The New Business Tax System (Capital Gains Tax) Act 1999 inserted the following measures into the Income Tax Assessment Act 1997 (ITAA 1997):

Indexation is not available for CGT assets acquired after 11.45 a.m. by legal time in the ACT on 21 September 1999 (the start time). For CGT events happening after that time to CGT assets acquired at or before that time, the individual may choose indexation frozen as at 30 September 1999 or the general CGT discount. If a CGT asset is acquired at or before the start time and further expenditure is incurred in relation to that asset after that time, indexation of that part of the cost base is not available. Neither indexation nor the CGT discount is available if the CGT asset was owned for less than 12 months. If the CGT asset is acquired after the start time only the CGT discount is available.

If an individual makes a capital gain from a CGT event happening after the start time to a CGT asset acquired after that time, the individual may be eligible for the CGT discount in Division 115 of ITAA 1997. The CGT discount means that 50 per cent of the discount capital gain (calculated without any indexation of the cost base) after it has been reduced by current year capital losses and prior year net capital losses is included in assessable income. The CGT asset must have been acquired at least 12 months before the CGT event giving rise to the capital gain. There are also rules to prevent circumvention of the 12 month requirement.

For a CGT event happening after the start time to a CGT asset acquired at or before that time and owned for at least 12 months an individual may choose to claim the CGT discount. In working out the net capital gain for the year of income, the capital gain (after applying capital losses) is reduced by 50 per cent. Both current year capital losses and prior year net capital losses must be applied to reduce current year capital gains before applying the CGT discount. Certain CGT events, such as where new assets are created, do not qualify for the CGT discount. These are CGT events D1, D2, D3, E9, F1, F2, F5, H2, J2, J3 and K1. The CGT discount is applied before any of the small business CGT concessions.

There are 4 small business CGT concessions now contained in Division 152 of ITAA 1997 which may apply to CGT events that happen after the start time if certain conditions are satisfied. These are:

• the small business 15 year exemption
• the small business 50 per cent active asset reduction
• the small business retirement exemption; and
• the small business roll-over.

For more information—refer to the publication Small business capital gains tax concessions. In most cases the small business 15 year exemption will not apply to CGT events that happen before 20 September 2000. The small business 50 per cent active asset reduction may apply to all CGT assets that are active assets (including goodwill of a business) and replaces the 50 per cent concession previously available in section 118-250 of ITAA 1997 for goodwill of a business. The previous small business roll-over and retirement exemption provisions and 50 per cent goodwill concession (Division 123, Subdivision 118-F and section 118-250 of ITAA 1997 respectively) continue to apply to CGT events happening before the start time.

New subdivision 124-M of ITAA 1997 provides, with effect from 10 December 1999, for a CGT roll-over—that is, deferral of any capital gain, when certain interests in companies and trusts are exchanged for interests in another entity, typically as the result of a takeover. This roll-over allows the capital gains liability otherwise arising on the disposal of the original interests to be deferred until a CGT event happens to the replacement interests. Treasurer’s Press Release No. 87 issued on 10 December 1999 announced that legislation to give effect to cost base rules for assets acquired by an interposed entity from the exchanging taxpayer in a takeover or merger will be introduced as soon as possible following consultation. A further announcement will also be made following a review of some other aspects of the scrip for scrip roll-over provisions.

With effect from the 1999-2000 income year, the New Business Tax System (Income Tax Rates) Act (No. 2) 1999 removes the CGT averaging concession. In the 1999-2000 income year, transitional measures in the Act provide a reduction to basic income tax liability if you had made a capital gain from a CGT event happening between 1 July 1999 and the start time. It ensures, as far as practicable, that the income tax payable in relation to capital gains from CGT events before the start time is the same as it would have been if capital gains tax averaging had not been removed.

The New Business Tax System (Capital Allowances) Act 1999 amended Income Tax Assessment Act 1997 (ITAA 1997) to remove plant from the CGT regime and include in assessable income under the depreciation provisions in Division 42 of ITAA 1997 the excess of disposal proceeds over the cost base of the plant, indexed to 30 September 1999. It also provides for a balancing charge offset for involuntary disposals of plant to replace the current CGT roll-over relief for such disposals. The amendments apply to balancing adjustment events (such as the disposal of plant) occurring after the start time.

In Treasurer’s Press Release No. 74 of 1999 issued on 11 November 1999 the following further measures were announced: At the time of printing legislation has not yet been introduced into Parliament to implement these measures.

The existing law will be amended to extend the scope of what is defined as an involuntary disposal for capital gains tax roll-over purposes and will establish the same treatment for a compulsory acquisition by a private acquirer as for a public acquirer if the former has recourse to a statutory power. The amendment will not, however, apply to compulsory acquisitions of minority interests under the Corporations Law. Roll-over will also apply if a landowner whose land is compulsorily subject to a mining lease sells the land to the mining company and acquires a replacement asset if the mining operation would significantly affect the landowner’s use of the land. The measure is intended to apply to involuntary disposals after 1.00 p.m. Australian eastern daylight saving time on 11 November 1999.

Measures will be introduced to provide ongoing relief for roll-overs, with effect from 1 July 2001, into companies and fixed trusts. Ongoing relief will be provided for the transfer of all assets, or the transfer of an entire business, from an individual, partnership or joint venture of individuals to a company or fixed trust. The underlying economic interests in the assets or business must remain unchanged and the tax values of the assets immediately after the transfer is completed must be the same as before the transfer. This measure will commence from 1 July 2001.

The New Business Tax System (Integrity and Other Measures) Act 1999 inserted the following measures into ITAA 1997:

Taxation Laws Amendment Bill (No. 11) 1999, if enacted by Parliament as introduced, will correct unintended consequences made by the rewrite of the CGT provisions from the Income Tax Assessment Act 1936 (ITAA 1936) into the ITAA 1997 by the Tax Law Improvement Project. The corrections will apply to assessments for the 1998-99 and later income years and are the second instalment of corrections after those contained in Taxation Laws Amendment Act (No. 4) 1999.

Taxation Laws Amendment Act (No. 4) 1999, which received Royal Assent on 16 July 1999, inserted a rewrite of the capital gains tax rules about:

• CGT asset register entries that eliminate the need for business taxpayers to keep source documents after 5 years
• the small business retirement exemption and the small business rollover provisions.

The Act also inserted a provision to exempt any capital gain made as a result of reimbursements or payments of expenses under the M4/M5 Cashback Scheme for tolls paid on the M4 and M5 toll roads.

Eligible managed investment schemes and their members are provided relief from any unintended taxation consequences caused by changing the scheme’s two tier manager and trustee structure to a single responsible entity structure as required under the Managed Investments Act 1998, effective 1 July 1998. Managed investment schemes that change their structure to become a registered scheme in accordance with the Managed Investments Act 1998 and members of such schemes may be eligible for capital gains tax relief. Refer to Taxation Laws Amendment Act (No. 7) 1999, which received Royal Assent on 22 September 1999, and Taxation Laws Amendment Bill (No. 10) 1999.

The Taxation Laws Amendment (Demutualisation of Non-Insurance Mutual Entities) Act 1999, which received Royal Assent on 16 July 1999, introduced a generic taxation framework applying to demutualisations of mutual non-insurance organisations completed on or after 12 May 1998. Features of the new framework include:

• its application to a demutualisation that occurs under one of three specified methods
• a requirement that the interests of members in the mutual organisation be extinguished in exchange for ordinary shares
• a need for broad continuity of beneficial interest to be maintained
• the deferral of any capital gains tax liability until the disposal of the demutualisation shares or interests in them; and
• the establishing, for CGT purposes, of the date and cost of acquisition of shares acquired by former members as part of the demutualisation process.

For most assets acquired after 7.30 p.m. on 13 May 1997, the cost base is reduced by the amount of any expenditure that is deductible. The cost base is not reduced if the deduction is reversed by an amount being included in the taxpayer’s assessable income or that would be included apart from a provision of the Income Tax Assessment Act which provides relief from including a balancing charge in the taxpayer’s assessable income.

If the taxpayer acquired land, or a building before 13 May 1997, but incurred expenditure after 13 May 1997 which section 160P of ITAA 1936 would have treated as a separate asset from the land or building, the cost base is not reduced by the amount of deductible expenditure as long as the taxpayer incurred the expenditure before 1 July 2000. For example, land acquired before 13 May 1997 where expenditure is incurred before 1 July 2000 on construction on the land of a rental property.

The cost base is also reduced where the taxpayer claims a heritage conservation rebate or landcare and water facility rebate—rather than a tax deduction—for expenditure incurred on or after 12 November 1998.

These changes to the law are contained in the Taxation Laws Amendment Act (No. 2) 1998 (Act No. 16 of 1999) which received Royal Assent on 8 April 1999.

As part of Business tax reform there have been significant changes to depreciation and prepayment rules. However these may not affect small business taxpayers in this income year.

A prepayment is a payment you made in this income year for things that will be done for you, or provided to you, in a future income year. There have been changes to the rules about when you can claim a deduction for some prepayments you incurred after 11.45 a.m. AEST on 21 September 1999.

Affected prepayments can now only be deducted in an income year to the extent that the payment for the item purchased was in that income year.

The following prepayments are not affected by the change (and will be treated in the same way as they would have been before the changes were made):

• any prepayment that is not incurred in carrying on a business
• any prepayment incurred by a small business taxpayer—for a definition of small business taxpayer—see page xx
• any prepayment incurred after 11.45 a.m. AEST, 21 September 1999 but in accordance with a contractual obligation that existed before that time to make that prepayment, but only if you cannot unilaterally escape that obligation; or
• any prepayment that is excluded expenditure—that is, an amount below $1000, an amount required to be incurred by law, or an amount of salary or wages.

Such prepayments can be divided into 2 parts:

• part 1 relating to something to be done within the same income year; and
• part 2 relating something to be done in future income years.

The first part is deductible in the same income year. Under the changes, the second part would only be deductible in future years but the transitional rule allows you to deduct 80 per cent of that part in the first income year and the remaining 20 per cent in the next income year.

Changes are also proposed which would broadly cover prepayments made in relation to a tax shelter arrangement.

A lease assignment is an arrangement entered into by the lessor which avoids tax that would be payable in the latter period of a lease of depreciable plant when the lease begins to generate positive taxable income. New rules ensure that certain amounts of consideration received in connection with a lease assignment are included in the assignor’s assessable income. These rules apply to plant, which has been used principally for leasing, or an interest in such plant, disposed of on or after 22 February 1999.

Several measures in the New Business Tax System (Capital Allowance) Act 1999 relating to the depreciation system apply from 11.45 a.m. AEST, 21 September 1999. These measures generally do not affect small business taxpayers who satisfy certain conditions—see Small business taxpayers on page x. The changes are:

• the removal of accelerated depreciation for depreciable assets acquired after 11.45 a.m. AEST, 21 September 1999 except for small business taxpayers satisfying certain conditions
• the accelerated depreciation system being replaced with a system where depreciation rates are fixed by reference to the effective life of the asset
• the introduction of the ability to reassess the effective life of depreciable assets acquired after 11.45 a.m. AEST, 21 September 1999
• the removal of the option to offset any assessable balancing adjustment amount against replacement plant for disposals occurring after 11.45 a.m. AEST, 21 September 1999 for all taxpayers except small business taxpayers
• the introduction of the option to offset any assessable balancing adjustment amount against replacement plant for certain involuntary disposals occurring after 11.45 a.m. AEST, 21 September 1999
• the removal of depreciable assets from the CGT regime for disposals occurring after 11.45 a.m. AEST, 21 September 1999 and treating any gains or losses as an additional balancing adjustment; and
• the introduction of depreciation deductions for the cost of an indefeasible right to use an international telecommunications submarine cable system (IRUs). The measures apply to expenditure incurred after 11.45 a.m. AEST, 21 September 1999 on IRUs over new cables.

For more information refer to the Guide to depreciation. To find out how to get a copy see the inside back cover.

The following measures, that apply from 11.45 a.m. AEST, 21 September 1999, are interim measures pending the introduction of a Simplified Tax System for small business taxpayers, which is to commence on 1 July 2001. At the time of printing legislation for the Simplified Tax System had not been introduced into Parliament.

The key features of the Simplified Tax System are:

• cash accounting rather than accruals
• a simplified depreciation system
• a simplified treatment of trading stock.

For the period 21 September 1999 to 30 June 2001, small business taxpayers, who meet certain eligibility requirements, will retain the following:

• accelerated depreciation for plant and equipment used in their business activities, when certain conditions are met—see page xx
• immediate deduction for plant costing $300 or less
• balancing adjustment offsetting
• continued access to the 13 month rule for prepayments other than prepayments in relation to tax shelter arrangements—see Prepayments on page xx.

The following conditions must be met to retain access to accelerated rates of depreciation:

• the entity must be a small business taxpayer for the income year that includes the time when the entity first used the plant or first had it installed ready for use
• at least 50 per cent of the plant's intended use must be in carrying on a business for the purpose of producing assessable income.

Neither of the following conditions apply:

• it could reasonably be expected that, because of the plant’s use, whether or not with other assets, the entity would not be a small business taxpayer for the next income year or either of the next 2 income years after that
• the plant is being, or is intended to be predominantly leased. This does not include a hire purchase agreement or short-term hire agreement.

Note: Accelerated depreciation will not be available to a small business if that item of plant is part of the start-up of a major business or major expansion of an existing business.

A small business taxpayer is a taxpayer who carries on a business during the income year and either:

• the taxpayer’s average turnover for the year is less than $1 million or
• where the taxpayer chooses to recalculate their average turnover for an income year before 2001–2002 income year based on a reasonable estimate, and it is less than $1 million.

A taxpayer's average turnover for an income year is the average of the taxpayer's group turnovers for the year and the preceding 2 years if any. Taxpayers can only average the years in which they carry on a business, except where they are winding up a business. For example, if a taxpayer has carried on a business for the current and previous year only, the taxpayer would average only those 2 years. A taxpayer is taken to be carrying on a business in a year if the taxpayer is winding up a business they formerly carried on and the taxpayer was a small business taxpayer at the time that they stopped carrying on the business.

To determine average turnover a small business taxpayer’s turnover will be grouped with the entities it controls or is controlled by. These grouping measures are based on those that apply under the CGT roll-over relief for small business. A taxpayer’s group turnover for an income year means the sum of the values of all supplies of goods and services that the taxpayer and its controlling or controlled entities made during the year to third parties in the ordinary course of carrying on a business, exclusive of GST payable on supplies.

Under new legislation contained in Division 1A of Part III of ITAA 1936, which was enacted during 1999–2000, new rules apply to stop franking credit trading and misuse of the intercorporate dividend rebate. The main effect of these provisions is the introduction of:

• a holding period rule which, subject to certain exceptions, requires taxpayers to hold shares at risk for more than 45 days (or 90 days for preference shares) before qualifying for a franking benefit or intercorporate dividend rebate; and
• a related payments rule which requires taxpayers who are under an obligation to make a related payment in relation to a dividend to hold the relevant shares at risk for more than 45 days (or 90 days for preference shares) during the relevant qualification period before qualifying for a franking benefit or intercorporate dividend rebate.

Broadly stated, a taxpayer must satisfy both the holding period and related payments rules in order to be treated as a qualified person in relation to a dividend. A taxpayer that is a qualified person is entitled to a franking credit, franking rebate or intercorporate dividend rebate. If a taxpayer fails the holding period rule and the related payments rule does not apply to them, they may still be entitled to a franking rebate if they qualify for the small shareholder exemption. The small shareholder exemption imposes a maximum franking rebate ceiling on all their franking rebate entitlements in a given year. In 1998–1999 the ceiling was $2000 but under proposed legislation it is to increase.

The holding period rule applies to shares and interests in shares acquired on or after 1 July 1997, unless the taxpayer had become contractually obliged to acquire the shares before 7.30 p.m. AEST on 13 May 1997.

The related payments rule applies to arrangements entered into on or after 7:30 p.m. AEST on 13 May 1997. Shares or interests in shares acquired before that time are caught under the rule if the arrangement is entered into after 7.30 p.m. AEST on 13 May 1997.

Special rules apply for beneficiaries of certain trusts. These rules apply to:

• shares or interests in shares which were acquired by a trust (other than a widely held public share trading trust) after 3 p.m. AEST on 31 December 1997; and
• widely held public share trading trusts established after 3 p.m. AEST on 31 December 1997.
• .

The Government intends to rectify an anomaly in the capital allowance provisions in relation to property acquired under hire purchase or limited recourse finance arrangements. Proposed amendments to legislation were introduced into Parliament in 1998 and have been reintroduced in Taxation Laws Amendment Bill (No. 5) 1999.

The broad impact of the proposed amendments is:

• new Division 240 of the Income Tax Assessment Act 1997. This would treat hire purchase and instalment sales as the equivalent of a sale of property by the financier/hire purchase company the notional seller to the hire purchaser the notional buyer. The sale would be treated as being financed by a loan from the notional seller to the notional buyer, at a sale price of either the agreed cost or value, or the property’s arm’s length value. This would apply to hire purchase transactions entered into after 27 February 1998
• owners of property who transfer title to the property merely by way of security under a chattel mortgage or other charge over the property would continue to be treated as owners for the purposes of capital allowances
• new Division 243 of the Income Assessment Act 1997 would ensure that deductions for capital allowances, such as depreciation, would not exceed the total actual capital expenditure where that expenditure is financed or refinanced wholly or partly by limited recourse debt (including hire purchase). Division 243 would apply where :
• the limited recourse debt is terminated but has not been paid in full by the debtor and
• because the debt has not been paid in full, the capital allowance deductions allowed for the expenditure exceed the deductions that would be allowable if the unpaid amount of the debt was not counted as capital expenditure of the taxpayer. Special rules apply in working out whether the debt has been fully paid.

Proposed Division 243 would apply to limited recourse arrangements which terminate after 27 February 1998.

On 1 July 1999 the penalty arrangements for late payment and other obligations were rationalised and simplified pursuant to the Taxation Laws Amendment Act (No 3) 1999.

This has been done by the introduction of a uniform, tax deductible general interest charge (GIC). The GIC is a penalty that is levied on outstanding amounts due to the ATO.

Section 8AAD of the Taxation Administration Act 1953 determines the rate of the charge. It is based on the relevant 13-week Treasury Note rate plus 8 percentage points. The daily rate can be calculated by dividing this sum by the number of days in a calendar year.

In 1999–2000 financial year, the daily compounding rate will only be applied to PAYE, PPS, RPS and Sales Tax.

For all other taxes, the Commissioner of Taxation will exercise his discretion to apply an annual simple interest rate.

The GIC is updated quarterly (refer table below).

Quarter GIC annual rate GIC daily rate

July–September 1999 12.72 % 0.0348493 %

October–December 1999 12.73 % 0.0348767 %

January–March 2000 13.08 % 0.0357377 %

From 1 July 2000, goods and services tax (GST) will be payable on taxable supplies. Entities that are registered for GST purposes will be entitled to input tax credits for their creditable acquisitions.

For income tax purposes, GST will be excluded from assessable income, exempt income and from amounts received or receivable that are taken into account in calculating income and deductions. Outgoings will be reduced by the amount of input tax credit entitlement. These rules apply only if you are registered for GST purposes.

In accordance with the A New Tax System (Goods and Services Transition) Act 1999, GST may be payable in relation to income derived before 1 July 2000, and input tax credit entitlements may arise in relation to outgoings incurred before that date.

Income derived before 1 July 2000 must exclude the GST payable (relating to that income) that is attributable to the first GST tax period after that date. Similarly, outgoings incurred before 1 July 2000 must be reduced by the amount of input tax credit entitlement (relating to those outgoings) that is attributable to the first GST tax period after that date.

To assist in the implementation of GST, a $200 Direct Assistance Certificate is provided to businesses that have a turnover of less than $10 million and register for the GST before 31 May 2000. The face value of a GST Direct Assistance Certificate ($200) will not be assessable income of the recipient. Legislation to ensure these certificates will be exempt from income tax is scheduled to be introduced into Parliament in the Taxation Laws Amendment Bill (No. 6) 2000.

The certificate can be used to purchase:

• computer hardware and software products prior to 30 June 2000
• training services and financial or accounting advice prior to 31 October 2000 that may assist in preparing for the GST.

A number of suppliers of these products have been registered and approved for this purpose by the GST Start-Up Assistance Office.

If a small business person uses the certificate to pay for computer hardware or software to be used for the purposes of producing assessable income, they are entitled to a deduction for depreciation. The amount of the deduction is based on the cost of the item, which is generally the cost of the item to the business. Using the certificate to pay for the item will not affect the cost of the item to the business. For example, if the business buys a computer for $2000 and pays for it with a certificate for $200 and cash of $1800, the cost of the item to the business is $2000 and depreciation will be calculated on that amount. New measures affecting deductions for GST-related expenditure are detailed below.

A deduction is allowable for expenditure of a revenue nature that businesses may incur in gearing up for GST. Revenue expenditure that qualifies for an immediate deduction would include new stationery, professional advice on complying with GST obligations and training and hiring of staff.

An immediate deduction for the cost of plant or software acquired or upgraded to prepare for the commencement of GST is also allowable if:

• the taxpayer incurs the expenditure between 1 July 1999 and 30 June 2000
• the taxpayer is carrying on a business that has an annual turnover of not more than $10 million
• the taxpayer uses the new plant or software or has it installed ready for use during the period 1 July 1999 and 30 June 2000
• one of the reasons the plant was acquired or upgraded was to prepare for the commencement of GST; and
• the business is registered for GST immediately before 1 July 2000.

For example:

• a business taxpayer has cash registers that cannot comply with GST requirements. The taxpayer acquires new cash registers on 30 April 2000 so that they can provide their customers with the information required for GST purposes. The cost of the new cash registers is immediately deductible
• a taxpayer who already has a computerised system buys new software and upgrades existing software during the 1999-2000 income year to be able to comply with GST and PAYG obligations. The taxpayer’s existing computer hardware is not capable of operating the new software in an efficient way and a new computer is acquired in April 2000 that can. The cost of the new software, the upgraded software and the computer is immediately deductible.

A failure to notify (FTN) penalty applies when the tax payer fails to notify the ATO of the amount of tax instalments deducted during a quarter. The FTN penalty is calculated at a rate of 8 per cent per annum of the amount not notified. To avoid this penalty you should notify the Tax Office of the amount due to be paid even if the taxpayer cannot pay the full amount by the due date.

If the taxpayer is unable to make the payment contact us on 13 2866 before the due date to notify the amount of the tax instalments deducted for the period and negotiate a payment arrangement.

From 1 July 2000, gifts and donations made to an organisation are only tax deductible to the donor when the organisation is endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR), or specifically named in the income tax law. All receipts for gifts issued by a DGR should include its Australian Business Number and the name of the gift fund, and state that the receipt is for a gift. DGR status will be shown on the Australian Business Register. This will enable members of the public to check whether their gifts and donations are being made to a DGR—and hence are tax deductible.

On 11 November 1999 the Treasurer announced, in Press Release No. 74 of 1999, integrity measures to contribute to the fairness and equity of the tax system.

These measures include:

• limiting the extent to which non-commercial losses can be offset against other income and
• restricting the ability of individuals to reduce tax by diverting the income they earn from personal services to an entity (a company, trust or partnership).

Both measures will commence from 1 July 2000. However, at the time of preparing these instructions, legislation had not been introduced into Parliament.

The ATO has discovered an anomaly in the calculation of the personal superannuation contribution rebate for a small number of taxpayers. It occurs when there is a profit and loss from the same partnership, which involves both primary production and non-primary production. See page xx of these instructions for further details.

A prepayment is a payment the taxpayer made in this income year for things that will be done for them, or provided to them, in a future income year. There have been changes to the rules about when the taxpayer can claim a deduction for some payments they incurred after 11.45 a.m.AEST on 21 September 1999.

Affected prepayments can now only be deducted in an income year to the extent that the thing the payment was for, is done in that income year.

The following prepayments are not affected by the changes (and will be treated in the same way as they would have been before the changes were made):

• any prepayment that is not incurred in carrying on a business
• any prepayment incurred by a small business taxpayer—see the previous definition of small business taxpayer
• any prepayment incurred after 11.45 a.m.AEST on 21 September 1999 but in accordance with a contractual obligation that existed BEFORE that time to make that prepayment, but only if you cannot unilaterally escape that obligation or
• any prepayment that is excluded expenditure—that is, an amount below $1000, an amount required to be incurred by law, or an amount of salary or wages.

Note : There is a transitional rule for affected prepayments incurred in the income year that includes 21 September 1999 that would previously have been immediately deductible within the 13-month rule. This will usually be in the 1999-2000 income year but may be different if you have a substituted accounting period.

Such prepayments can be divided into 2 parts:

• part 1, relating to something to be done within the same income year and
• part 2, relating to something to be done in future income years.

The first part is deductible in the same income year. Under the changes, the second part would only be deductible in future years but the transitional rule allows the taxpayer to deduct 80 per cent of that part in the first income year and the remaining 20 per cent in the next income year.

Changes are also proposed which would broadly cover prepayments made in relation to a tax shelter arrangement.

The Government announced in the Treasurer’s Press Release No. 10 of 22 February 1999 that it intended to address any exploitation of deficiencies in the current business tax system in relation to assignment of leases or interests in leased plant.

The new rules are included in new Division 45 of ITAA 1997 and will apply to plant, which has been used principally for leasing, or an interest in such plant, disposed of on or after 22 February 1999.

A lease assignment is an arrangement entered into by the lessor which avoids tax that would be payable in the later period of a lease of depreciable plant when the lease begins to generate positive taxable income. The proposed measure will ensure that all forms of consideration received in connection with a lease assignment are included in the assignor’s assessable income.

The new rules will include in the lessor’s assessable income any excess of the money consideration and value of other benefits obtained from disposing of the plant or an interest in the plant, over the plant’s written down value or the relevant proportion thereof. Where a lessor disposes of rights under the lease of the plant without disposing of the plant itself, the lessor’s assessable income will include the money consideration for the disposal plus the value of other benefits obtained as a result of the disposal.

Under proposed legislation the Government has introduced a number of taxation measures to encourage taxpayers to donate to certain funds, authorities and institutions. The proposals are contained in the Taxation Laws Amendment (Polictical Donations) Bill 1999 and Taxation Laws Amendment Bill (No.8) 1999. They are:

• a deduction is allowable for a gift of property valued by the Commissioner at more than $5000 made to certain private funds, authorities and institutions, to public funds and to political parties. The relevant funds, authorities and institutions include charities, approved overseas aid funds, school building funds and cultural organisations. Gifts to political parties are subject to a deduction limit of $1500
• a deduction is allowable for donations made to prescribed private funds. These funds are listed in the Income Tax Assessment Regulations
• taxpayers who make gifts under the Cultural Gifts Program may choose to apportion the deduction over a maximum of 5 income years. An election must be lodged with the Secretary of the Department of Communications, Information Technology and the Arts who administers the Cultural Gifts Program. Further information about the Cultural Gifts Program and the election can be obtained from the Department of Communications, Information Technology and the Arts
• taxpayers who make gifts to environmental organisations may choose to apportion the deduction over a maximum of 5 income years. An election must be lodged with the Secretary of the Department of the Environment and Heritage. Further information about making gifts to environmental organisations and the election can be obtained from the Department of the Environment and Heritage
• an exemption from capital gains tax applies for testamentary gifts of property to certain funds, authorities and institutions and to political parties, unless the property is reacquired for less than market value by the estate, a beneficiary of the estate or an associate. For more information see Guide to capital gains tax which is available from the ATO
• an exemption from capital gains tax applies for gifts of property under the Cultural Gifts Program unless the property is reacquired for less than the market value by the donor or an associate. For more information refer to the Guide to capital gains tax.

The Government has proposed legislation to allow deductions of between $2 and $1500 for both contributions to registered political parties and gifts to independent candidates and Members of Parliament. See item D7—Gifts or donations on page xx of these instructions.

The Government has introduced fringe Benefits Tax (FBT) changes from 1 April 1999, as part of its tax reform package A New Tax System. These changes require employers to keep records of the taxable value of certain fringe benefits provided to each employee. Where the total taxable value of the fringe benefits for an employee exceeds $1000 in an FBT year, the employer is required to report the grossed-up amount on the employee’s group certificate.

The amount reported on group certificates will not be included in assessable (or taxable) income or affect the amount of standard Medicare levy payable. The total will, however, be used for determining deductions and rebates for personal superannuation contributions, liability to superannuation contributions surcharge, termination payments surcharge and Medicare levy surcharge, entitlement to income tested government benefits and concessions, child support obligations and Higher Education Contribution Scheme (HECS) repayments.

Income tax is not paid on reportable fringe benefits.

The small business roll-over relief and retirement exemption will apply to land and buildings integral to an entity’s business even when they are owned by an entity different to the one operating the business. These measures were announced by the Federal Government on 13 August 1998 and are to be effective for such disposals of land and buildings after that date. At the date of publishing these instructions, legislation to give effect to this announcement had not been enacted by Parliament.

The ATO has designed a special taxi driver takings and expenses summary form to help taxpayers keep proper records of their earnings and expenses if they operate a taxi. The form should be filled out at the end of each shift and taxpayers should keep receipts to support their expenses. The form records the driver’s name and:

• the shift details—that is, date, day/shift (day or night), operator’s name and the kilometres traveled during the shift
• gross earnings—cash, credit and total
• expenses—pay-in, fuel/wash costs, other expenses (by description and amount), and total expenses; and
• net expenses, shown in the final column.

Although the form is not compulsory, the ATO recommends its use within the industry. Taxi driving earnings and expenses should be recorded in the Business and professional items schedule 2000—tax agents. The credit for any tax credit vouchers that have been purchased should be recorded at item C1—Income tax credit vouchers. Refer to page 10 on the tax return.

As part of its tax reform package, the Government announced that trustees of closely held trusts will be required to disclose to the Commissioner of Taxation the identity of ultimate beneficiaries presently entitled to net income and tax-preferred amounts to which a trustee beneficiary is presently entitled. The disclosure must be made within a specified period after the end of the relevant income year.

These requirements apply to present entitlements created after 4.00 p.m. on 13 August 1998.

Where the trustee of a closely held trust does not correctly identify the ultimate beneficiaries of net income within the specified period, tax—referred to as ultimate beneficiary non-disclosure tax (UBNT)—is imposed on that part of the net income of the trust at the top marginal rate plus Medicare levy. Tax is imposed at the same rate if there is no such ultimate beneficiary of that part of the net income. Where the trustee does not disclose the ultimate beneficiaries of tax-preferred amounts, tax is not imposed, but there may be offences under the Taxation Administration Act 1953.

If an individual receives a distribution from a closely held trust on which UBNT has been paid, that income comprises exempt income for the individual.

However, this exempt income is taken into consideration for purposes of the superannuation contributions surcharge. Refer to item A4—Amount on which ultimate beneficiary non-disclosure tax is payable on page xx of these instructions.

Under the Taxation Laws Amendment (Software Depreciation) Act 1999, taxpayers may depreciate or claim a deduction for certain expenditure incurred to ensure year 2000 compliance of their computers. See page xx of these instructions.

If the taxpayer is 55 years of age or older and their taxable income in either 1998–99 or 1999–2000 was less than $30 000, they may be entitled to the bonuses for older Australians. They will need to apply for the bonuses using a special claim form. In May and June this year, claim forms were posted to people who may be eligible.

If the taxpayer is claiming the bonuses for older Australians and they made contributions to a superannuation fund during 1999–2000 they may also need to complete item R4 on their tax return—to make sure that their claim is processed correctly.

If you are lodging a tax return for a taxpayer that died during 1999–2000, prepare a final tax return for the income year up to the date of death. Print Deceased estate on the top of page 1 of the tax return and print Final in the Final tax return box.

If an item has specified that further information is required, a separate piece of paper headed SCHEDULE OF ADDITIONAL INFORMATION should be attached. Provide the taxpayer’s name, tax file number (TFN) and any required details on this schedule. Ensure the taxpayer signs the schedule. Print Y in the Have you included any attachments—other than group certificates and income tax credit vouchers? box on page 1 of the tax return and attach the additional information to the top left hand corner of page 3.

Titles of up to 15 characters can be used in the space provided. A list of preferred abbreviations for the most common titles can be found in the Titles section of the publication Keying names and addresses.

Please carefully complete the personal information items.

If any part of the taxpayer’s name has changed since the last tax return was lodged, print the previous surname only.

Print the street number and name on the first 2 lines and the details of suburb or town, State and postcode in the spaces provided on the 3rd line. If the taxpayer’s postal address is in a country other than Australia, include the name of the country on the 4th line. Otherwise, leave this space blank.

Complete all the details of the taxpayer’s date of birth—day, month and year—to avoid delays in the processing of the tax return.

Write a telephone number on which the taxpayer can be contacted during business hours.

This allows the ATO to deposit the taxpayer’s tax refund directly into a bank, credit union or building society account of their choice using EFT—for example, a tax agent’s account.

Important—Care should be taken when completing EFT details as payment of any refund will be made to the account specified.

If the taxpayer does not want to use EFT, or wishes to cancel their existing EFT authority, simply print N in the Do you want to use EFT for your refund this year? box.

To use direct refund print Y in the Do you want to use EFT for your refund this year? box.

If the taxpayer received a direct refund last year and the account details provided are correct there is no need to provide them again.

If the taxpayer did not use EFT last year or the account details are different this year complete the following.

This allows the taxpayer to pay their tax directly from their account using electronic funds transfer (EFT). A taxpayer can provide separate account details for direct debit and direct refund. However, an account for direct debit must be in the taxpayer’s name. Joint accounts are acceptable as long as the taxpayer’s name is one of the account names.

If the taxpayer wants to use direct debit for the first time they must complete and sign a Direct debit request and send it to the ATO. The amount to be debited from the account and the date the payment is to be made must also be provided. Allow at least 10 working days for processing.

If the taxpayer used EFT last year and the account details provided are correct there is no need to make another request. The notice of assessment will display a message that the tax debt will be debited from the taxpayer’s nominated account on the due date.

If the taxpayer’s account details have changed they will need to complete and sign a new Direct debit request if they want to use direct debit successfully this year.

There is no provision for a direct debit election on the tax return. The Direct debit request is available in the EFT direct debit and direct refund chapter of the Tax agent portfolio. The request is also available as part of electronic lodgment service software packages.

A Direct debit request remains in force until it is cancelled. Cancellations must be received 5 business days before the payment date.

The taxpayer must sign and date the taxpayer’s declaration at the bottom of page 1 and the tax agent must complete and sign the tax agent’s certificate at the top of page 2.

When completing the tax agent’s certificate, the contact name is the name of the person who is the first point of contact in your firm for queries relating to the tax return. Where the tax agent’s reference number is less than 8 digits, please include leading zeros.

Include amounts written on group certificates, or statements of benefit and allowance, at items 1 to 8. Do not include amounts shown on income tax credit vouchers purchased for the taxpayer except where the taxpayer is part of the staff of an embassy. In that case amounts shown on income tax credit vouchers are to be shown at item 2—Allowances, earnings, tips, director’s fees, etc.

Include an accurate description of the taxpayer’s main salary or wage income earning activity and the appropriate 4-digit code from the Salary or wage occupation codes 2000. Please do not use last year’s code without checking this booklet.

If the taxpayer has more than 5 group certificates, add the tax instalments deducted and gross income from the 5th and remaining group certificates and write the income totals at label G, item 1, and tax instalments deducted at the left of label G, item 1. Ensure you attach all group certificates to page 3 of the tax return.

• ensure that all group certificates and statements of benefit and allowance have been received and included by the taxpayer before lodging their tax return
• do not show foreign employment income at this item. Show it, if required, at item 16
• do not show income tax credit vouchers at this item. Show them, as appropriate, at items 2, 11 and C1
• do not show reportable fringe benefits amounts provided in respect of the taxpayer’s employment at this item—show them at item 8.

Include at this item all assessable salary or wages—within the meaning of subsection 221A (1) of ITAA 1936—derived by the taxpayer during 1999–2000 other than:

Do not show total reportable fringe benefits amounts provided in respect of the taxpayer’s employment at item 2–show them at item 8.

Do not show any income derived by the taxpayer from foreign employment at item 2. Show it, if required, at item 16.

Do not show any income derived by the taxpayer as a non-employee taxi driver—for example, one operating under a standard bailment agreement with an owner/operator—at item 2. This income should be included in the Business and professional items schedule 2000—tax agents.

For taxpayers who are embassy staff, show at label K, item 2—Allowances, earnings, tips, director’s fees, etc, any salary or wages from which tax instalments have not been deducted, and show in the ‘Tax instalments deducted’ box at the left of label K the total amount of any tax paid by the purchase of income tax credit vouchers.

Do not show, at this item, any income derived as a partner in a partnership nor any income—including commission income—derived because the taxpayer was self-employed.

Show at label R the total of all amounts shown at A in the lump sum payments box on the taxpayer’s group certificates, letters and statements.

Show at label H—5 per cent of the total of all amounts at B in the lump sum payments box on the taxpayer’s group certificates, letters and statements.

Show the total tax instalments deducted from the amounts shown at A and B at the left of labels R and H, respectively, if not already shown at item 1 or 2.

The assessable amount shown at Section 3, ETP cash payment details, on ETP group certificates, is the taxable amount to be shown at label I. If the ATO has advised the taxpayer that they have exceeded the relevant reasonable benefit limits, the ETP components shown on that ATO advice must be used.

This includes:

• an income support component from a Community Development Employment Project (CDEP)—shown as ‘CDEP Salary or Wages’ on the taxpayer’s group certificate.
• under proposed legislation a CDEP Scheme Participant Supplement paid by Centrelink will be shown at this question.
• training for Employment Program allowance, New Enterprise Incentive Scheme allowance, textile clothing and footwear special allowance, Green Corps training allowance or other taxable Commonwealth education or training payments

If the taxpayer received one or more of the payments listed above, they may be entitled to a beneficiary rebate. We work out the taxpayer’s rebate from the information you provide at this question, using the following formulas:

Tax-free threshold is defined in Regulation 148 of the Income Tax Regulations. If the taxpayer has changed residency status for tax purposes or finished full-time education for the first time during 1999-2000, complete item A2—Part-year tax-free threshold on page 6 to ensure the taxpayer receives the correct beneficiary rebate entitlement.

This includes:

Select the appropriate code letter from the table below to match the conditions that applied during 1999–2000 while the taxpayer was receiving these pensions or allowances. Note that there are 2 columns to select from this year: column 1 is for use by persons who receive their pension or allowance from Centrelink, unless otherwise advised, and column 2 is for use by persons who receive their pension or allowance from the Department of Veterans’ Affairs. This change is necessary for rebate purposes to accommodate taxpayers who received 27 instead of 26 fortnightly payments during the income year. It is important that the correct column is used, as this will allow the correct rebate to be calculated.

If at any time during 1999–2000 while the taxpayer was receiving the Commonwealth of Australia government pension or allowance listed at item 6—Commonwealth of Australia government pensions and allowances the taxpayer was:

If the taxpayer was married or had a de facto spouse and their spouse did not receive any of the Commonwealth of Australia government pensions or allowances listed at item 6 or any exempt social security or Department of Veterans’ Affairs pension, and the taxpayer started to receive their pension or allowance on or after 12 March 1992 AND the taxpayer and their spouse had to live apart due to illness OR either of them was in a nursing home at any time during 1999–2000 H C

If a taxpayer lived with a spouse—married or de facto—and their spouse did NOT receive any of the Commonwealth of Australia government pensions or allowances listed at item 6 or any exempt social security or Department of Veterans’ Affairs pension and the taxpayer started to receive their pension on or after 12 March 1992 Q D

If the taxpayer and their spouse—married or de facto—both received a Commonwealth of Australia government pension or allowance listed at item 6, or the taxpayer received such a pension and their spouse received any exempt social security or Department of Veterans’ Affairs pension and they had to live apart due to illness or either was in a nursing home at any time during 1999–2000 A E

If the taxpayer and their spouse—married or de facto—lived together and both received a Commonwealth of Australia government pension or allowance listed at item 6, or the taxpayer received such a pension and their spouse received any exempt social security or Department of Veterans’ Affairs pension at any time during 1999–2000 M F

Had to live apart due to illness is a term relating to the payment of pensions. If you are unsure if the taxpayer was paid the pension at a higher rate because he or she was separated from their spouse due to illness, check with Centrelink.

If more than one code letter applies to the taxpayer, use the letter that appears first in the following order: S A H M Q if the taxpayer is a Centrelink client, or B E C F D if the taxpayer is a Department of Veterans’ Affairs (DVA) client. For example, if the taxpayer is a Centrelink client and both code letters S and H apply to the taxpayer, use S.

• if B and E apply to the taxpayer, and their spouse’s notional taxable income was less than $12 005 if they were a DVA client, or $11 555 if they were a Centrelink client, use code letter E as this will give the taxpayer the correct rebate.

If the taxpayer had a spouse during 1999–2000 complete Spouse details—married or de facto on page 7 of the tax return including labels O and Q. Also show the source of the spouse’s pension or allowance, or exempt pension in the source code box at the right of label O. If the spouse was a Centrelink client print P, if a Veterans’ Affairs print V and Your spouse’s name on page 1 of the tax return.

The rebate thresholds for the rebate code letters for this item are:

Column 1 Column 2* Column 3

The Taxpayer may get up to the Taxpayer will not get a Maximum rebate
taxpayer’s full rebate if their taxable rebate if their taxable
rebate code income is equal to or income is equal to or
letter less than this amount more than this amount

S $12 190 $23 054 $1358

A*, H $11 880 $22 248 $1296

M*,Q $10 300 $18 140 $980

B $12 655 $24 263 $1451

C, E* $12 330 $23 418 $1386

D, F* $10 695 $19 167 $1059

Print the type of pension or annuity in the Type box at item 7—Other Australian pensions or annuities—including superannuation pensions. Show total gross income derived by the taxpayer from the pension or annuity at label J, item 7. Show the total tax instalments deducted from the pension or annuity—as shown on the group certificate or statement which the taxpayer obtained from the annuity, superannuation fund, pension fund or retirement savings account (RSA) provider—at the left of label J, item 7. Do not show pension or annuity income from a foreign annuity or pension fund at this item. Show it at item 16—Foreign source income and foreign assets or property.

From 1 April 1999, employers are required to keep records that show the taxable value of certain fringe benefits provided to each employee (and their associates such as spouse and children). If the total taxable value of fringe benefits for an employee in a FBT year exceeds $1000, the total grossed-up amount is reported on the employee’s group certificate for the corresponding income year.

Reporting of fringe benefits amounts on group certificates applies from the 1999–2000 income year. Therefore, benefits received during the 1999–2000 FBT year (1 April 1999 to 31 March 2000) would be reported on a group certificate for the 1999–2000 income year (1 July 1999 to 30 June 2000).

If 2 or more employees share a fringe benefit, the employer needs to work out the portion of the taxable value that reasonably reflects the amount of the benefit provided to each employee. To do this, the employer should take into account all relevant information such as the usage of the benefit by each employee.

An agreement between an employee and an employer relating to a reasonable method of apportionment may be used to allocate the taxable value of a benefit between employees.

The new arrangements will enhance the fairness and equity of the taxation and social welfare systems. Government income tests will now take into account the fringe benefits people receive. The information that is reported on group certificates will be used for the following income tests:

• Medicare levy surcharge
• superannuation contributions surcharge
• termination payments surcharge
• deductions for personal superannuation contributions
• rebate for contributions to spouse’s superannuation
• rebate for personal superannuation contributions
• HECS repayments
• child support obligations, and
• entitlement to certain income tested government benefits.

Fringe benefits excluded from the group certificate reporting arrangements are:

• car parking benefits (other than car parking expense payment benefits)
• entertainment by way of food or drink and benefits associated with that entertainment such as travel and accommodation
• hiring or leasing entertainment facilities such as corporate boxes
• remote area housing fringe benefits and certain other benefits associated with remote area housing such as residential fuel and rental payments
• freight costs for food provided to employees living in a remote area, and
• costs of occasional travel to a major Australian population centre by employees and their families living in a remote area.

The Government has announced that certain housing and other fringe benefits provided to Australian Defence Force personnel will also be excluded from the reporting requirements.

The above fringe benefits will, however, still be subject to FBT.

Benefits which are exempt from FBT (other than those discussed in the next paragraph) do not need to be included when calculating the amount of fringe benefits received by the taxpayer. Some examples of exempt benefits are mobile phones used primarily for work and minor benefits such as small Christmas presents.

Some benefits that are exempt from FBT may still need to be reported on group certificates. These are benefits that are exempt only because they are provided to:

• certain live-in residential care workers where the employer is a government body, religious institution or a non-profit company; or
• employees of public benevolent institutions, including government employees who work in public hospitals.

Show gross assessable interest income derived by the taxpayer from Australian sources at label L, item 9—Gross interest. Show any TFN amounts deducted from that income at label M, item 9. Account keeping fees, charges and Financial Institutions Duty should not be shown at label M. You may be able to claim these amounts at item D6—Interest and dividend deductions.

If the taxpayer had a joint account and they quoted their individual TFN to the financial institution, show the taxpayer’s share of interest at item 9. If the taxpayer quoted a partnership or trust TFN to the financial institution, any interest derived becomes part of the net income of the partnership or trust—show the taxpayer’s share of the net income of the partnership or trust at item 11—Partnerships and trusts.

Do not include at this label distributions of interest the taxpayer received, or was entitled to receive, from a partnership or trust—including a cash management, money market, mortgage, property, unit or any similar trust investment product. Show these amounts at item 11—Partnerships and trusts.

Do not show any interest income derived by the taxpayer from any foreign source at this item. Show it at item 16—Foreign source income and foreign assets or property.

Show the total of gross unfranked dividends paid or credited to the taxpayer and any other unfranked amounts—such as amounts arising because a taxpayer failed the holding period and related payments rules in Division 1A of Part IIIAA of ITAA 1936—which will be treated as having been paid or credited to the taxpayer at label S, item 10—Dividends, other than dividends paid or credited to a non-resident taxpayer from which withholding tax has been deducted.

Include at these labels distributions from a corporate limited partnership taxed in accordance with Division 5A of Part III of ITAA 1936.

