Exempt income! Why is it exempt?

exempt taxpayers - section 50.

Certain types of income will be exempt -section 51.

income which is exempt ONLY if it is derived by certain taxpayers - section 11-15.

Assessable income excludes Exempt income

See for yourself in section 6-1

(1) Assessable income consists of *ordinary income and *statutory income.

(2) Some *ordinary income, and some *statutory income, is *exempt income.

(3) *Exempt income is not assessable income.

(4) Some *ordinary income, and some *statutory income, is neither assessable income nor *exempt income.

You will be aware that the core provisions of the Act, specifically section 7-1, makes ordinary income exempt if:

Exempt taxpayer

it is derived by a person included in the list of exempt taxpayers (11-5 Entities that are exempt, no matter what kind of ordinary or statutory income they have). You will find section 11 in the core provisions of the Act. As usual, to get more detail, you go to the general provision, in this case, section 50-1 where you will find a list of such bodies that are exempt from paying tax on any type of income. You will not be surprised to find that they include entities involved in:

Charity, education, science and religion( section 50-5)

Community service (section 50-10)

Employer, employee (unions, etc) organisations (section 50-15)

Friendly Society bodies involved in finance (section (50-20)

Government (section 50-25)

Health (section 50-30)

Certain mining bodies (section 50-35);

Primary and secondary resources and tourism (section 50-40)

Sports, culture film and recreation (section 50-45)

exempt income:

that means the rest of us

Certain types of income will be exempt if they are referred to in an item in the list of exempt income - in fact there are 2 of these lists.

The first lists income, which is exempt, no matter whose it is (11-10 Ordinary or statutory income which is exempt, no matter whose it is). This is the core provision. Further details are provided in section 51, which is found in the general provisions. These include:

Exempt no matter who gets it

Certain Defence Force payments - section 51-5

Education and training payments - section 51-10. There will be more on this in a separate topic

Governors (section 51-15)

Aboriginal mining bodies (section 51-20)

Certain welfare payments (maintenance, rent subsidies and Handicapped Persons open employment incentive bonuses) - section 51-30

Payments to a full-time student at a school, college or university- section 51-35. There is a separate topic on scholarship payments

Payments to a secondary student - section 54-40

Maintenance payments to a spouse or child - section 51-50

Answer this question....

Are the pay and allowances received by members of the Army Reserve exempt from tax?

(Hint - refer sec 51-5)

Yes No

Exempt if specified persons or bodies derive the income

The second, lists income which is exempt ONLY if it is derived by certain taxpayers. 11-15 Ordinary or statutory income which is exempt only if it is derived by certain entities) This list includes a number of income items, eg Social Security and like payments and the divisions in which they will be found. Some of them will be examined in greater detail in other topics. It would be worth your while to have a look at the section 11-15 before continuing