EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO. 468
Issued by the authority of the Treasurer INCOME TAX ASSESSMENT ACT 1936
INCOME TAX REGULATIONS (Amendment)
Part 8 - Rebates in Respect of Certain Pensions and Benefits - in the Income Tax Regulations provides for the determination of the rebates of tax allowable under section 160AAA for the 1989-90 and subsequent income years.
Under the regulations different levels of the pensioner rebate of tax are available in respect of a year of income for -
married pensioners, where the pensioner receives the married-rate of pension during the year;
married pensioners, where the pensioner receives the single-rate of pension during the year, because the couple are unable to live together due to infirmity or illness? and
single pensioners, where the pensioner receives the single-rate of pension during the year.
The rebates allow a married pensioner couple to receive, in addition to the pension, a combined amount of non-pension income of $70 per week ($3,640 for a year) in 1989-90 and 1990-91, before becoming liable for tax. For single pensioners, the rebate allows them to receive in addition to the pension, $25 per week ($1,300 for the year) non-pension income in 1989-90, and $40 per week ($2,080 for the year) in 1990-91, before becoming liable for tax. For 1991-92 and subsequent years, the amount of the non-pension income that can be received by both married or single pensioners before becoming liable for tax will be subject to indexation, as provided for by the law that authorises the payment of the pension.
The level of each rebate is reduced where the taxable income of a pensioner exceeds a certain taxable income threshold. The threshold is, in effect, the maximum level of taxable income below which a pensioner is not required to pay income tax. The rebates shade-out at a rate of 12.5 cents for each dollar of taxable income in excess of the level of the threshold.
For married pensioners, any unused portion of a rebate can be transferred to the spouse.
A pensioner who is eligible for more than one level of rebate because, during the year of income, he or she receives more than one of the rates of pension outlined, is entitled to the rebate which gives the greatest benefit.
The amending regulations insert a new provision to allow married pensioners, who during a respite care period are in receipt of a single rate of pension, to be able to receive the pensioner rebate that is available where a pensioner couple are separated indefinitely due to infirmity or illness. For 1989-90, the rebate level for a single pensioner is $664, for a married pensioner, $530 and for a married pensioner living apart due to illness or infirmity, $773.
Details of the amending regulations are set out below.
Amendment
Regulation 1 states that the Income Tax Regulations are amended as set out in the amending Regulations.
Regulation 148 (Interpretation)
Regulation 2 amended Regulation 148 by extending definitions so that a married pensioner who is receiving the single rate of pension during a respite care period will be able to claim the higher rebate currently available to members of a pensioner couple who are unable to live together due to infirmity or illness. Subsection 47(2A) of the Veterans’ Entitlements Act 1986 and subsection 33(2A) of the Social Security Act 1947 authorise payment of the higher single rate of pension during a respite care period.
By subregulation 2.1 the definition of ‘separated-rate service pension’ was extended to include a rebatable pension paid to a person under the Veterans’ Entitlements Act 1986 at the rate specified in paragraph 47 (1) (a) of that Act, and where subsection 47 (2A) applies. This rate of pension may be paid to a pensioner couple where one or both are in respite care.
Subregulation 2.2 provides that the definition of ‘separated-rate social’ security pension’ is extended to include a rebatable pension paid to a person under the Social Security Act 1947 at the rate specified in paragraph 33(1) (a) of that Act, and where subsection 33(2A) applies. This rate of pension may be paid to a pensioner couple where one or both are in respite care.
Subregulations 2.3 and 2.4 made amendments to the definition of ‘single-rate service pension’ and ‘single-rate social security pension’ to exclude from these definitions, a rebatable pension paid at the single-rate to married pensioners who are living apart due to ill-health.
Application
By regulation 3 the amendments will apply to a year of income ending after 30 June 1989, i.e., for the 1989-90 and subsequent income years.