Do not include at these labels any dividends that the taxpayer received, or was entitled to receive, that are part of a distribution of income from a partnership or trust-including a cash management, money market, mortgage, property, unit or any similar trust investment product. Show these amounts at item 11—Partnerships and trusts.

If the taxpayer is a shareholder, or an associate of a shareholder, of a private company and received payments from the company or loans from the company or a trustee (where company has present entitlement) or had debts forgiven by the company, the amounts (subject to distributable surplus) of those payments, loans not repaid or debts forgiven should be returned as an unfranked dividend unless they are specifically excluded under the provisions of Division 7A of Part III of ITAA 1936.

Show the total of gross franked dividends paid or credited to the taxpayer at label T, item 10—Dividends, other than franked dividends paid or credited to a non-resident taxpayer.

Show at label U, item 10—Dividends, the total of the section 160AQT of ITAA 1936 gross-up amounts for the franked dividends shown at label T which the taxpayer is entitled to claim as a franking rebate.

If the taxpayer purchased their shares in joint names show only their portion of dividend income in the appropriate dividend labels.

A taxpayer’s entitlement to a franking rebate may be affected by the holding period rule and related payments rule. The relevant provisions generally operate from 1 July 1997—although in some cases they apply from 13 May 1997. For details of the operation of the legislation restricting the claiming of franking rebates and credits, see What’s new? on page x of these instructions, Division 1A of Part IIIAA of ITAA 1936 and the publication You and your shares which is available from the Australian Taxation Office.

If the taxpayer derived any assessable income that is not covered by items 1 to 10, or the taxpayer incurred any loss which can be claimed in the supplementary section, the supplementary section must be completed.

If the supplementary section has to be completed, transfer the amount from Total supplementary SECTION income or loss to item I, page 2 on the tax return.

If an overall loss was calculated for this item, print the letter L in the small box at the right of this label.

The Government has announced that it will amend the law to adjust taxable income, where net deductions for the cost of depreciable property financed under hire purchase or limited recourse finance arrangements exceed the total actual expenditure, when the financing arrangement is terminated. The measures apply to hire purchase and limited recourse debt arrangements that terminated after 27 February 1998. See What’s New? on page xx of these instructions.

The ATO has released special information on work related expenses for 16 occupations: airline employees, Australian Defence Force members, employee building workers, employee cleaners, employee lawyers, factory workers, hairdressers, hospitality industry employees, nurses, employee performing artists, police officers, real estate employees, employee shop assistants, teachers, employee journalists and employee truck drivers. Rulings, including occupational rulings summaries, are available on the ATO’s Internet site—ATOassist—at the following address: www.ato.gov.au You may also obtain a copy of the rulings from the Freedom of Information Unit in your State (South Australia and Tasmania, ring Box Hill in Victoria).

This label is for deductible work related car expenses relating to a car that the taxpayer owned, leased or hired under a hire purchase agreement. Do not include expenses for vehicles other than cars, such as motorcycles, utility trucks or panel vans with a carrying capacity of 1 tonne or more or any other vehicle with a carrying capacity of 9 or more passengers. Show them at item D2—Work related travel expenses. Do not include car expenses covered by award transport payments if the claim is no more than the amount payable under the award as at 29 October 1986. Show them at item D2. Do not include the work related running costs associated with a car owned or leased by somebody else—a borrowed car. You may be able to claim these expenses at item D2.

Schedule 2E of ITAA 1936 provides for leases of luxury cars to be treated as notional sale and loan transactions. A proportion of the finance charge for the notional loan is allowable as a deduction to the lessee to the extent that the lease payments made would have been deductible. As the lessee is taken to be the owner of the car, the lessee is the person entitled to any deduction for depreciation in accordance with the rules applying to owners of luxury cars.

There are special rules for jointly owned cars. For example, where a car is owned by 2 people—each owning half—under METHOD 2—12 per cent of original value method, each joint owner would claim 6 per cent. more For more information about these rules refer to Practice Statement 1992/2.

Print the code letter that relates to the largest portion of the claim in the Claim type box at the right of label A.

Cents per kilometre S

12 per cent of the original value T

One-third of actual expenses O

Logbook B

Changes to the depreciation system may affect the amount of work related car expense. See What’s new? on page x or refer to the publication Guide to depreciation. Claim at item D1—Work related car expenses any deductible balancing adjustment loss arising from the disposal, loss or destruction of the taxpayer’s car for which car expenses were claimed. Show any assessable balancing adjustment profit that arises in the same way at label V, item 19—Other income in the supplementary section. Taxation Ruling TR 2000/6—Substantiation rules: calculation of balancing adjustment for cars and the booklet Guide to depreciation show how to calculate a balancing adjustment from the disposal, loss or destruction of a car for which car expenses were claimed.

The calculation of balancing adjustments for cars is not affected by the depreciation changes that applied from 11.45 a.m. on 21 September 1999.

This label is for deductible travel expenses such as meals, accommodation and incidental expenses, air, bus, train, tram and taxi fares, bridge and road tolls, parking and car hire fees. It is also for those deductible car expenses not covered by item D1—Work related car expenses—for example, car expenses covered by an award transport payment where the claim is no more than the amount payable under the award as at 29 October 1986 and any work related running costs associated with vehicles other than cars or a car owned or leased by somebody else—a borrowed car.

A taxpayer cannot claim a deduction for any expenses incurred for the direct operation of a car that their employer provides, which is at any time used by them or their relatives, even if the expenses are work related. However, a taxpayer may be able to claim expenses—such as parking fees and bridge tolls—which are linked to the car but are not involved in its direct operation.

Claim at label C, item D3, deductible expenses incurred by the taxpayer in buying, renting, repairing, laundering or dry cleaning occupation specific clothing, protective clothing and work uniforms. Refer to Taxation Ruling TR 94/22—Deductibility of expenditure on conventional clothing, Taxation Ruling TR 97/12—Deductibility of expenses on clothing, uniform and footwear and Taxation Ruling TR 98/5—Calculating and claiming a deduction for laundry expenses. Taxation Determination TD 1999/62—What are the criteria to be considered in deciding whether clothing items constitute a compulsory corporate uniform/wardrobe. Print the code letter that relates to the largest portion of the claim in the Claim type box at the right of label C.

Compulsory work uniform C

Non-compulsory work uniform N

Occupation specific clothing S

Protective clothing P

This item is only for deductible self-education expenses related to an educational course provided by a school, college, university or other place of education.

Select from the list below the code letter that best describes the taxpayer’s deductible self-education expenses and print the code letter in the Claim type box at the right of label D, item D4.

There is a direct connection between the self-education and the taxpayer’s current work activities because the study maintains or improves a skill or specific knowledge required for their current work activities. * K

There is a direct connection between the self-education and the taxpayer’s current work activities because they can show that the study leads to, or is likely to lead to, increased income from their current work activities. * I

Other circumstances exist where there is a direct connection between the taxpayer’s self-education and their current work activities. * O

* The term ‘current work activities’ refers to the work activities of the taxpayer at the time they incurred the relevant self-education expenses.

Self-education expenses are NOT allowable if the taxpayer’s study is designed to:

Self-education expenses are not deductible against income received from youth allowance, austudy payment, ABSTUDY or similar schemes providing payments in the nature of assistance. For more information on self-education expenses, refer to Taxation Ruling TR 98/9—Deductibility of self-education expenses. For more information on depreciation refer to Guide to Depreciation which contains details of changes to depreciation calculations, small item write offs and balancing adjustments that apply to items acquired on or after 21 September 1999.

This item may include claims for union fees, subscriptions to associations, overtime meals, attending formal education courses provided by professional associations, seminars, conferences or education workshops that are sufficiently connected to current work activities, books, journals and trade magazines, tools and equipment, telephone, computers and software, depreciation expenses and home office expenses.

• changes to the depreciation system may affect the amount of other work related expenses. Refer to What’s new? on page x and refer to the publication Guide to depreciation.

Do not show at item D6 expenses incurred in relation to the following:

If funds are borrowed for both private and income producing purposes, then the interest on the borrowings must be apportioned. Only interest incurred for an income producing purpose is deductible. Deductions are not allowable for expenses incurred in deriving an amount that has been excluded from assessable income because family trust distribution tax has been paid on it.

Claim FID imposed on the deposit of assessable interest and dividend income of the taxpayer at this item. Where FID was imposed partly in relation to the deposit of assessable interest and dividend income of the taxpayer and partly in relation to the deposit of other amounts, then only the proportion of FID imposed in relation to the former can be claimed at label I, item D6—Interest and dividend deductions.

Where a taxpayer has been charged debits tax or GDT on payments from their account to fund expenses incurred in earning assessable interest or dividends—expenses that the taxpayer is claiming at this item—the taxpayer can also claim the debits tax at this item. If only a proportion of the payment on which debits tax was imposed was used to fund such expenses, then only the same proportion of the debits tax can be claimed at this item.

A taxpayer cannot claim a deduction for any loss or outgoing incurred in deriving exempt income, such as expenses incurred in relation to deriving a dividend that is exempt under section 271-105 of ITAA 1936. Refer to Schedule 2F of ITAA 1936.

If the claim at this item includes an amount for a cultural bequest and this is the final individual tax return for a deceased person, print the code letter C in the Claim type box at the right of label J. Otherwise leave blank.

Parliament is presently considering changes to the law with respect to the deductibility of gifts or donations. These changes, which may apply this income year are:

• to allow tax deductible contributions-including membership subscriptions—up to a maximum level of $1500 to registered political parties
• to allow tax deductible gifts-also up to a maximum level of $1500—to independent candidates or independent Members of Parliament
• to allow deductions for gifts of property valued at more than $5000 made to certain funds, authorities and institutions regardless of when or how the property was acquired—where the property relates to a gift or contribution to a political party or independent candidate or independent Member of Parliament, the deduction is to be limited to $1500
• to allow deductions for gifts made to specified private funds
• to allow taxpayers to elect to spread the deduction for gifts made under the Cultural Gifts Program over 5 income years or less
• to allow CGT exemption for gifts of property made under the Cultural Gifts Program and testamentary gifts of property to gift deductible organisations

Refer to the Taxation Laws Amendment (Political Donations) Bill 1999 and Taxation Laws Amendment Bill (No. 8) 1999.

The deductible amount that taxpayers can claim under section 27H of ITAA 1936 is claimed at label L. This amount must not exceed the pension or annuity to which it relates, shown at label J, item 7.

Only expenses incurred by the taxpayer, which are deductible under section 25-5 of ITAA 1997 can be claimed at this item. Claims include managing the taxpayer’s own tax affairs or complying with legal obligations relating to another person’s tax affairs. Managing the taxpayer’s own tax affairs includes:

Costs of complying with legal obligations relating to another person’s tax affairs include:

If the taxpayer can claim any deductions other than those that can be claimed at items D1 to D9 and D10, the supplementary section must be completed.

If the supplementary section is required to be completed, transfer the amount from TOTAL SUPPLEMENTARY SECTION DEDUCTIONS to item D on page 3 of the tax return.

To work out the TOTAL DEDUCTIONS, excluding tax losses of earlier income years, add the amounts shown for items D1 to D. After this has been done subtract TOTAL DEDUCTIONS—items D1 to D from TOTAL INCOME OR LOSS above the deductions area on page 3 of the tax return. The amount that you calculated should be shown in the amount box. If a loss was made, print the letter L in the small box at the right of the amount box.

Subtract total deductions from total income or loss. If a loss was made, print the letter L in the small box.

Print at label F, item D10, the amount of the whole or part of allowable tax losses from earlier income years from a business of primary production which the taxpayer can deduct this income year under Division 36 of ITAA 1997.

Print at label Z, item D10, the amount of the whole or part of allowable tax losses of earlier income years, other than from a business of primary production which the taxpayer can deduct this income year under Division 36 of ITAA 1997. Special rules apply to film losses—refer to Subdivision 375-G of ITAA 1997.

Deductions and losses that relate to foreign source income are subject to the quarantining rules contained in sections 79D and 160AFD of ITAA 1936 and cannot be deducted at this item. See page xx, item 16—Foreign source income and foreign assets or property, in relation to how foreign income deductions or losses may affect the amounts—if any—shown at labels L, D and M, item 16.

If the taxpayer elects under section 79DA of ITAA 1936 to deduct the whole or part of allowable losses of earlier income years from foreign source income, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item D10. This should show the taxpayer’s name, address, tax file number (TFN) and each amount and year in which the taxpayer elects to deduct tax losses of earlier income years from their foreign source income. Ensure the taxpayer signs the schedule.

Non-primary production losses can be deducted in 1999–2000 only if they were made in 1989–90 or a later year. Non-primary production losses made in 1988–89 and earlier years can no longer be deducted.

Subtract any item D10—Tax losses of earlier income years deducted this year amounts from amount shown to the right of the (black square to be inserted) above.

To claim the spouse rebate Spouse details—married or de facto on page 7 of the tax return must be completed, including label R (the amount of the taxpayer’s spouse’s separate net income for 1999–2000). Your spouse’s name on page 1 of the tax return must also be completed.

Write at label P, item R1, the total amount of rebate the taxpayer is entitled to claim in 1999–2000 for a dependent spouse or a child-housekeeper under section 159J of ITAA 1936 or for a full-time housekeeper under section 159L of ITAA 1936.

Print the applicable rebate code letter in the Claim type box at the right of label P.

The taxpayer claimed a rebate for their spouse and they or their spouse received the basic parenting payment (partnered) P

The taxpayer claimed a rebate for their spouse, they had a dependent child, and they or their spouse did not receive the basic parenting payment (partnered) D

The taxpayer claimed a rebate for their spouse for part of the year and also claimed a rebate for a child-housekeeper or housekeeper for another part of the year C

The taxpayer claimed a rebate only for a child-housekeeper or housekeeper H

If the taxpayer has a spouse, the general rule is that a housekeeper rebate is not available. However, if the taxpayer otherwise qualifies for a housekeeper rebate and they are not entitled to a spouse rebate the fact that the taxpayer has a spouse may be overlooked in special circumstances. If you consider that special circumstances apply, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item R1 with the taxpayer’s name, address, tax file number and an explanation of the taxpayer’s situation. Ensure the taxpayer signs the schedule.

Include at label W, item R1—married or de facto—child-housekeeper or housekeeper, amounts of basic parenting payment (partnered) paid to the taxpayer or the taxpayer’s spouse.

Write at label Q, item R2, the amount of rebate the taxpayer is entitled to claim in 1999–2000 under section 159K of ITAA 1936.

A low income aged persons rebate may apply if the taxpayer was of age pension age on 30 June 2000. Age pension age is 65 years or more for a male and 61–5 years or more for a female.

To be eligible for this rebate, the taxpayer must meet the requirements of section 160AAAA of ITAA 1936, namely:

–the taxpayer did not have a spouse—married or de facto—and the taxpayer’s taxable income was less than $23 054

–the taxpayer did have a spouse—married or de facto—and the taxable income of the taxpayer and their spouse was less than $36 280

–the taxpayer did have a spouse—married or de facto—but the taxpayer and their spouse had to live apart indefinitely due to illness or infirmity of either or both of them or either of them was in a nursing home at any time in 1999–2000 and the taxable income of the taxpayer and their spouse was less than $44 496.

If the taxpayer had a spouse in 1999–2000, Spouse details—married or de facto on page 7 of the tax return must be completed including label O—Spouse’s 1999–2000 taxable income and label T—Spouse’s share of trust income on which the trustee is assessed under Section 98 of ITAA 1936 and which has not been included in spouse’s taxable income. Your spouse’s name on page 1 of the tax return must also be completed.

