Income Tax Act (No. 2) 1945

Legislation au C1945A00038 Not in force Act

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INCOME TAX (No. 2).

 

No. 38 of 1945.

An Act to amend the Income Tax Act 1945.

[Assented to 11th October, 1945.]

BE it enacted by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title and citation.

1.—(1.) This Act may be cited as the Income Tax Act (No. 2) 1945.

(2.) The Income Tax Act 1945, as amended by this Act, may be cited as the Income Tax Acts 1945.

Commencement.

2. This Act shall come into operation on the day on which it receives the Royal Assent.


Rates of income tax.

3. Section four of the Income Tax Act 1945 is amended—

(a) by omitting sub-sections. (1.) and (2.) and inserting in their stead the following sub-sections:—

“(1.) The rate of income tax in respect of a taxable income derived from personal exertion shall be half the sum of the rates which would be applicable if Parts I. and II. of the First Schedule to this Act both applied in respect of that taxable income.

“(2.) The rate of income tax in respect of a taxable income derived from property shall be half the sum of the rates which would be applicable if Parts I. and II. of the Second Schedule to this Act both applied in respect of that taxable income.”; and

(b) by omitting from sub-section (9.) the word “Ten” (twice occurring) and inserting in its stead the word “Five”.

Levy of income tax.

4. Section six of the Income Tax Act 1945 is amended by adding at the end of sub-section (2.) the following words:—

“except that—

(a) the rate of income tax in respect of a taxable income derived from personal exertion shall be as set out in Part II. of the First Schedule to this Act; and

(b) the rate of income tax in respect of a taxable income derived from property shall be as set out in Part II. of the Second Schedule to this Act.”.

The First Schedule.

5. The First Schedule to the Income Tax Act 1945 is amended—

(a) by inserting immediately under the second heading the sub-heading “Part I.”; and

(b) by adding at the end thereof the following Part:—

“Part II.

If the taxable income does not exceed £200, the rate of tax shall be nil.

If the taxable income exceeds £200 but does not exceed £300, the rate of tax for every pound of taxable income up to and including £200 shall be 3 pence, and the rate of tax for every pound of taxable income in excess of £200 shall be 36.15 pence increasing uniformly by .15 of one penny for every pound by which the taxable income exceeds £201.

If the taxable income exceeds £300 but does not exceed £1,000 the rate of tax for every pound of taxable income up to and including £300 shall be 19 pence and the rate of tax for every pound of taxable income in excess of £300 shall be 66.01 pence increasing uniformly by .01 of one penny for every pound by which the taxable income exceeds £301.

If the taxable income exceeds £1,000 but does not exceed £2,000 the rate of tax for every pound of taxable income up to and including £1.000 shall be 56.8 pence and the rate of tax for every pound of taxable income in excess of £1,000 shall be 80.03 pence increasing uniformly by .03 of one penny for every pound by which the taxable income exceeds £1,001.

If the taxable income exceeds £2,000 but does not exceed £3,000 the rate of tax for every pound of taxable income up to and including £2,000 shall be 83.4 pence and the rate of tax for every pound of taxable income in excess of £2,000 shall be 140.013 pence increasing uniformly by .013 of one penny for every pound by which the taxable income exceeds £2,001.


If the taxable income exceeds £3,000 but does not exceed £5,000 the rate of tax for every pound of taxable income up to and including £3,000 shall be 106.6 pence and the rate of tax for every pound of taxable income in excess of £3,000 shall be 166.004 pence increasing uniformly by .004 of one penny for every pound by which the taxable income exceeds £3,001.

If the taxable income exceeds £5,000 the rate of tax for every pound of taxable income up to and including £5,000 shall be 133.56 pence and the rate of tax for every pound of taxable income in excess of £5,000 shall be 182 pence.”.

The Second Schedule.

6. The Second Schedule to the Income Tax Act 1945 is amended—

(a) by inserting immediately under the second heading the subheading “Part I.”; and

(b) by adding at the end thereof the following Part:—

“Part II.

If the taxable income does not exceed £200, the rate of tax shall be nil.

If the taxable income exceeds £200 but does not exceed £300 the rate of tax for every pound of taxable income up to and including £200 shall be 3 pence and the rate of tax for every pound of taxable income in excess of £200 shall be 48.21 pence increasing uniformly by .21 of one penny for every pound by which the taxable income exceeds £201.

If the taxable income exceeds £300 but does not exceed £1,000 the rate of tax for every pound of taxable income up to and including £300 shall be 25 pence and the rate of tax for every pound of taxable income in excess of £300 shall be 90.01 pence increasing uniformly by .01 of one penny for every pound by which the taxable income exceeds £301.

