Commonwealth Consolidated Acts

TAX LAWS AMENDMENT (2006 MEASURES NO. 3) ACT 2006 - SCHEDULE 6

A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999

1   At the end of subsection 10(1)

Add:

Note:   Subdivision   61 - L (tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 might provide a tax offset for a person if Medicare levy surcharge is payable by the person.

Income Tax Assessment Act 1936

2   At the end of subsection 251S(1)

Add:

Note:   Subdivision   61 - L (tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 might provide a tax offset for a person if Medicare levy surcharge (within the meaning of that Act) is payable by the person.

Income Tax Assessment Act 1997

3   Section   13 - 1 (table item headed "lump sum income arrears")

Repeal the item, substitute:

4   At the end of Division   61

Add:

Subdivision   61 - L -- Tax offset for Medicare levy surcharge (lump sum payments in arrears)

Guide to Subdivision   61 - L

61 - 575   What this Subdivision is about

You may get a tax offset under this Subdivision if:

Table of sections

Operative provisions

61 - 580   Entitlement to a tax offset

61 - 585   The amount of a tax offset

61 - 590   Definition of MLS lump sums

Operative provisions

61 - 580   Entitlement to a tax offset

Tax offset for MLS lump sums paid to you

  (1)   You are entitled to a * tax offset for the * current year if:

  (a)   you are an individual; and

  (b)   * Medicare levy surcharge is payable by you for the current year because of:

  (i)   section   8B, 8C or 8D of the Medicare Levy Act 1986 ; or

  (ii)   the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 ; and

  (c)   your assessable income or * exempt foreign employment income for the current year includes one or more * MLS lump sums paid to you; and

  (d)   the total of the MLS lump sums paid to you is greater than or equal to one - eleventh of the total of the following amounts:

  (i)   your normal taxable income (within the meaning of section   159ZR of the Income Tax Assessment Act 1936 ) for the current year;

  (ii)   your exempt foreign employment income for the current year;

  (iii)   your * reportable fringe benefits total for the current year;

  (iv)   the amounts that would be included in your assessable income for the current year if, and only if, subsection 271 - 105(1) (family trust distribution tax) in Schedule   2F to the Income Tax Assessment Act 1936 were ignored.

Note:   The test in paragraph   (d) is similar to the 10% test in paragraph 159ZRA(1)(b) of the Income Tax Assessment Act 1936 , which also deals with a tax offset for lump sum payments in arrears.

Tax offset for MLS lump sums paid to your spouse

  (2 )   You are also entitled to a * tax offset for the * current year if:

  (a)   during all or part of the current year, you were married to an individual (within the meaning of section   3 of the Medicare Levy Act 1986 or section   7 of the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 ); and

  (b)   the individual is entitled to a tax offset for the current year under subsection   (1); and

  (c)   * Medicare levy surcharge is payable by you for the current year because of:

  (i)   section   8D of the Medicare Levy Act 1986 ; or

  (ii)   Division   4 of Part   3 of the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 ;

    (which are about Medicare Levy surcharge for individuals who are married); and

  (d)   you are not entitled to a tax offset for the current year under subsection   (1); and

  (e)   less of the Medicare levy surcharge referred to in paragraph   (c) would be payable by you for the current year if the * MLS lump sums paid to the individual referred to in paragraph   (a) were disregarded.

61 - 585   The amount of a tax offset

  (1)   The amount of a * tax offset under subsection 61 - 580(1) is the amount worked out using the following formula:

where:

"total Medicare levy surcharge" means the total of the * Medicare levy surcharge referred to in paragraph 61 - 580(1)(b) that is payable by you for the * current year.

"total non-arrears Medicare levy surcharge" means the amount that would be the total Medicare levy surcharge if the * MLS lump sums paid to you (and the MLS lump sums paid to the individual referred to in paragraph 61 - 580(2)(a)) were disregarded.

  (2)   The amount of a * tax offset under subsection 61 - 580(2) is the amount worked out using the following formula:

where:

"total family Medicare levy surcharge" means the total of the * Medicare levy surcharge referred to in paragraph 61 - 580(2)(c) that is payable by you for the * current year.

"total non-arrears family Medicare levy surcharge" means the amount that would be the total family Medicare levy surcharge if the * MLS lump sums referred to in paragraph 61 - 580(2)(e) were disregarded.

61 - 590   Definition of MLS lump sums

    Both of the following are MLS lump sums paid to an individual:

  (a)   a lump sum payment of eligible income (within the meaning of section   159ZR of the Income Tax Assessment Act 1936 ) that is included in the individual's assessable income for the * current year (but only to the extent that it accrued in an earlier income year);

  (b)   a lump sum payment that is included in the individual's * exempt foreign employment income for the current year (but only to the extent that it accrued during a period ending more than 12 months before the date on which it was paid).

5   Subsection 995 - 1(1)

Insert:

"exempt foreign employment income" means amounts that are exempt from tax under section   23AF or 23AG of the Income Tax Assessment Act 1936 .

6   Subsection 995 - 1(1)

Insert:

"Medicare levy surcharge" means:

  (a)   an amount (other than a nil amount) of Medicare levy (within the meaning of Part   VIIB of the Income Tax Assessment Act 1936 ) that is payable by you only because of section   8B, 8C, 8D, 8E, 8F or 8G of the Medicare Levy Act 1986 ; or

  (b)   surcharge within the meaning of the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 .

7   Subsection 995 - 1(1)

Insert:

"MLS lump sums" has the meaning given by section   61 - 590.

Income Tax (Transitional Provisions) Act 1997

8   After Part   2 - 15

Insert:

Part   2 - 20 -- Tax offsets

Division   61 -- Generally applicable tax offsets

Table of Subdivisions

61 - L   Tax offset for Medicare levy surcharge (lump sum payments in arrears)

Subdivision   61 - L -- Tax offset for Medicare levy surcharge (lump sum payments in arrears)

Table of Sections

61 - 575   Application of Subdivision   61 - L of the Income Tax Assessment Act 1997

61 - 575   Application of Subdivision   61 - L of the Income Tax Assessment Act 1997

    Subdivision   61 - L (Tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 applies to assessments for the 2005 - 06 income year and later income years.

Medicare Levy Act 1986

9   At the end of section   5

Add:

Note:   Subdivision   61 - L (tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 might provide a tax offset for a person if Medicare levy surcharge (within the meaning of that Act) is payable by the person.

Taxation Administration Act 1953

10   Section   45 - 340 in Schedule   1 (method statement, step 1, after paragraph   (d))

Insert:

11   Section   45 - 375 in Schedule   1 (method statement, step 1, after paragraph   (c))

Insert: