 $530, less an amount equal to 1.5% of the excess 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). Amount of your tax offset Item If your relevant income: The amount of your tax offset is: 1 does not exceed $37,000 $645 2 exceeds $37,000 but is not more than $41,000 $645, less an amount equal to 6.5% of the excess 3 exceeds $41,000 but is not more than $66,667 $385, less an amount equal to 1.5% of the excess 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. Part 2—Related amendments Income Tax Assessment (1936 Act) Regulation 2015 2 Section 4 (definition of 159N rebate maximum amount) Repeal the definition, substitute: 159N rebate maximum amount means $445. 3 Section 4 (definition of 159N rebate reduction rate) Repeal the definition, substitute: 159N rebate reduction rate means 0.015. 4 Section 4 (definition of 159N rebate reduction threshold) Repeal the definition, substitute: 159N rebate reduction threshold means $37,000. Income Tax Assessment Act 1936 5 After subsection 159N(2) Insert: (2A) Subsection (1) does not apply for the 2022‑23 year of income or a later year of income. Note: This section will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Income Tax Assessment Act 1997 6 Section 13‑1 (table item headed "low income earner") Omit: general................................. 159N substitute: general................................. Subdivision 61‑D tax offset for 2021‑22 income year and earlier income years 159N 7 At the end of subsection 63‑10(1) Add: Note 7: Item 17 of the table will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Taxation Administration Act 1953 8 Section 45‑340 in Schedule 1 (method statement, step 1, before paragraph (a)) Insert: (aa) section 61‑110 of the Income Tax Assessment Act 1997 (the Low Income tax offset); or 9 Section 45‑375 in Schedule 1 (method statement, step 1, before paragraph (a)) Insert: (aa) section 61‑110 of the Income Tax Assessment Act 1997 (the Low Income tax offset); or Schedule 2—Personal income tax reform Part 1—Main amendments Income Tax Rates Act 1986 1 Paragraph 1(b) of Part I of Schedule 7 Repeal the paragraph, substitute: (b) for each part of the ordinary taxable income specified in the table applicable to the year of income—the rate applicable under that table. 2 Clause 1 of Part I of Schedule 7 (table) Repeal the table, substitute: Tax rates for resident taxpayers for the 2018‑19, 2019‑20, 2020‑21 or 2021‑22 year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 exceeds the tax‑free threshold but does not exceed $37,000 19% 2 exceeds $37,000 but does not exceed $90,000 32.5% 3 exceeds $90,000 but does not exceed $180,000 37% 4 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for resident taxpayers for the 2022‑23 or 2023‑24 year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 exceeds the tax‑free threshold but does not exceed $41,000 19% 2 exceeds $41,000 but does not exceed $120,000 32.5% 3 exceeds $120,000 but does not exceed $180,000 37% 4 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2026 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for resident taxpayers for the 2024‑25 year of income or a later year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 exceeds the tax‑free threshold but does not exceed $41,000 19% 2 exceeds $41,000 but does not exceed $200,000 32.5% 3 exceeds $200,000 45% 3 Paragraph 4(a) of Part I of Schedule 7 After "the table in clause 1", insert "that is applicable to the year of income". 4 Paragraph 1(b) of Part II of Schedule 7 Repeal the paragraph, substitute: (b) for each part of the ordinary taxable income specified in the table applicable to the year of income—the rate applicable under that table. 5 Clause 1 of Part II of Schedule 7 (table) Repeal the table, substitute: Tax rates for non‑resident taxpayers for the 2018‑19, 2019‑20, 2020‑21 or 2021‑22 year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 does not exceed $90,000 The second resident personal tax rate 2 exceeds $90,000 but does not exceed $180,000 37% 3 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for non‑resident taxpayers for the 2022‑23 or 2023‑24 year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 does not exceed $120,000 The second resident personal tax rate 2 exceeds $120,000 but does not exceed $180,000 37% 3 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2026 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for non‑resident taxpayers for the 2024‑25 year of income or a later year of income Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 does not exceed $200,000 The second resident personal tax rate 2 exceeds $200,000 45% 6 Paragraph 4(a) of Part II of Schedule 7 After "the table in clause 1", insert "applicable to the year of income". 7 Clause 4 of Part II of Schedule 7 (example) Repeal the example. 8 Clause 1 of Part III of Schedule 7 Omit "following table", substitute "table that is applicable to the year of income". 9 Clause 1 of Part III of Schedule 7 (table) Repeal the table, substitute: Tax rates for working holiday makers for the 2018‑19, 2019‑20, 2020‑21 or 2021‑22 year of income Item For the part of the taxpayer's working holiday taxable income that: The rate is: 1 does not exceed $37,000 15% 2 exceeds $37,000 but does not exceed $90,000 32.5% 3 exceeds $90,000 but does not exceed $180,000 37% 4 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2024 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for working holiday makers for the 2022‑23 or 2023‑24 year of income Item For the part of the taxpayer's working holiday taxable income that: The rate is: 1 does not exceed $41,000 15% 2 exceeds $41,000 but does not exceed $120,000 32.5% 3 exceeds $120,000 but does not exceed $180,000 37% 4 exceeds $180,000 45% Note: The above table will be repealed on 1 July 2026 by the Treasury Laws Amendment (Personal Income Tax Plan) Act 2018. Tax rates for working holiday makers for the 2024‑25 year of income or a later year of income Item For the part of the taxpayer's working holiday taxable income that: The rate is: 1 does not exceed $41,000 15% 2 exceeds $41,000 but does not exceed $200,000 32.5% 3 exceeds $200,000 45% Part 2—Related amendments Income Tax Rates Act 1986 10 Subsection 3(1) (definition of second resident personal tax rate) Repeal the definition, substitute: second resident personal tax rate means the rate mentioned in item 2 of the table in clause 1 of Part I of Schedule 7 that is applicable to the year of income. 