If the taxpayer was in prison for the whole of 1999–2000, they cannot claim this rebate.

Select the code letter that applies to the taxpayer’s circumstances from the rebate code letters table below and print the code letter at label N, item R3—Low income aged persons.

If more than one code letter applies to the taxpayer, use the letter that appears first in the following order:

A, B, C, D, E. For example, if both B and D apply, use B.

If at any time during 1999–2000, the taxpayer was:

• single or widowed A

• separated A

• a sole parent A

If the taxpayer and their spouse—married or de facto—‘had to live apart due to illness’ or either of them was in a nursing home at any time in 1999–2000 and they are both eligible for this rebate B

If the taxpayer and their spouse—married or de facto—‘had to live apart due to illness’ or either of them was in a nursing home at any time in 1999–2000 but the taxpayer’s spouse is ineligible to claim this rebate due to the conditions above C

If the taxpayer and their spouse—married or de facto—were living together and they are both eligible for this rebate D

If the taxpayer and their spouse—married or de facto—were living together but the taxpayer’s spouse is ineligible to claim this rebate due to the conditions above E

Had to live apart due to illness is a term used to describe a situation where the living expenses of a taxpayer and their spouse—married or de facto—are increased because they are unable to live together in a matrimonial home due to the indefinitely continuing illness or infirmity of either or both of them.

If you have used B, C, D or E, you must write the taxpayer’s spouse’s 1999–2000 taxable income at label O, Spouse details—married or de facto on page 7 of the tax return. Show at label T the taxpayer’s share of trust income on which the trustee is assessed under section 98 if it is not already included in the taxpayer’s spouse’s taxable income.

If both the taxpayer and their spouse have a combined taxable income of less than double the figures shown in Column 2 of the rebate thresholds table below, the taxpayer may be able to get any unused portion of their spouse’s rebate.

The rebate thresholds for the rebate code letters for this item are shown below.

COLUMN 1 COLUMN 2 COLUMN 3

Taxpayer’s Taxpayer may get up to the full Taxpayer will not get a rebate Maximum
code letter rebate if their taxable income is if their taxable income is equal
equal to or less than this amount to or more than this amount

A $12 190 $23 054 $1358

B $11 880 $22 248 $1296

C $11 880 $22 248 $1296

D $10 300 $18 140 $ 980

E $10 300 $18 140 $ 980

If B or D applies to the taxpayer the amount in COLUMN 3 could be increased or reduced because of the rebate transfer between the taxpayer and their spouse—married or de facto.

Write at label T, item R4, the amount of personal undeducted superannuation contributions made by the taxpayer to a complying superannuation fund or retirement savings account. This item must be completed if the taxpayer is claiming the bonuses for older Australians. The ATO will use this information to calculate the bonuses.

Personal undeducted superannuation contributions are contributions made by the taxpayer to complying superannuation fund or RSA that they do not claim as a tax deduction at item D13—Non-employer sponsored superannuation contributions. They do not include contributions made on behalf of another person or contributions made by an employer—including contributions made as part of a salary sacrifice. They do not include superannuation contributions made by the taxpayer on behalf of a spouse—refer to item R6—Superannuation contributions on behalf of your spouse on page 10 of the supplementary section of the tax return.

Write at label S, item R4, the amount of rebate the taxpayer is entitled to claim as a superannuation contributions rebate under section 159SZ of ITAA 1936 or as a superannuation pension or annuity rebate under sections 159SM of ITAA 1936 and 159SU of ITAA 1936.

If claiming the superannuation contributions rebate, the taxpayer must have completed label T, item R4. There is no entitlement to this rebate if the taxpayer’s assessable income and total reportable fringe benefits amounts exceeds $31 000.

The taxpayer will only be able to claim a superannuation pension or annuity rebate if the taxpayer shows income from the pension or annuity at item 7.

Print the appropriate rebate code letter in the Claim type box at the right of label S.

Superannuation pension or annuity rebate A

Superannuation contributions rebate S

Both the superannuation contributions rebate and the superannuation pension or annuity rebate C

The 30% private health insurance rebate is 30% of the premium paid to a registered health fund for appropriate private health insurance cover. The rebate can be claimed as:

If the taxpayer received their full entitlement from their health fund or Medicare they cannot claim the rebate in their tax return.

To be eligible to claim the rebate the taxpayer must have paid, or the taxpayer’s employer must have paid as a fringe benefit, the premium for an appropriate private health insurance policy where everyone covered by the policy is eligible for benefits under the Medicare system. This includes payments made for cover for more than one income year. The taxpayer must not have claimed their full entitlement through any other method. If 2 people make payments for the same policy—for example, the taxpayer makes payments from a joint bank account—each person can claim a proportion of the rebate.

Appropriate private health insurance is either hospital cover, ancillary cover or combined hospital and ancillary cover, provided by a registered health fund carrying on a health insurance business within the meaning of section 67 of the National Health Act 1953.

The rebate is on the premium for appropriate health insurance cover. Under this rebate the entitlement is 30% of the premium paid. However, if the policy that was in existence during the 1998–99 income year and before 1 January 1999, a person was eligible to apply for registration under the private health insurance incentive scheme that operated until that date—the old incentive scheme—the rebate could be more.

A taxpayer meeting these conditions may compare the rebate they would have received under the old incentive scheme with the present scheme based on 30% of the premium paid and claim the higher amount.

If claimed through the tax return the private health insurance rebate is a refundable rebate. The full rebate is passed on to the taxpayer by refunding any amount by which the rebate exceeds the tax assessed.

The amount of the taxpayer’s entitlement depends on whether or not a person was registered, or entitled to be registered, under the Private Health Insurance Incentives Act 1997—the old incentive scheme. A person was entitled to be registered for the old incentive scheme if they satisfied the eligibility criteria before 1 January 1999—refer to Subdivisions 61-G and 61H of ITAA 1997.

If a person was not registered or entitled to be registered under the old incentive scheme, the rebate is 30% of the premium paid.

If a person was registered or entitled to be registered under the old incentive scheme the rebate is the greater of:

• 30% of the premium paid, or
• the rebate that would have been available under the old incentive scheme.

The maximum annual rebate amount that was available under the old incentive scheme was:

Single $100 $25 $125

Couple $200 $50 $250

Family $350 $100 $450

Print at label G, item R5, the amount of offset the taxpayer is entitled to claim under Subdivision 61H of ITAA 1997.

The taxpayer’s private health insurance policy details must be provided on page 4 of the tax return. Refer to Private health insurance policy details on page xx of these instructions.

If the taxpayer can claim any rebates/tax offsets other than those that can be claimed at items R1 to R6, the supplementary section must be completed.

If the supplementary section is required to be completed, transfer the amount from TOTAL SUPPLEMENTARY SECTION REBATES/TAX OFFSETS to item R on the tax return.

If items R5—30% private health insurance or item M2—Medicare levy surcharge asked the taxpayer to complete this section, or the taxpayer made premium payments for private health insurance but not in the capacity of an employer, the details of the policy must be provided at Private health insurance policy details on page 4 of the tax return.

Private health insurance details are shown on the statement the taxpayer receives from the registered health fund.

Print at label B the appropriate Health fund ID. Write at label C the membership number for each policy. Print the appropriate type of cover code letter (as below) in the Type box at the right of label C.

Ancillary cover only—also known as Extras A

Hospital cover only H

Combined ancillary and hospital cover C

If the taxpayer changed cover during the year, but did not change the membership number, print the code letter for the highest level of cover that the taxpayer had at any time during the year.

If the taxpayer held more than 4 policies attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—Private health insurance policy details, with the taxpayer’s name and address, tax file number, health fund ID, membership number and the code letter for type of cover, for each policy. Ensure the taxpayer signs the schedule.

For 1999–2000, the levy is 1.5 per cent of the taxpayer’s taxable income.

The taxpayer may be eligible to claim a reduced Medicare levy under section 8 of the Medicare Levy Act 1986 if the taxpayer:

For each additional dependent child or student, add $2100 to the lower limit and $2270 to the upper limit.

If the taxpayer claims a Medicare levy reduction based on family income and the taxpayer had a spouse—married or de facto—during 1999–2000, Spouse details—married or de facto on page 7 of the tax return and Your spouse’s name on page 1 of the tax return must be completed.

If a Medicare levy reduction based on family income is being claimed by the taxpayer, write at label Y, item M1—Medicare levy reduction or exemption the number of dependent children and students of the taxpayer for whom in 1999–2000 the taxpayer would be entitled—but for subsection 159J (1A) of ITAA 1936—to claim a dependent rebate under section 159J of ITAA 1936.

Medicare levy exemption categories—refer to page xx of these instructions

Print at label V, item M1, the number of days in 1999–2000 the taxpayer is entitled to a full Medicare exemption under section 251T of ITAA 1936.

Print at label W, item M1, the number of days in 1999–2000 the taxpayer is entitled to a half Medicare exemption under subsection 251U (3) of ITAA 1936.

Print at label Y, item M1, the number of dependent children and students of the taxpayer—within the meaning of section 251R of ITAA 1936—during 1999–2000.

If the taxpayer is claiming a full or half Medicare levy exemption and the taxpayer had a married or de facto spouse during 1999–2000 Spouse details—married or de facto on page 7 of the tax return and Your spouse’s name on page 1 of the tax return must be completed.

If label V has been completed and the taxpayer has a certificate from the Levy Exemption Certification Unit of the Health Insurance Commission showing that the taxpayer was not entitled to Medicare benefits, print the letter C in the Claim type box at the right of label V, item M1.

To calculate the taxpayer’s full or half Medicare levy exemption or reduction use the Medicare levy calculation worksheet on page xx of these instructions.

The Medicare levy surcharge (MLS) is an additional amount of Medicare levy imposed on certain taxpayers. It is equal to 1 per cent of the taxpayer’s taxable income (imposed under the Medicare Levy Act 1986) and 1 per cent of the taxpayer’s total reportable fringe benefits amounts (imposed under the A New Tax System (Medicare Levy Surcharge—-Fringe Benefits) Act 1999). A taxpayer will be liable for MLS if:

• either of the following conditions applies:

• they are a prescribed person—for example, a Defence Force member—and, subject to List B—Full exemption on page xx of these instructions, they have a dependant who is not a prescribed person and who does not have the required private patient hospital cover during the whole of 1999–2000 AND
• they meet the applicable income test below:
• if the taxpayer has no dependants during 1999–2000, the taxable income for MLS purposes of the taxpayer exceeds $50 000 OR
• if the taxpayer has dependants during 1999–2000, the sum of the taxable income for MLS purposes of the taxpayer and their spouse—if they had one—exceeds $100 000 plus $1500 for each dependent child after the first, and their own taxable income is $XX XXX or more.

If the taxpayer is liable for MLS but one of the conditions above applied to them for only part of 1999-2000, the taxpayer will be liable for MLS for the number of days during 1999–2000 on which the condition applied to them.

Includes a de facto spouse of the taxpayer but does not include a person who is living separately and apart from the taxpayer.

Generally, private patient hospital cover is cover provided by an insurance policy issued by a registered fund that covers some or all hospital treatment provided in an Australian hospital or day hospital facility. Travel insurance is NOT private patient hospital cover for MLS purposes. The Private Health Insurance Administration Council (PHIAC) can advise the taxpayer if an overseas health fund is a registered fund. Some health funds are not required to be registered and the PHIAC can also advise taxpayers if a policy they have with an unregistered organisation provides private patient hospital cover.

Ancillary or Extras cover is not private patient hospital cover.

Dependants must be Australian residents whose maintenance the taxpayer contributed to. A dependant is:

• the taxpayer’s spouse
• any of the taxpayer’s children who are under 16 years of age
• any of the taxpayer’s children aged 16 years and over but under 25 years of age who were full-time students.

A person within the meaning of subsection 251U (1) of ITAA 1936.

A taxpayer’s taxable income for MLS purposes is a total of:

Note: Where a taxpayer derives exempt foreign employment income under section 23AF and/or section 23AG, MLS forms part of the notional gross tax that is used to calculate the tax payable on other income where the taxpayer meets the applicable income threshold tests. Therefore, for the purposes of completing item M2 any exempt employment foreign income should be added to taxable income for MLS purposes when applying the relevant threshold tests.

The taxable income of the taxpayer’s spouse for MLS purposes is the total of:

• the taxpayer’s spouse’s taxable income AND
• the spouse’s total reportable fringe benefits amounts AND
• any share in the net income of a trust estate to which the spouse is presently entitled and on which a trustee is assessed under section 98 of ITAA 1936 and which has not been included in the spouses’s taxable income AND
• any amount which would have been included in the taxpayer’s spouse’s taxable income if the exemption under section 271-105 of ITAA 1936 for amounts on which family trust distribution tax has been paid were ignored (see Medicare Levy Consequential Amendment (Trust Loss) Act 1998).

If the taxpayer’s spouse dies during 1999–2000, and the taxpayer does not have a new spouse before the end of 1999–2000, the taxpayer is taken to have had a spouse from the date of death until the end of 1999–2000 and the taxpayer retains the benefit of the family surcharge threshold..

If the taxpayer had a spouse for only part of 1999–2000, a special income test applies to the taxpayer as follows:

• for the period during 1999–2000 when the taxpayer did have a spouse, the taxpayer’s taxable income for MLS purposes for the whole year (not including the taxable income for MLS purposes of the taxpayer’s spouse) must not exceed $100 000 plus $1500 for each dependent child after the first, during that period AND
• for the period during 1999–2000 when the taxpayer did not have a spouse, the taxpayer’s taxable income for MLS purposes for the whole year must not exceed $50 000 if the taxpayer did not have dependent children during that period, or exceed $100 000 plus $1500 for each dependent child after the first, if the taxpayer did have dependent children during that period.

If the taxpayer did not have a spouse—married or de facto—and had a dependant for only part of 1999-2000 the income tests apply to the taxpayer as follows:

• for the period during 1999–2000 when the taxpayer did have a dependent child the taxpayer’s taxable income for MLS purposes for the whole year must not exceed $100 000 plus $1500 for each dependent child after the first, AND
• for the period during 1999–2000 when the taxpayer did not have a dependent child, the taxpayer’s taxable income for MLS purposes for the whole year must not exceed $50 000.

If the taxpayer had private patient hospital cover for the taxpayer and all their dependants including their spouse—if any—for the whole period 1 July 1999 to 30 June 2000, print Y for yes at label E, item M2, and complete Private health insurance policy details on page 4 of the tax return.

If the taxpayer did not have private patient hospital cover for the taxpayer and all their dependants including their spouse—if any—for the whole period 1 July 1999 to 30 June 2000, print N for no at label E, item M2. If N is printed at label E, write the number of days for which the taxpayer is not liable for MLS at label A, item M2. If the taxpayer is not liable for MLS for the whole of 1999–2000 write 366 at label A.

If N is printed at label E, and the taxpayer had a spouse during 1999–2000, complete Spouse details—married or de facto on page 7 of the tax return and Your spouse’s name on page 1 of the tax return. If the taxpayer had a spouse for all of 1999–2000 complete labels O, T, U and S.

Write at label D, item M2, the maximum number of dependants of the taxpayer, other than the taxpayer’s spouse, during 1999–2000.

Private patient hospital cover policy details for the taxpayer and their dependants must be provided on page 4 of the tax return. See Private health insurance policy details on page xx of these instructions.

If the taxable income is:

Family income A $............. Lower limit B $.............

A minus B C $.............

1.5% of B D $.............

18.5% of C E $.............

D minus E =

Family reduction amount F $.............

