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ATO Interpretative Decision

ATO ID 2002/99

Income Tax
Norfolk Island Resident - Tax-free threshold

Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision Current

CautionCAUTION: 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, a resident of Norfolk Island, entitled to the tax-free threshold in Schedule 7 to the Income Tax Rates Act 1986 (the Rates Act)?


Yes. A Norfolk Island resident taxpayer is entitled to the tax-free threshold in Schedule 7 to the Rates Act as they are a resident of Australia for tax purposes.


The taxpayer is a Norfolk Island resident who receives Australian sourced income.

Reasons for Decision

The rates of tax on taxable income for resident taxpayers are contained in Part 1 of Schedule 7 to the Rates Act. The tax-free threshold applicable to resident taxpayers is defined in section 3 of the Rates Act.

The term 'resident taxpayer' is defined in section 3 of the Rates Act to be a taxpayer who is not a 'prescribed non-resident'. Section 3 of the Rates Act defines 'prescribed non-resident' as a person who, at all times during the year of income, is a non-resident, not being a person whom certain pensions, allowances or benefits are payable to and subject to tax in Australia.

Section 4 of the Rates Act provides that the Income Tax Assessment Act 1936 (ITAA 1936) is incorporated and shall be read as one with the Rates Act. As the term 'resident' is not further defined in the Rates Act it is necessary to look to the general definition of the term in section 6 of the ITAA 1936, which defines 'resident' or 'resident of Australia' as a person who resides in Australia.

Subsection 7A(2) of the ITAA 1936 provides that the ITAA 1936 has effect as if Norfolk Island were part of Australia.

As Norfolk Island is deemed to be part of Australia, a person who resides in Norfolk Island is deemed to reside in Australia and is therefore a resident of Australia for tax purposes.

Furthermore, as the taxpayer is not considered to be a non-resident, the definition of a prescribed non-resident under section 3 of the Rates Act is not satisfied and instead the definition of resident taxpayer is met. As a deemed resident taxpayer, the Norfolk Island resident is therefore entitled to apply the tax rates in Part I of Schedule 7 to the Rates Act, including the entitlement to the tax-free threshold.

Amendment History

Date of amendment Part Comment
10 June 2016 Reasons for decision Correction of typo,
Note: this ATO ID is not affected by changes to the law with effect from 1 July 2016 under Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015.
13 June 2014 Reasons for decision Updated legislative references and adjusted wording to better reflect the legislation and improve clarity.

Date of decision: 19 October 2001

Legislative references:
Income Tax Assessment Act 1936
   section 6
   subsection 7A(2)

Income Tax Rates Act 1986
   section 3
   section 4
   Schedule 7
   Schedule 7, Part 1

Norfolk Island
Tax free threshold

Siebel/TDMS reference number: DW296011; 1-5IL0GPW; 1-7T3A5TX

Business line: Small Business/Individual Taxpayers

Date of publication: 30 January 2002

ISSN: 1445-2782

ATO ID 2002/99 history   Top  
   Date   Version 
   19 October 2001   Original statement   
   13 June 2014   Updated statement   
 You are here ®  10 June 2016   Updated statement   


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