11 Subsections 20(1) and (2) After "table", insert "applicable to the year of income". 12 Paragraphs 28(b), 28A(b) and 29(2)(a) After "table", insert "applicable to the year of income". 13 Part IV Repeal the Part. 14 Repealed law continues for relevant years of income Despite the repeal of Part IV of the Income Tax Rates Act 1986 by this Part, that Part continues to apply, in relation to assessments for a temporary budget repair levy year, as if that repeal had not happened. Note: The temporary budget repair levy years are the years of income corresponding to the 2014‑15, 2015‑16 and 2016‑17 financial years (see former section 32 of the Income Tax Rates Act 1986). 15 Subparagraph 2(b)(ii) of Division 2 of Part I of Schedule 8 Repeal the subparagraph, substitute: (ii) the words "exceeds the tax‑free threshold but" were omitted from item 1 of the table applicable to the year of income in Part I of Schedule 7. 16 Paragraph 2(b) of Part I of Schedule 10 Repeal the paragraph, substitute: (b) the words "exceeds the tax‑free threshold but" were omitted from item 1 of the table applicable to the year of income in Part I of Schedule 7. Income Tax (Transitional Provisions) Act 1997 17 Subsection 4‑11(2) (note) Repeal the note. Endnotes Endnote 1—About the endnotes The endnotes provide information about this compilation and the compiled law. The following endnotes are included in every compilation: Endnote 1—About the endnotes Endnote 2—Abbreviation key Endnote 3—Legislation history Endnote 4—Amendment history Abbreviation key—Endnote 2 The abbreviation key sets out abbreviations that may be used in the endnotes. Legislation history and amendment history—Endnotes 3 and 4 Amending laws are annotated in the legislation history and amendment history. The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation. The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law. Editorial changes The Legislation Act 2003 authorises First Parliamentary Counsel to make editorial and presentational changes to a compiled law in preparing a compilation of the law for registration. The changes must not change the effect of the law. Editorial changes take effect from the compilation registration date. If the compilation includes editorial changes, the endnotes include a brief outline of the changes in general terms. Full details of any changes can be obtained from the Office of Parliamentary Counsel. Misdescribed amendments A misdescribed amendment is an amendment that does not accurately describe the amendment to be made. If, despite the misdescription, the amendment can be given effect as intended, the amendment is incorporated into the compiled law and the abbreviation "(md)" added to the details of the amendment included in the amendment history. If a misdescribed amendment cannot be given effect as intended, the abbreviation "(md not incorp)" is added to the details of the amendment included in the amendment history. Endnote 2—Abbreviation key ad = added or inserted o = order(s) am = amended Ord = Ordinance amdt = amendment orig = original c = clause(s) par = paragraph(s)/subparagraph(s) C[x] = Compilation No. x /sub‑subparagraph(s) Ch = Chapter(s) pres = present def = definition(s) prev = previous Dict = Dictionary (prev…) = previously disallowed = disallowed by Parliament Pt = Part(s) Div = Division(s) r = regulation(s)/rule(s) ed = editorial change reloc = relocated exp = expires/expired or ceases/ceased to have renum = renumbered effect rep = repealed F = Federal Register of Legislation rs = repealed and substituted gaz = gazette s = section(s)/subsection(s) LA = Legislation Act 2003 Sch = Schedule(s) LIA = Legislative Instruments Act 2003 Sdiv = Subdivision(s) (md) = misdescribed amendment can be given SLI = Select Legislative Instrument effect SR = Statutory Rules (md not incorp) = misdescribed amendment Sub‑Ch = Sub‑Chapter(s) cannot be given effect SubPt = Subpart(s) mod = modified/modification underlining = whole or part not No. = Number(s) commenced or to be commenced Endnote 3—Legislation history Act Number and year Assent Commencement Application, saving and transitional provisions Treasury Laws Amendment (Personal Income Tax Plan) Act 2018 47, 2018 21 June 2018 Sch 1 (items 1–9) and Sch 2 (items 1–17): 1 July 2018 (s 2(1) items 2, 4) Sch 1 (items 10–20) and Sch 2 (items 18–21): Repealed before commencing (s 2(1) items 3, 5) Sch 2 (items 22–25): 1 July 2026 (s 2(1) item 6) Remainder: 21 June 2018 (s 2(1) item 1) Treasury Laws Amendment (A Tax Plan for the COVID‑19 Economic Recovery) Act 2020 92, 2020 14 Oct 2020 Sch 1 (items 28–31): 15 Oct 2020 (s 2(1) item 6) — Endnote 4—Amendment history Provision affected How affected s 2..................... am No 92, 2020 Schedule 1 Part 3................... rep No 92, 2020 item 10.................. rep No 92, 2020 item 11.................. rep No 92, 2020 item 12.................. rep No 92, 2020 item 13.................. rep No 92, 2020 item 14.................. rep No 92, 2020 item 15.................. rep No 92, 2020 item 16.................. rep No 92, 2020 item 17.................. rep No 92, 2020 item 18.................. rep No 92, 2020 item 19.................. rep No 92, 2020 item 20.................. rep No 92, 2020 Schedule 2 Part 3................... rep No 92, 2020 item 18.................. rep No 92, 2020 item 19.................. rep No 92, 2020 item 20.................. rep No 92, 2020 item 21.................. rep No 92, 2020 item 22.................. rep No 92, 2020 item 23.................. rep No 92, 2020 item 24.................. rep No 92, 2020 item 25.................. rep No 92, 2020