Note: If the taxable income for the spouse is $13 550 or less, step 2 is not necessary.

Family reduction amount from F G $.............

Taxable income H $.............

Multiply G by H I $.............

Family income J $.............

Divide I by J = Share of the family reduction amount K $.............

The family reduction amount is unlikely to be more than the basic levy the taxpayer must pay. If it is, the difference will be taken off the levy the spouse must pay. Similarly, any excess family reduction amount the spouse has may be transferred to the taxpayer. Show this at L below.

Excess family reduction amount transferred from the spouse L $.............

Add K and L = Share of the family reduction amount M $.............

Basic levy from section 1, on this page N $.............

Family reduction amount from F, K or M O $.............

N minus O = Net basic levy P $.............

Note: If there is no exemption adjustment go to section 5.

Refer to page xx of these instructions.

Net basic levy from P above Q $.............

The number of days shown at V, item M1 on the tax return* R .............

Multiply Q by R S $.............

Divide S by 366 T $.............

See page xx of these instructions.

Net basic levy from P above U $.............

The number of days shown at M1, label W on the tax return* V .............

Multiply U by V W $.............

Divide W by 366 X $.............

Divide X by 2 Y $.............

Add T and Y =

Exemption adjustment Z $.............

*Note: If completing this calculation for trust tax returns, use Medicare label C from the tax return to determine the number of days of full exemption. Use Medicare label D from the tax return to determine the number of days of half exemption.

Taxable income for MLS purposes AA $.............

Multiply AA by 1% BB $.............

If the taxpayer has to pay the surcharge for the WHOLE year, the amount the taxpayer has to pay is BB. If the taxpayer has to pay the surcharge for PART of the year, continue with step 2 below.

The number of days shown at label A, item M2, on the tax return CC .............

Subtract CC from 366 DD .............

Divide DD by 366 EE .............

Multiply BB by EE =

Surcharge amount FF $……….

Net basic levy—P above P $.............

Exemption adjustment—Z above Z $.............

Surcharge amount—FF above FF $.............

P minus Z plus FF =

If the taxpayer was in exemption category 3 or 4 the taxpayer qualifies for a full Medicare levy exemption for the whole of the income year regardless of whether or not they had dependants.

Full 1.5 per cent levy exemption applies for any period in 1999–2000 if the taxpayer was in exemption category 1 or 2 and one or more of the following conditions applied for that period:

• the taxpayer had no dependants
• all the taxpayer’s dependants were also in an exemption category
• the only dependant was the taxpayer’s spouse, who was liable to pay the Medicare levy
• the taxpayer had dependent children who were not in an exemption category but they were also dependants of the taxpayer’s spouse, who either has to pay the Medicare levy or was in exemption category 1 or 2 and the taxpayer has completed a FAMILY AGREEMENT declaring that their spouse will pay the half levy for their joint dependants.

To be eligible to complete a FAMILY AGREEMENT it is a condition that both the taxpayer and their spouse would, apart from their exempt category status, have to pay the Medicare levy.

If the taxpayer was in exemption category 3 or 4 for part only of 1999–2000 or exemption category 5 or 6 for any period of 1999–2000 the full 1.5 per cent levy exemption applies if one or more of the following conditions applied for that period:

• the taxpayer had no dependants
• all their dependants were in an exemption category.

Half 1.5 per cent levy exemption applies for any period in 1999–2000 if the taxpayer was in exemption category 1 or 2 and one or more of the following conditions applied for that period:

• the taxpayer did not have a spouse but had one or more dependants who were eligible to receive Medicare benefits
• the taxpayer’s spouse was not in an exemption category for that period and the spouse was not liable to pay the Medicare levy because of the low income earner threshold
• the taxpayer’s spouse was also in exemption category 1 or 2 but there was a dependant of both the taxpayer and their spouse who was not in an exemption category. In this case either the taxpayer or their spouse can, by completing a FAMILY AGREEMENT, claim a full exemption—list B—with the other claiming a half exemption—list C.

This is a compulsory label for taxpayers who were under 18 years of age on 30 June 2000. Completion of the label will ensure the correct calculation of any tax payable due to Division 6AA of ITAA 1936.

Show any excepted assessable income less any deductions related to excepted assessable income at label J, item A1.

If the taxpayer is an excepted person or a prescribed person with no excepted income, write ‘0’ at label J, item A1.

Print the appropriate code letter from the following table in the TYPE box at the right of label J, item A1.

Excepted person A

Person under 18 years at 30 June 2000 M

Person who will be 18 years in 2000–2001 N

If both code letters M and N apply, print the letter N.

This item is only completed if the taxpayer ceased full-time education for the first time in 1999–2000, within the meaning of section 17 of the Income Tax Rates Act 1986 (ITRA 1986), or the taxpayer, not being an eligible pensioner, ceased to be or became an Australian resident for tax purposes during 1999–2000.

Write the number of months at label N, item A2, that the taxpayer:

Write the date to the left of label N that the taxpayer ceased to be a resident or became a resident.

If the taxpayer ceased full-time education for the first time in 1999–2000, write the net pre-workforce income of the taxpayer within the meaning of section 19 ITRA 1986 at label O, item A2, of the tax return.

Show here any amount that would be included in the taxable income of the taxpayer for the 1999-2000 income year if the operation of section 271-105 of ITAA 1936 were ignored. Under legislation contained in Schedule 2F of ITAA 1936, a trust may choose to make a family trust election and a trust, company or partnership may choose to make an interposed entity election.

A consequence of making a family trust election or an interposed entity election is that under Division 271 of ITAA 1936, a special tax called family trust distribution (FTD) tax, is payable at 48.5 per cent by the relevant trust, company or partnership on any conferral of present entitlement to, or distribution of, income or capital of the trust, company or partnership, respectively, to persons who are not members of the family group of the individual specified in the relevant election within the meaning of s272-90 of ITAA 1997.

To the extent that that part of the FTD tax has been paid on a conferral of present entitlement to, or distribution of, income or capital of a trust, company or partnership that would otherwise be assessable to a person, the income or capital is excluded from the person's assessable income. Refer to section 271-105 of ITAA 1936.

However, any part of the distribution that would have been included in the taxpayer’s assessable income if FTD tax had not been paid is reduced by any expenses that would have been deductible against it.

Any losses or outgoings incurred in deriving an amount which is excluded from assessable income under section 271-105 of ITAA 1936 are not deductible and a credit or rebate cannot be claimed for any imputation credit attached to a dividend which is exempt income by reason of section 271-105 of the ITAA 1936.

However, the exemption of an amount under section 271-105 of ITAA 1936 is ignored for the purpose of determining the liability of an individual for the Medicare levy surcharge and the superannuation contributions surcharge. Refer to the Medicare Levy Consequential Amendment (Trust Loss) Act 1998 and items 33 and 34 of Schedule 1 to the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998, respectively.

Show here any amount that would be included in the taxable income of the taxpayer for the 1999–2000 income year if the operation of sections 102UK and 102UM of ITAA 1936 were ignored. Under paragraphs 102UK(2)(b) and 102UM(2)(b), where a trustee of a closely held trust is subject to ultimate beneficiary non-disclosure tax on the share of net income of the trust, the trustee beneficiary and any other person presently entitled to a part of that share of the net income, are not required to include that amount within their assessable income. However, this amount is nevertheless treated as though it were not exempt income when calculating the taxpayer’s taxable income for the purpose of determining the liability of the taxpayer for the Medicare levy surcharge and the superannuation contributions surcharge. Any distribution that is shown at this item on your tax return can be reduced by expenses the taxpayer would have been able to claim as a deduction if the distribution had been included in your assessable income.

If the taxpayer is an Australian resident and is eligible for family tax assistance under Division 5 of Part II of ITRA 1986, complete item A5 on page 6 of the tax return. If the taxpayer completes item A5 and had a spouse during 1999–2000, also complete Spouse details—married or de facto on page 7 of the tax return and Your spouse’s name on page 1 of the tax return.

Write the name and date of birth of each dependant of the taxpayer during 1999–2000 within the meaning of sections 20K, 20L, 20M, 20N and 20P of ITRA 1986 in the Given name of FTA dependant and Date of birth boxes. If section 20L of ITRA 1986 applies to the taxpayer in respect of a dependant, show the number of nights during 1999–2000 the child was the dependant of the taxpayer during the allocation period under section 20L of ITRA 1986, at label C (if there is only one allocation period within the meaning of section 20L of ITRA 1986 in 1999–2000) or at label E (if there is more than one allocation period within the meaning of section 20L of ITRA 1986 in 1999-2000). Unless label E is completed, write at label B the number of nights the child was the dependant of the taxpayer during 1999–2000 excluding any night during any allocation period within the meaning of section 20L of ITRA 1986. If label E is completed, label E must show the number of nights the child was the dependant of the taxpayer during 1999–2000, including during every allocation period within the meaning of section 20L of ITRA 1986. If a number is written at label C, write the number of nights at label D the child was the dependant of another person or persons, during the allocation period.

Write at label F, item A5, the maximum number of dependants that the taxpayer had at any one point of time during 1999–2000. Write at label G, item A5, the number of nights in 1999–2000 the taxpayer provided care for a dependant who was under the age of 5 years at the time. If the taxpayer provided care for more than one dependant under 5 during 1999–2000, do not count the same night more than once.

Write at label H, item A5, the amount of family tax payment Part A benefit received by the taxpayer, their spouse or another person residing with the taxpayer for the dependants for whom the taxpayer is claiming FTA.

Write at label I, item A5, the amount of family tax payment Part B benefit received by the taxpayer, their spouse or another person residing with the taxpayer for the dependants of the taxpayer.

Dependant under 16 and in full-time education at any time between 1 July 1999 and 30 June 2000 No limit

* In working out these limits exclude income from youth allowance paid to full time students, ABSTUDY, Veterans’ Children Education Scheme or Assistance for Isolated Children Scheme.

1 $70 000

2 $73 000

3 $76 000

4 $79 000

more than 4 dependent children $79 000 plus $3000 for each dependent child after the 4th

1 $65 000

2 $68 000

3 $71 000

4 $74 000

more than 4 dependent children $74 000 plus $3000 for each dependent child after the 4th

The taxable income ceiling is $xxxx.

Complete labels J to R where requested to do so.

If the taxpayer has a joint account and they have quoted their individual tax file number (TFN) to the financial institution, show the taxpayer’s share of interest at item 9—Gross interest. If the taxpayer quoted a partnership or trust TFN to the financial institution, any interest derived becomes part of the net income of the partnership or trust. Show the taxpayer’s share of the net income of the partnership or trust at this item.

If the taxpayer is presently entitled to income of a non-resident trust or the taxpayer is claiming a credit for tax paid or payable by the trustee under subsection 98A(2) or subsection 100(2) of ITAA 1936, you will need to provide more information. Attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 11, with the taxpayer’s name and address, TFN, name of the trust and of the trustee, the taxpayer’s share of net income of the trust and any credits to which the taxpayer is entitled under subsections 98A(2) or 100(2) of ITAA 1936. Ensure the taxpayer signs the schedule.

Any amount described as attributed foreign income or any other foreign source income on the taxpayer’s distribution statement from the trust or partnership is not shown at this item. Show these amounts at item 15—Foreign entities or item 16—Foreign source income and foreign assets or property.

Show at labels N or O amounts of net income of a partnership which are assessable to the taxpayer for 1999–2000 under subsection 92(1) of ITAA 1936 (referred to below as partnership income) and any deduction allowable to the taxpayer for 1999–2000 under subsection 92(2) of ITAA 1936 (referred to below as a partnership loss), less any attributed foreign income or foreign source income of the partnership on which the taxpayer is assessed—which must be included at item 15 or 16.

Include at label N the whole or part of partnership income or a partnership loss which is assessable primary production income or a relevant primary production deduction of the taxpayer within the meaning of Division 392 of ITAA 1997. If the amount shown at label N is a loss, print L in the small box at the right of label N.

Include at label O the whole or part of partnership income or a partnership loss which is not shown at label N. If the taxpayer was a partner in a partnership, include any salary and wage income derived by the taxpayer from the partnership at label O. If the amount shown at label O is a loss, print L in the small box at the right of label O.

Do not show income from a corporate limited partnership at this item—show it at item 10—Dividends.

If a taxpayer:

When lodging returns for taxpayers in this situation, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 11 with the taxpayer’s name, address and TFN, and indicate that both the profit distribution and the loss are from the same partnership. The ATO will then calculate the correct personal superannuation contributions rebate manually. Ensure the taxpayer signs the schedule.

Show at label L or U any share of net income of a trust or trusts on which the taxpayer is assessable for 1999–2000 (referred to below as ‘trust income’), less the following amounts (if any):

Include at label L the whole or part of trust income which is assessable primary production income or a relevant primary production deduction within the meaning of Division 392 of ITAA 1997.

Include at label U the whole or parts of trust income that is not shown at label L.

Include at this label distributions from any trust investment product, such as a cash management trust, money market trust, mortgage trust, property trust, or unit trust. Do not show distributions from an equity investment in an entity that is treated as a company for tax purposes-that is, a public trading trust or a corporate unit trust. These are shown at item 10—Dividends.

A loss from a trust cannot be included in the amount shown at either label L or label U unless it forms part of an overall amount of net income of the trust on which the taxpayer is assessable.

Where the taxpayer is presently entitled to income of a trust which is carrying on a business of primary production in Australia within the meaning of Division 392 of ITAA 1997 and the taxpayer:

then you must write ‘0’ at label L, item 11, and print L in the small box at the right of the label. This will ensure that the taxpayer is subject to the averaging provisions for primary producers. Refer to Taxation Ruling TR 95/29—Applicability of averaging provisions to beneficiaries of trust estates carrying on a business of primary production.

Print the trust code letter from Table 1 below which best describes the type of trust from which an amount is shown at label L or U. Descriptions of the type of trusts listed in Table 1 are contained in Table 2 on page xx. If the amount shown at label L or U is from more than one type of trust, print the code letter for the type of trust from which the greatest amount is included in the amount shown at label L or U. If the amount at label L or U is a loss you must use the code letter L.

If from more than one type of trust print the code letter for the trust type with the largest amount of distribution.

Claim at label I any expenditure incurred by the taxpayer on landcare operations or water conservation/conveying that is deductible under Subdivisions 387-A and 387-B of ITAA 1997. The amount at label I must relate directly to assessable primary production income derived by the taxpayer under Division 5 of Part III of ITAA 1936 and the expenditure must not have been claimed by any partnership.

If the taxpayer is a partner in a partnership that incurred expenditure that is deductible under Subdivisions 387-A and/or 387-B of ITAA 1997, the taxpayer may be able to claim a rebate at item R10—Landcare and water facility instead of an expense at label I. See page xx of these instructions. If the taxpayer is a beneficiary in a trust that incurred eligible landcare operations and/or water conservation/conveying expenses, only the trust can claim deductions or rebates for that expenditure.

Claim at label X any other deductible expenses incurred by the taxpayer—less any expenses shown at label I, item 11, or that have been claimed at R10—which relate directly to assessable primary production income derived by the taxpayer under Division 5 or Division 6 of Part III of ITAA 1936.

Claim at label J any expenditure incurred by the taxpayer on landcare operations expenses that are deductible under Subdivision 387-A of ITAA 1997—other than expenses shown at label I. The amount at label J must relate directly to assessable income derived by the taxpayer under Division 5, Part III of ITAA 1936 and the expenditure must not have been claimed by any partnership.

