ATO Interpretative Decision
ATO ID 2002/210 (Withdrawn)
Low-Income Tax Offset - eligible termination payments (ETP)
FOI status: may be released
||This ATO ID is withdrawn from the database as it is a straight application of the law and does not contain an intepretative decision.
||This document has changed over time. View its history.
Status of this decision: Decision Withdrawn 13 June 2008
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Is the taxpayer entitled to the low-income tax offset under section 159N of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer receives an Eligible Termination Payment (ETP) during the year of income?
No. The taxpayer is not entitled to the low-income offset under section 159N of the ITAA 1936 as the ETP is included in the taxpayer's assessable income and consequently their taxable income exceeds the cut-out threshold.
The taxpayer received an ETP during the year of income and well as assessable income from other sources.
The ETP was made up of both a pre July 1983 component and a post June 1983 taxed element.
The taxpayer's taxable income (including the ETP) exceeded $24 450.
Reasons for Decision
Section 159N of the ITAA 1936 allows a tax offset to a taxpayer whose taxable income in a year income is less than $24 450. The rebate is $150, reduced by 4 cents for every $1 for the amount by which the taxable income of the year exceeds $20 700.
Section 6-10 of the Income Tax Assessment Act 1997 provides that amounts that are not ordinary income but are included in assessable income by another provision, are called statutory income and are also included in assessable income.
Subsection 27B(1) of the ITAA 1936 provides that assessable income includes the taxed element of the retained amount of a post-June 1983 component of an ETP. Section 27C of the ITAA 1936 includes in assessable income 5% of the retained amount of a pre-July 1983 component of an ETP.
The combination of the taxpayer's:
- post-June 1983 taxed element,
- 5% of the pre-July 1983 component, and
- other income and deductions,
results in a taxable income that exceeds $24 450.
Accordingly, the taxpayer is not entitled to a low-income tax offset under section 159N of the ITAA 1936.
Date of decision: 1 February 2002
Income Tax Assessment Act 1997
Income Tax Assessment Act 1936
Eligible termination payment
Low income rebates
Date of publication: 28 February 2002
|ATO ID 2002/210 (Withdrawn) history