Income Tax Rates Amendment Act (No. 1) 1997

Administered by Department of the Treasury

Legislation au C2004A05217 Not in force Act

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Income Tax Rates Amendment Act (No. 1) 1997

Act No. 124 of 1997 as amended

This compilation was prepared on 17 November 2000

[This Act was amended by Act No. 83 of 1999

Amendments from Act No. 83 of 1999

[Schedule 10 (item 63) amended Schedule 1 (item 2)
Schedule 10 (item 63) commenced immediately after 15 September 1997]

Prepared by the Office of Legislative Drafting,
Attorney‑General’s Department, Canberra

 

 

 

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Family tax initiative

Income Tax Rates Act 1986

Schedule 2—Technical amendments

Income Tax Rates Act 1986

 

An Act to amend the Income Tax Rates Act 1986, and for related purposes

[Assented to 15 September 1997]

1  Short title

  This Act may be cited as the Income Tax Rates Amendment Act (No. 1) 1997.

2  Commencement

  This Act commences on the day on which it receives the Royal Assent.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

 

Schedule 1—Family tax initiative

Income Tax Rates Act 1986

1  Paragraph 12(7)(a) (definition of B)

After “subsection (3)”, insert “, Division 5 of Part II”.

2  Paragraph 12(8)(a) (definition of B)

After “subsection (4)”, insert “, Division 5 of Part II”.

3  Subsection 20F(1)

Repeal the subsection, substitute:

 (1) If:

 (a) the taxable income of a year of income of a taxpayer to whom section 20C or 20D applies, or would apart from section 20E apply, consists of or includes a special income component; and

 (b) the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E, exceeds the section 20F rate adjustment;

then:

 (c) sections 20C, 20D and 20E do not apply; and

 (d) the rate referred to in paragraph (b) is reduced by the section 20F rate adjustment.

 (1A) If:

 (a) the taxable income of a year of income of a taxpayer to whom section 20C or 20D applies, or would apart from section 20E apply, consists of or includes a special income component; and

 (b) the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E, does not exceed the section 20F rate adjustment;

then:

 (c) sections 20C, 20D and 20E do not apply; and

 (d) the rate referred to in paragraph (b) is reduced to nil.

4  Subsection 20F(2)

Omit all the words after paragraph (d), substitute:

 and (e) the rate of tax for every $1 of the taxable income, as worked out under clause 3 of Part I of Schedule 12 and apart from sections 20C, 20D and 20E, exceeds the section 20F rate adjustment;

then:

 (f) sections 20C, 20D and 20E do not apply; and

 (g) the rate referred to in paragraph (e) is reduced by the section 20F rate adjustment.

5  After subsection 20F(2)

Insert:

 (2A) If:

 (a) a trustee of a trust estate is liable to be assessed and to pay tax under section 98 of the Assessment Act in respect of a share of a resident beneficiary of the net income of the trust estate of a year of income; and

 (b) Division 6AA of Part III of that Act applies to a part of that share; and

 (c) that share consists of or includes a capital gains component; and

 (d) section 20C or 20D applies, or would apart from section 20E apply, to the beneficiary; and

 (e) the rate of tax for every $1 of the taxable income, as worked out under clause 3 of Part I of Schedule 12 and apart from sections 20C, 20D and 20E, does not exceed the section 20F rate adjustment;

then:

 (f) sections 20C, 20D and 20E do not apply; and

 (g) the rate referred to in paragraph (e) is reduced to nil.

6  Subsection 20F(3)

Insert:

section 20F rate adjustment means:

 (a) for the purposes of subsections (1) and (1A)—the rate worked out using the formula:

 (b) for the purposes of subsections (2) and (2A)—the rate worked out using the formula:

7  Paragraphs 20G(1)(c), (2)(c), (3)(e) and (4)(e)

Omit “$5,400”, substitute “the tax-free threshold”

8  After subsection 20G(2)

Insert:

 (2A) If a taxpayer to whom subsection 20F(1A) applies in respect of a year of income is liable to pay complementary tax under subsection 156(4A) of the Assessment Act in respect of the whole or a part of the taxable income of the year of income, the rate of complementary tax, as determined under subsection 12(3), is reduced by the rate worked out using the formula:

9  After subsection 20G(4)

Insert:

 (4A) If:

 (a) a trustee of a trust estate is liable to be assessed and to pay tax under subsection 98(1) or (2) of the Assessment Act in respect of a beneficiary’s share of the net income of a trust estate of the year of income; and

 (b) subsection 20F(2A) applies in respect of that share; and

 (c) the trustee is liable to pay complementary tax under subsection 156(5A) of that Act in respect of the share;

the rate of complementary tax, as determined under subsection 12(4), is reduced by the rate worked out using the formula:

10  Subsection 20G(5) (formula in the definition of adjusted tax-free threshold)

Repeal the formula, substitute:

11  Subsection 20G(5)

Insert:

balance of section 20F rate adjustment, in relation to a taxpayer to whom subsection 20F(1A) or (2A) applies, means the rate obtained by subtracting:

 (a) the rate of tax for every $1 of the taxable income, as worked out under clause 2 or 3 of Part I of Schedule 7, clause 2 of Part I of Schedule 9 or clause 3 of Part I of Schedule 11, as the case may be, and apart from sections 20C, 20D and 20E;

from:

 (b) the section 20F rate adjustment.