If the taxpayer is a partner in a partnership that incurred expenditure that is deductible under Subdivisions 387-A and 387-B of ITAA 1997, the taxpayer may be able to claim a rebate at item R10 instead of an expense at label J. See page xx of these instructions. If the taxpayer is a beneficiary in a trust that incurred eligible landcare operations and/or water conservation/conveying expenses, only the trust can claim deductions or rebates for that expenditure.

Claim at label Y any other deductible expenses incurred by the taxpayer which relate directly to assessable income derived by the taxpayer under Division 5 or Division 6, Part III of ITAA 1936—other than:

If an amount shown at label O or U includes an amount of assessable professional income within the meaning of section 405-20 of ITAA 1997 from activities as an author of a literary, dramatic, musical or artistic work, inventor, performing artist, production associate or an active sportsperson, this income less amounts that reasonably relate to the assessable professional income must also be shown at Taxable professional income, label Z, item 19—Other income on page 9 in the supplementary section of the tax return.

Share of prescribed payments system (PPS) credit—label P

If a partnership or trust distribution was made to the taxpayer that includes PPS income, show the share of any PPS credit for tax deducted at label P.

If a partnership or trust distribution was made to the taxpayer, which includes RPS income, show the share of any RPS credit for tax deducted at label Z.

Write at label Q the amount of any franking rebates that the taxpayer is entitled to claim through a partnership or trust under section 160AQX or section 160AQZ of ITAA 1936.

A taxpayer’s entitlement to a franking rebate may be affected by measures that have been introduced to curb the unintended usage of franking rebates by persons who do not effectively own the shares or who only briefly own the shares. These measures, known as the holding period rule and the related payments rule, generally operate from 1 July 1997 and in some cases from 13 May 1997. See What’s New? on page xx of these instructuions. For details of the operation of this legislation refer to the Taxation Laws Amendment Act (No.2) 1999 and the publication You and your shares which is available from the ATO.

This is the amount of income tax credit vouchers purchased for the taxpayer to offset tax on net income from a partnership or a trust which is included in the amount shown at labels N, L, O and U.

If the taxpayer carries on a business or is self-employed, including a taxi driver under a standard bailment agreement with an owner/operator, the Business and professional items schedule 2000-tax agents must be completed and attached to page 3 of the tax return.

If the taxpayer is registered for GST purposes, the net income or loss excludes any GST payable relating to income derived in 1999–2000. Expenses incurred in 1999–2000 are reduced by amounts of input tax credit entitlements attributable to the first GST tax period after 1 July 2000.

Use the Business and professional items schedule 2000-tax agents to calculate the net income or loss if you carry on a business.

Note: The list below shows where to put certain types of income and expense in the tax return:

Transfer to labels B and C any amounts shown, respectively, at labels Y and Z, item P6, of the Business and professional items schedule 2000-tax agents. If the amount at label B or C is a loss, print L in the small box at the right of the appropriate label. Payments of tax on income shown at this item by income tax credit vouchers must be shown at item C1—Income tax credit vouchers in the supplementary section of the tax return.

If the taxpayer carried on a business as an author of a literary, dramatic, musical or artistic work, inventor, performing artist, production associate or an active sportsperson, assessable professional income less amounts that reasonably relate to the assessable professional income must also be shown at Taxable professional income, label Z, item 19, in the supplementary section of the tax return.

You must complete Gross prescribed payments system income, label D, item P6, in the Business and professional items schedule 2000-tax agents if the taxpayer is claiming a PPS credit at label D, item 12—Net income or loss from business.

In order to claim a PPS credit at label D, item 12, the taxpayer must have:

Do not include the taxpayer’s share of PPS credits distributed from a partnership or trust at label D, item 12. Include that credit at label P—Partnerships and trusts—Share of prescribed payments system credit, item 11 in the supplementary section of the tax return.

If the taxpayer had tax deducted under the prescribed payments system during the year ended 30 June 2000, the taxpayer should have received duplicate copies of PPS payment summaries. Payers are required to send the payment summary to the taxpayer by 14 July 2000. Show the total amount of tax deducted, as shown on the payment summaries, at label D, item 12.

If the taxpayer did not receive or has lost their copy of the payment summary, contact the payer and request a signed photocopy of the payer’s copy or a letter setting out the details previously shown in the missing payment summary.

You must complete Gross reportable payments system income labels E and/or F, item P6, in the Business and professional items schedule 2000-tax agents if the taxpayer is claiming an RPS credit at label W, item 12.

In order to claim a RPS credit at label W, item 12, the taxpayer must have:

Do not include the taxpayer’s share of RPS credits distributed from a partnership or trust at label W, item 12.

Include that credit at Partnerships and trusts—Share of reportable payments system credit at label Z, item 11—Partnerships and trusts in the supplementary section of the tax return.

If the taxpayer had tax deducted under the reportable payments system during the year ended 30 June 2000, the taxpayer should have received a receipt from the payer indicating the amount deducted. The total amount of tax deducted is to be included at label W, item 12.

If the taxpayer did not receive or has lost their copy of the receipt, contact the payer and request a signed photocopy of the payer’s copy or a letter setting out the details previously shown in the missing receipt.

If the amount of deposits is greater than the amount of withdrawals, print L in the small box at the right of label E.

Note: Start time refers to 11.45 a.m. by legal time in the ACT on 21 September 1999.

A taxpayer makes a capital gain or loss for the income year if a CGT event happens. There is a wide range of CGT events. Most CGT events involve a CGT asset. Some happen often and affect many different taxpayers. For example, CGT event A1 happens when a taxpayer disposes of a CGT asset. Other CGT events are rare and affect only a few taxpayers. Some CGT events are concerned directly with capital receipts and do not involve a CGT asset - for example, when a taxpayer enters into an agreement not to work in a particular industry for a period of time in return for a capital receipt.

An Australian resident makes a capital gain, generally speaking, if a CGT event happens to any of its worldwide CGT assets.

A non-resident taxpayer makes a capital gain or loss only if a CGT event happens to a CGT asset that has the necessary connection with Australia or CGT events D1 or E9 apply - which are respectively, about creating contractual or other rights and creating a trust over future property. A non- resident makes a capital gain or loss from CGT event D1 and E9 only if the requirements of section 136-15 of the Income Tax Assessment Act 1997 (ITAA 1997) are satisfied. There are also rules dealing with what happens when a non-resident becomes a resident.

Note: Indexation is not available for CGT assets acquired after the start time or for expenditure in relation to CGT assets after the start time. For CGT events happening after that time to a taxpayer’s assets acquired at or before that time, indexation is frozen as at 30 September 1999. For CGT events happening after the start time an individual taxpayer may be eligible for the CGT discount. See What’s new? on page 10 of these instructions for more information.

An exception (most are in Division 104 of ITAA 1997) or exemption may apply to allow the taxpayer to reduce the capital gain or loss or disregard it.

In general, the taxpayer acquires a CGT asset when the taxpayer becomes its owner. Any capital gain or loss is disregarded if the taxpayer became its owner before 20 September 1985. However, if a capital improvement is made after 19 September 1985 to an asset acquired on or before that date, the improvement may be treated as a separate CGT asset. See Property acquired before 20 September 1985 on page 11 of these instructions.

Use the Capital gains worksheets on pages 45 to 54 to calculate capital gains and losses. The ATO publication Guide to capital gains tax provides more information on how to calculate capital gains and losses.

Note: A capital gain a taxpayer makes from a CGT event is reduced if an amount has already been included in assessable income as a result of the CGT event, under a provision of the income tax legislation other than the capital gains tax provisions.

Any profit from the sale of any property acquired before 20 September 1985 must be included in your assessable income if:

• the profit arose from the carrying on or carrying out of a profit making undertaking or plan; or
• the property was acquired for profit making by sale.

The Australian Taxation Office (ATO) has issued a number of Taxation Rulings and Taxation Determinations setting out the views of the ATO on the interpretation and application of the law as it relates to transactions involving property. For example, Taxation Ruling TR 92/3.

Show at this label the figure at F13 of the Capital gains worksheet on page 12. Elect the code letter from the list below that best describes the CGT asset involved in the CGT event. Print the code letter in the Type box at the right of label H. If the taxpayer made capital gains in more than one category, print the code letter for the category with the largest amount of capital gain.

Shares S

Units in unit trusts U

Real estate R

Collectables A

Personal use assets P

Equipment and plant including trucks E

Goodwill on the sale of a business G

Trust distributions T

Other assets or where the CGT event does not involve a CGT asset O

Instalment Receipts I

Note: Code letter E does not apply for a CGT event in relation to plant that happens after the start time.

A taxpayer’s share of any net capital gain from a trust estate should be included at this label. Do not include this amount as a distribution from the trust at item. There are special rules if the trust’s net capital gain was reduced by the CGT discount and/or has been reduced because of the application of the small business 50 per cent active asset reduction by the trustee. These rules ensure that any capital losses are applied appropriately and the taxpayer claims the CGT discount correctly.

If the taxpayer receives from a trust estate a share of any net capital gain made by the trust estate and the net capital gain has been reduced by 50 per cent under either the CGT discount or the small business 50 per cent active asset reduction but not both, the taxpayer must ‘gross up’ by multiplying their share of the net capital gain amount by 2. If the taxpayer receives from a trust estate a share of any net capital gain made by the trust estate and the net capital gain has been reduced by 50 per cent under both the CGT discount and the small business 50 per cent active asset reduction, the taxpayer is to ‘gross up’ by multiplying their share of the net capital gain amount by 4. Refer to Subdivision 115-C ITAA of 1997.

The taxpayer may also receive payments from the trustee out of the discount amount and/or an active asset reduction amount. These payments are ‘tax-deferred amounts’. If the trust estate is a unit trust or a fixed trust and the tax-deferred amount exceeds the cost base of the units or fixed interests in the trust, the taxpayer makes a capital gain equal to the excess.

Note: The amount at Label H includes any amounts rolled over under the capital gains tax small business roll-over provisions in Division 123 or Subdivision 152-E of ITAA 1997 or which are exempt under the small business retirement exemption provisions in subdivisions 118-F or 152-D of ITAA 1997. It also includes capital gains prior to the application of the CGT discount (Division 115) and the small business 50 per cent active asset reduction.(subdivision 152-B).

Special rules apply to collectables and personal use assets. If the taxpayer makes a capital gain from a collectable, it is disregarded if the collectable was acquired for $500 or less. A capital gain or loss the taxpayer makes from an interest in a collectable is only disregarded if the market value of the asset was $500 or less when the interest was acquired. A capital gain the taxpayer makes from a personal use asset, or part of a personal use asset, is disregarded if the taxpayer acquired it for $10 000 or less.

Show at this label the Current year capital losses applied from of the Capital gains worksheet on page 25. Show at Label G, the sum of E1 and F20. The amount includes capital losses applied in calculating a small business roll-over amount. Only show, at label G, the appropriate amount of capital losses that are applied against the taxpayer’s Total current year capital gains, label H. The amount shown at label G cannot exceed the amount shown at label H. If label H is blank, do not complete label G.

The taxpayer may choose the order in which capital gains are reduced by current year capital losses.

A capital loss is made if a CGT event happens and the taxpayer’s reduced cost base for the CGT event exceeds the capital amounts the taxpayer receives, or is entitled to receive, from the event. The reduced cost base is not indexed for inflation.

A capital loss the taxpayer makes from a collectable is disregarded if it is acquired for $500 or less.

A capital loss made on a collectable in the income year can only be used to reduce capital gains from other collectables—section 108-10 of ITAA 1997. Only include at this label the amount of any current year capital losses from collectables that the taxpayer is using this year to reduce capital gains from collectables.

A capital loss from a personal use asset is disregarded—section 108-20 of ITAA 1997—that is, it is not even used to reduce capital gains from other personal use assets.

Any capital losses not applied can be carried forward to a later income year and applied against capital gains in that year.

Select the code letter from the list below which best describes the CGT asset or assets to which the CGT event happened. Print the code letter in the TYPE box at the right of label G. If the taxpayer made a capital loss from more than one CGT event, print the code letter for the largest amount of capital loss.

CGT asset Code letter

Shares S

Units in Unit trusts U

Real estate R

Collectables A

Equipment and plant including trucks E

Goodwill on the sale of business G

Other CGT assets or where the CGT event does not involve a CGT asset O

Instalment Receipts I

Note: Code letter E does not apply for a CGT event in relation to plant that happens after the start time.

Show at this label the sum of D1, E2 and F30 from the Capital gains worksheet on page 15. The amount includes prior year net capital losses applied in calculating a small business roll-over amount or retirement exemption amount. The amount shown at this label cannot exceed Total current year capital gains, label H minus Total current year capital losses applied, label G. If label H is blank or equals label G, do not complete label X.

Prior year net capital losses are applied in the order in which they were made. Any unused prior year net capital loss made on a collectable can only be applied to reduce capital gains from other collectables. Only include at label X any prior year net capital losses from collectables applied against current year capital gains from collectables.

A capital loss from a personal use asset is disregarded—that is, it is not even used to reduce capital gains from other personal use assets.

Capital losses may be reduced by the commercial debt forgiveness provisions under section 102-30, Item 3 of ITAA 1997 and Schedule 2C of ITAA 1936.

This is the amount at F37 of the worksheet.

To work out the net capital gain any discount capital gains (after applying current year capital losses and prior year net capital losses) should be first reduced by the discount percentage. Any remaining capital gains that qualify for any of the small business concessions in subdivision 152-C, 152-D and 152-E of ITAA1997 may be further reduced.

The information at labels V and Z is required to work out the CGT averaging reduction, which can reduce the tax otherwise payable on some assessments. The labels need to be completed when assessments are affected by the removal of CGT averaging in the 1999-2000 income year, and part of the taxpayer's net capital gain is attributable to CGT events that happened between 1 July 1999 and 11.45 a.m. by legal time in the Australian Capital Territory on 21 September 1999 (the start time).

The New Business Tax System (Income Tax Rates) Act (No 2) 1999 ('the Act') amended the Income Tax Rates Act 1986 to remove the CGT averaging concession from the 1999-2000 income year. In that year only, transitional measures provide a reduction to basic income tax liability. The reduction reduces additional tax from the removal of CGT averaging, to the extent that it relates to CGT events happening up until the start time. The explanatory memorandum to the Act describes how the reduction is worked out and gives several examples.

The reduction is calculated by the ATO from information in the return, including the information at labels V and Z. Do not complete labels V and Z unless there may be a reduction entitlement in the assessment, or unless the reduction may increase the rebate on eligible termination payments and lump sums under section 159SA of ITAA 1936. In some circumstances, you will need to include a schedule of additional information in the return.

If, after reading these instructions and making any further enquiries, you are still unsure whether the taxpayer qualifies for the reduction (or the benefit of the reduction through a section 159SA rebate) you may still complete labels V and Z as explained below. The ATO will work out whether or not there will be any benefit. If you need further information, contact the ATO.

The reduction can only apply to taxpayers who would have been entitled to the CGT averaging concession had it not been removed. These are:

• individuals
• trustees, for assessments under sections 98 and 99 of the ITAA 1936 which apply individual stepped tax rates
• for individuals, the 1999-2000 year taxable income must include a net capital gain
• there must be a capital gain (that is not disregarded) from a CGT event that happened in the 1999-2000 year before the start time. This does not include capital gains that have been entirely disregarded, but can include a gain against which losses have applied under the small business CGT concessions, even if some or all of the remainder was then disregarded. It could also include a gain arising from a trust in which the taxpayer is a beneficiary
• the pre-announcement net capital gain amount at label V must be greater than zero. See below for information on how to calculate it.
• the gross adjustment amount (additional tax from the removal of averaging) must be more than zero. It may not exceed zero if the taxpayer's taxable income, apart from any net capital gain (or for some taxpayers average income or a reduced notional income) exceeds the top individual marginal rate threshold. Where all of the net capital gain is subject to the Division 6AA tax rates applying to certain children's income there will be no reduction in that assessment, because the CGT averaging concession would not have been available under the previous law.