If the taxable income exceeds £1,000 but does not exceed £2,000 the rate of tax for every pound of taxable income up to and including £1,000 shall be 75.4 pence and the rate of tax for every pound of taxable income in excess of £1,000 shall be 104.03075 pence increasing uniformly by .03075 of one penny for every pound by which the taxable income exceeds £1,001.

If the taxable income exceeds £2,000 but does not exceed £5,000 the rate of tax for every pound of taxable income up to and including £2,000 shall be 105.075 pence and the rate of tax for every pound of taxable income in excess of £2,000 shall be 165.50275 pence increasing uniformly by .00275 of one penny for every pound by which the taxable income exceeds £2,001.

If the taxable income exceeds £5,000 the rate of tax for every pound of taxable income up to and including £5,000 shall be 146.28 pence and the rate of tax for every pound of taxable income in excess of £5,000 shall be 182 pence.”.

The Third Schedule.

7. The Third Schedule to the Income Tax Act 1945 is amended—

(a) by omitting from paragraph (a) the words “under the First Schedule” and inserting in their stead the words “,at the rate which would be applicable under this Act,”;and

(b) by omitting from paragraph (b) the words “under the Second Schedule” and inserting in their stead the words “, at the rate which would be applicable under this Act,”.

The Fourth Schedule.

8. The Fourth Schedule to the Income Tax Act 1945 is amended—

(a) by omitting from paragraph (a) the words “under the First Schedule” and inserting in their stead the words “,at the rate which would be applicable under this Act,”; and

(b) by omitting from paragraph (b) the words “under the Second Schedule” and inserting in their stead the words “,at the rate which would be applicable under this Act,”.

The Fifth Schedule.

9. The Fifth Schedule to the Income Tax Act 1945 is amended—

(a) by omitting from paragraph (a) the words “under the First Schedule” and inserting in their stead the words at the rate which would be applicable under this Act,”; and

(b) by omitting from paragraph (b) the words “under the Second Schedule” and inserting in their stead the words “, at the rate which would be applicable under this Act,”.

The Sixth Schedule.

10. The Sixth Schedule to the Income Tax Act 1945 is amended by omitting the words “under the First, Second, Third, Fourth or Fifth Schedule, as the case requires” and inserting in their stead the words “, at the rate which would be applicable under this Act”.

 

Overview

The Income Tax Act (No. 2) 1945 was enacted by the Australian Parliament to amend the Income Tax Act 1945, addressing the need for adjustments in income tax rates and structures in response to the economic conditions of the time. This legislation aimed to provide a more equitable tax system by introducing new income tax rates and modifying the existing tax brackets. The primary objective of the Act was to streamline and update the income tax system to better suit the economic climate and to ensure a fairer distribution of the tax burden among different income earners. This Act, assented to on 11th October 1945, set new tax rates and structures that were intended to reflect the economic realities and needs of the post-war period.

Scope and Application

The Income Tax (No. 2) Act 1945 amends the Income Tax Act 1945 and applies to all individuals and entities whose income is subject to income tax under the Commonwealth of Australia. This Act establishes the rates of income tax for personal exertion and property, with specific graduated rates detailed in the First and Second Schedules. The Act's application is nationwide, binding all taxpayers within Australia's jurisdiction, regardless of their location within the states or territories. Notably, the Act does not explicitly state exclusions, exemptions, or thresholds beyond those defined within the schedules, which outline tax rates based on the amount of taxable income. The Act may be further elaborated or refined through subordinate instruments, such as regulations or rules, which could provide additional clarity or adjustments to the implementation of the tax rates set forth in the schedules.

Key Provisions

The Income Tax (No. 2) Act 1945 amends the Income Tax Act 1945 by introducing new income tax rates for personal exertion and property incomes, as well as modifying the levy of income tax. Section 3 of the Act alters the calculation of tax rates for incomes derived from personal exertion and property. Specifically, it mandates that the income tax rate for personal exertion be half the sum of the rates applicable if both Parts I and II of the First Schedule applied (section 3(a)(i)) and similarly for property income under the Second Schedule (section 3(a)(ii)). Additionally, section 3(b) reduces the threshold for income tax applicability from £10 to £5. The obligations imposed by this Act require taxpayers to calculate their income tax based on the new rates set out in the amended schedules. For personal exertion, taxpayers must determine their income tax by applying the rates specified in Part II of the First Schedule, which vary according to the amount of income exceeding certain thresholds (section 4). Similarly, for income from property, taxpayers must use the rates in Part II of the Second Schedule (section 4). The Act does not explicitly state any new offences, penalties, or consequences for non-compliance within the provided text. However, given that the Act amends existing legislation, it is reasonable to infer that the existing penalties for non-compliance, such as fines or imprisonment, would still apply. The exact penalties would be governed by the general provisions of the Income Tax Act 1945 or other relevant legislation.

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Taxation Law
Instrument
Act
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Commencement Provisions
Offence Provisions
Levy of Income Tax
Rates of Income Tax

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.