12  Subsection 20G(5)

Insert:

section 20F rate adjustment, in relation to a taxpayer to whom subsection 20F(1A) or (2A) applies, has the same meaning as in whichever of those subsections applies to the taxpayer.

13  Subsection 20G(5)

Insert:

tax-free threshold means:

 (a) $5,400; or

 (b) if Division 4 applies to the taxpayer in respect of the year of income—the amount calculated under whichever of subsection 20(1) or 20(2) applies to the taxpayer.

14  Application

The amendments made by this Schedule apply in relation to the 1996-97 year of income and to all later years of income.


Schedule 2—Technical amendments

Income Tax Rates Act 1986

1  Section 20B (definition of lowest marginal rate of tax)

Omit “Part 1”, substitute “Part I”.

2  Section 20C

Omit “Part 1” (wherever occurring), substitute “Part I”.

3  Section 20D

Omit “Part 1” (wherever occurring), substitute “Part I”.

4  Section 20E

Omit “Part 1” (wherever occurring), substitute “Part I”.

5  Section 20F

Omit “Part 1” (wherever occurring), substitute “Part I”.

6  Subsection 20G(5) (definition of tax-free threshold increase)

Omit “Part 1”, substitute “Part I”.

7  Section 20H

Omit “Part 1” (wherever occurring), substitute “Part I”.

8  Subsection 20J(1)

Omit “Part 1” (wherever occurring), substitute “Part I”.

9  Subsection 20U(1)

Omit “Part 1” (wherever occurring), substitute “Part I”.

10  Application

The amendments made by this Schedule apply in relation to the 1996-97 year of income and to all later years of income.

 

Overview

The Income Tax Rates Amendment Act (No. 1) 1997, enacted by the Australian Parliament, addresses issues with income tax rates and provides technical amendments to the Income Tax Rates Act 1986. This Act was introduced to make changes in response to identified gaps in the tax system, specifically targeting the family tax initiative and rectifying inconsistencies in the application of certain tax provisions. The policy objective is to ensure that tax rates and thresholds are correctly applied and that the tax system supports families, particularly those with children. The Act amends various sections of the Income Tax Rates Act 1986 to reflect these changes, applying from the 1996-97 year of income onwards.

Scope and Application

The Income Tax Rates Amendment Act (No. 1) 1997 amends the Income Tax Rates Act 1986 to modify various sections and definitions related to income tax rates, specifically targeting the family tax initiative and including technical amendments. This Act applies to individuals and entities whose income tax is governed by the Income Tax Rates Act 1986, including taxpayers, trustees of trust estates, and beneficiaries of those trusts. It has a national jurisdictional reach, as it is a Commonwealth Act. The amendments made by the Act apply to the 1996-97 year of income and all subsequent years. The Act allows for further extensions or restrictions through subordinate instruments, ensuring that the provisions can be updated as necessary to reflect changes in tax policy or economic conditions.

Key Provisions

The Income Tax Rates Amendment Act (No. 1) 1997 (Act) amends the Income Tax Rates Act 1986 (ITRA) to introduce a family tax initiative and make technical amendments. The Act's provisions are set out in Schedules 1 and 2. Schedule 1 focuses on the family tax initiative, while Schedule 2 contains technical amendments to the ITRA. Schedule 1 introduces amendments to the ITRA that apply from the 1996-97 income year onwards. These amendments include changes to the definitions of certain terms (sections 1 and 2), adjustments to the tax rate calculations for special income components (sections 3 and 4), and modifications to the complementary tax provisions (sections 8 and 9). Additionally, Schedule 1 includes provisions to calculate the section 20F rate adjustment (section 6) and adjust the tax-free threshold (sections 7 and 10). Schedule 2 contains technical amendments to the ITRA, updating references to "Part 1" to "Part I" in various sections (sections 1 to 9) and making a minor adjustment to the definition of "tax-free threshold increase" (section 6). These amendments also apply from the 1996-97 income year onwards. The Act imposes several obligations on taxpayers and trustees of trust estates. Taxpayers are required to calculate their taxable income and applicable tax rates according to the amended provisions of the ITRA, particularly in relation to special income components and complementary tax. Trustees of trust estates must also determine the applicable tax rates for beneficiaries' shares of net income and adjust the complementary tax accordingly. These obligations ensure that taxpayers and trustees comply with the updated tax provisions. Breach of the obligations imposed by the Act may result in civil consequences. For instance, taxpayers who fail to accurately calculate their tax liability or trustees who do not correctly apply the complementary tax provisions may be liable for additional taxes, interest, and penalties. The specific penalties for non-compliance are not detailed in the Act but are governed by the general provisions of the ITRA and the Income Tax Assessment Act 1997. These penalties can include fines and interest on unpaid taxes. While the Act does not explicitly outline criminal penalties for breach, severe or repeated non-compliance with tax laws may potentially lead to criminal charges under other relevant legislation.

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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.