If the taxpayer’s taxable income includes an amount rebatable under section 159SA (the rebateable component of certain lump sum and eligible termination payments), and apart from this payment being included, there may have been additional tax from the removal of CGT averaging, you should complete labels V and Z. Even if there is no direct entitlement to the averaging reduction, it may increase the rebate.

When a trustee is assessed under section 98 of the ITAA 1936, and an amount is shown at item 11 label S in the beneficiary's return (share of credit for tax paid by the trustee), any CGT averaging reduction allowed in the trustee assessment must be taken into account.

Firstly, calculate the notional net capital gain. This is used instead of the actual net capital gain in working out the additional tax from the removal of the CGT averaging concession. It is the amount that would have been the net capital gain if the changes to the tax law from 21 September 1999 involving frozen indexation, the CGT discount and the new small business CGT concessions had not been made.

In the notional net capital gain, capital gains made throughout the 1999-2000 year are worked out using the indexation rules applying in the first part of the year, and without the CGT discount rules. For example, a discount capital gain made in December 1999 is recalculated to include (where otherwise allowable) indexation in the cost base. The indexation is worked out using the index number for the December 1999 quarter. The gain is not reduced by the discount percentage. Capital losses, and capital gains made up to the start time, will not need to be recalculated.

If the taxpayer’s taxable income includes a share of the net income of a trust, and that share is to some extent attributable to the net capital gain included in the taxpayer’s taxable income, ignore any capital gain taken to arise under subdivision 115-C of the Income Tax Assessment Act 1997 (ITAA 97) when you work out the taxpayer’s notional net capital gain. Instead, include a proportion of the notional net capital gain of the trust. The proportion you include is the same as the proportion of the trust's net capital gain attributable to the taxpayer’s share of the trust's net income. For example, if this is one half of the trust's net capital gain, include one half of the trust's notional net capital gain in the taxpayer’s notional net capital gain. This assumes that the trust's notional net capital gain is less than its notional net income. Otherwise, a smaller amount would be included.

Finally, the notional net capital gain is also worked out as though the former small business CGT concessions in subdivisions 118-C and 118-F (the goodwill and small business retirement exemptions) and Division 123 (the small business roll-over) applied for the whole year, and the new measures in Division 152 ITAA 97 had not been enacted. The concession notionally applied must be such that it would have been available in the actual circumstances.

Modified net capital gain amount—Label Z (work out label Z before label V)

The modified net capital gain amount is the notional net capital gain PLUS the amount of prior year net capital losses applied shown at label X (current year capital losses shown at label G are not added back).

Where the taxpayer is a minor (see A1), in working out the modified net capital gain amount you also exclude any part of the notional net capital gain which is eligible assessable income under Division 6AA of Part III of ITAA 1936 (including in respect of any share of the notional net capital gain of a trust). In these situations, you will need to include a schedule of additional information with the return - see below.

The modified net capital gain amount should include the part of any capital gain that has been offset by current and/or prior year capital losses before the application of any actual (or notional) small business CGT concessions, less the current year capital losses applied against them. The prior year net capital losses applied in this way are added back at this step along with any other prior year losses.

Pre-announcement net capital gain amount—Label V

The pre-announcement net capital gain amount at label V is the modified net capital gain amount at label Z, to the extent that it relates to CGT events that happened up to the start time (pre-announcement CGT events). Capital losses and capital gains for later CGT events are ignored. In the case of minors subject to Division 6AA, the amount at label V will not include any eligible assessable income because it will already have been excluded in completing label Z.

If the taxpayer’s notional net capital gain includes some of the notional net capital gain of a trust, and a proportion of it relates to pre-announcement CGT events in that trust, the same proportion is included in the taxpayer’s pre-announcement net capital gain amount. For example, if one third of the taxpayer’s share of the trust's notional net capital gain is attributable to pre-announcement CGT events in the trust, include one third in your taxpayer’s pre-announcement net capital gain amount. However, in the case of minors subject to Div 6AA, this amount should only be included to the extent that it is excepted trust income.

The CGT averaging reduction is worked out by:

• calculating the additional tax from the removal of averaging; and
• reducing what would otherwise be the basic income tax liability by a percentage of the additional tax.

The additional tax is worked out by comparing tax with, and without, CGT averaging on a notional taxable income, which uses a notional net capital gain (see above) instead of the taxpayer's actual net capital gain. The percentage capital gain adjustment percentage reflects the extent to which the net capital gain relates to pre-announcement CGT events, and otherwise would have been subject to CGT averaging.

For more information refer to Guide to capital gains tax.

If the taxpayer was under 18 at 30 June 2000 and they have made a net capital gain, they will not be entitled to the CGT averaging reduction unless they are an excepted person, or all or part of their net capital gain is excepted income. Refer to question A1 on page x of these instructions.

If only part of the taxpayer’s net capital gain is excepted income, complete labels V and Z as shown above. In addition, prepare an attachment headed SCHEDULE OF ADDITIONAL INFORMATION: CGT averaging reduction – partly excepted income. Explain the taxpayer's circumstances, including the following details:

• the amount of the net capital gain which is considered to be excepted income, and why
• the amount you subtracted in working out the taxpayer’s modified net capital gain amount at label Z because it is not excepted income, and details of how it was worked out; and
• details of how you worked out the taxpayer’s pre-announcement net capital gain amount at label V.

You must also include the information and follow the procedures required by the instructions for tax return attachments on page [6 in the 1999 instructions] of these instructions.

Show at this label the amount from F33 of the Capital gains worksheet being current year capital losses and/or prior year net capital losses that have not been applied to offset capital gains.

There should not be an amount at label R if there is an amount at label W.

Do not include net capital losses made from personal use assets. Keep a note of any net capital loss made from collectables and not applied this year to reduce a capital gain from collectables. This amount can only be applied in future years to reduce capital gains made from collectables.

Do not include net capital losses which have been applied in calculating a capital gains tax small business net roll-over amount under former Division 123 of ITAA 1997 or retirement exemption amount under Subdivision 118-F of ITAA 1997.

Capital losses may be reduced by the commercial debt forgiveness provisions under section 102-30 of ITAA 1997 and Schedule 2C of ITAA 1936.

Show at this label the amount of capital gain that has been rolled over under either former Division 123 of the ITAA 1997 or Subdivision 152-E of the ITAA 1997 in respect of the small business capital gains tax roll-over relief. This will be the sum of C3 and E3 from the capital gains worksheet.

A company or trust which the taxpayer controls may have claimed an exemption from capital gains tax under the small business retirement exemption laws. If the taxpayer received an eligible termination payment (ETP) from a company or trust which has claimed the exemption, and all or part of the ETP includes a capital gains tax (CGT) component, you must show the amount of the CGT component at label T. If the taxpayer carries on business as a sole trader or partnership and has claimed the CGT small business retirement exemption, show the exempt amount at label T.

Include at item T both amounts eligible for the retirement exemption under either the former Subdivision 118-F of the ITAA 1997 or subdivision 152-D of the ITAA 1997. This is the sum of C4 and D2.

For further information regarding the small business roll-over or small business retirement exemption refer to the ATO publication, Capital gains tax concessions for small business.

It is important to keep accurate records from the date of acquisition of any CGT asset from which the taxpayer has made or might make a capital gain or loss if a CGT event happens to it-for example, a disposal of the asset.

Failure to keep such records could result in:

• extra expense to reconstruct the cost base of the asset when a CGT event happens to it and
• more tax being paid.

The taxpayer must keep records of every act, transaction, event or circumstance that can reasonably be expected to be relevant to working out whether the taxpayer has made a capital gain or capital loss from a CGT event. It does not matter whether the CGT event has happened or may happen in the future.

The taxpayer must keep records in English—or readily convertible to English. The records must show the nature of the act, transaction, event or circumstance and the day when it happened or arose. In the case of an act the records must show who did it and in the case of a transaction who were the parties to it.

The taxpayer must retain the records for 5 years after it becomes certain that no CGT event—or no further CGT event—can happen such that the records could reasonably be expected to be relevant to working out whether the taxpayer has made a capital gain or loss from the event.

Note: The law (section 121-35 of ITAA 1997) now allows taxpayers to either:

• continue to follow the record keeping requirements above
• transfer the information contained in the records to a CGT asset register; or
• adopt a combination of both methods.

For further information regarding asset registers refer to the ATO publication CGT asset register: a new way of keeping records.

The taxpayer needs to answer the following questions.

Is the taxpayer an Australian resident for tax purposes whom:

You may need the publications Foreign income return form guide, Foreign tax credit guide and Foreign investment fund guide which are available from the ATO, to complete this item.

If the taxpayer answers yes to the second of the above questions, you will need to provide more information. Attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 15 with the taxpayer’s name, address, tax file number (TFN), name of trust and its trustee or trustees, date of transfer, and the amount of any attributable income in relation to the trust. Ensure the taxpayer signs the schedule.

Include the taxpayer’s answers to the 3 questions above at labels I, A and J, item 15—Foreign entities. Include the income relevant to these questions at labels K, B and C, item 15. If the taxpayer is entitled to claim any foreign tax credits in respect of income shown at label C, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 15 with the taxpayer’s name, address and TFN, the name of the FIF and/or FLP, the amount of attributable income in relation to each FIF and/or FLP and the amount of foreign tax credits claimed by the taxpayer in respect of the attributable income of each FIF and/or FLP. Ensure the taxpayer signs the schedule,

Show at label E, item 16, the gross amount of assessable income derived by the taxpayer from foreign sources, including any foreign tax paid on that income, other than income shown at labels K, B and C, item 15—Foreign entities. Do not include any income derived by the taxpayer that is exempt from tax at this label. The amount to be shown at label E reflects the gross foreign income, while the amounts at labels L, D and M reflect the income shown at label E net of deductions allowable to the taxpayer.

Show at label L, item 16, the following amounts:

Do not include at labels E or L any amount which is eligible income within the meaning of section 159ZR of ITAA 1936—lump sum payments in arrears. Include it instead at item 19—Other income.

If the amount shown at label L includes pension or annuity income which never had an undeducted purchase price, print the code letter P in the Type box at label L, item 16.

Show at label D, item 16, any foreign pension or annuity income of the taxpayer that has or had an undeducted purchase price (including any foreign tax paid on that income) less any deductions allowable to the taxpayer against that income.

If a taxpayer receives a foreign pension that is taxable in Australia, they may have made a prepayment of tax payable on that pension income by purchasing income tax credit vouchers from the ATO. Amounts of tax paid by the purchase of income tax credit vouchers should be included at item C1—Income tax credit vouchers.

Show at label M, item 16, all assessable income of the taxpayer from foreign sources including foreign source income of a partnership or trust which is assessed to the taxpayer (including any foreign tax paid on that income) other than income required to be shown at labels L or D, item 16, less any deductions allowable to the taxpayer against that income less any allowable foreign losses from previous years for each category of income that have not already been offset.

Show at label N, item 16, any income derived by the taxpayer from foreign employment, including lump sum payments, which is exempt from tax under section 23AF or section 23AG of ITAA 1936.

Claim at label O, item 16, any foreign tax credits which the taxpayer is entitled to claim under section 160AF of ITAA 1936.

Print Y at label $, item 16, if the taxpayer held at any time during 1999–2000 overseas assets—tangible or intangible—valued at AUD $50 000 or more, even if the taxpayer did not receive any income from that property or funds this year. Otherwise print N.

These assets include any interest whether legal or beneficial and whether it was held directly or indirectly through one or more interposed entities. The term ‘assets’ includes real property, shares in companies or other entities, interests in partnerships or trusts, business assets, debentures, bonds, money or funds held in accounts or by other parties, loans and deposits. It also includes intangible property such as trademarks, copyrights, patents, debtors or equitable choses in action. An interest in an asset also includes certain entitlements to acquire an FIF under section 483 of ITAA 1936.

Determine the value of these assets by historical cost or market value, whichever is greater. Use the exchange rate at 30 June 2000 to convert the value of the property or funds to Australian dollars or, if the property was disposed of during the year, use the exchange rate at the time of disposal.

For more information on rental income and deductions in relation to rental income refer to the publications Rental properties, Guide to depreciation and Taxation Rulings IT 2167—Rental properties: non-economic rental, holiday home, share of residence, etc. cases, family trust cases, TR 97/25—Property development: deduction for capital expenditure on construction of income producing capital works including buildings and structural improvements, TR 98/22—The consequences for taxpayers entering into certain linked or split loan facilities, TR 1999/D3—Deductibility of interest on moneys drawn down under line of credit facilities and redraw facilities and TR 97/23—Deductions for repairs.

Some tax agents will need to complete a rental property schedule that will be delivered to taxpayers as part of a separate package.

Print at label P the amount of total gross assessable rental income—including income of a similar kind such as agistment fees and hiring fees—derived by the taxpayer.

Print at label Q the amount of any deductible interest expenses incurred by the taxpayer in producing assessable rental income.

Print at label F the amount of any deductions allowable to the taxpayer under Division 43 of ITAA 1997 in relation to the taxpayer’s rental property or properties.

Print at label U the amount of any other deductible expenses incurred by the taxpayer in producing assessable rental income.

Where the total of amounts shown at labels Q, F and U is greater than gross rent shown at label P, print the letter L in the small box at the right of the Net rent label.

Print the appropriate code letter in the Claim type box at the right of label W.

Bonus from a life insurance company A

Bonus from a friendly society F

Bonus from both types of policies C

Show at this item all assessable income of the taxpayer that was not shown at items 1 to 18.

Show at label Y, item 19, the total amount of assessable income derived by the taxpayer of the following kinds:

Print the type of income you have shown at label Y in the Type of income—category 1 box at the left of label Y. If more than one type of income is included at label Y, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 19—category 1 income, setting out the taxpayer’s name, address, tax file number (TFN), details of each type of category 1 income and the amount of each type of income. Ensure the taxpayer signs the schedule.

Show at label V, item 19, the total amount of assessable income derived by the taxpayer of the following kinds:

Print the type of income you have shown at label V in the Type of income—category 2 box at the left of label V. If more than one type of income is included at label V, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item 19—category 2 income, setting out the taxpayer’s name, address, TFN, details of each type of category 2 income and the amount of each type of income. Ensure the taxpayer signs the schedule.

Do not show at this item:

If the taxpayer received lump sum payments in arrears write the amount of any tax instalments deducted from those payments at label E, item 19—Other income. Do not show any tax instalments included elsewhere on the taxpayer’s tax return.

Claim at label G, item D11, any deduction that the taxpayer is entitled to claim under Division 10BA of ITAA 1936. Do not claim at this item subscriptions for shares in a company licensed to invest in Australian films under the Film Licensed Investment Company (FLIC) Scheme. Claim them at item D14—Other deductions.

Note: Certain product rulings may apply to deductions claimed for film industry incentive expenditure.

Claim at label Y, item D12, the amount which the taxpayer can claim as a deduction under section 27H of ITAA 1936 in relation to a foreign pension or annuity, income from which the taxpayer showed at label D, item 16—Foreign source income and foreign assets or property.

Claim at label H, item D13, the amount that the taxpayer can claim as a deduction under section 82AAT of ITAA 1936.

The taxpayer cannot claim a deduction for contributions to a complying superannuation fund or retirement savings account (RSA) under section 82AAT of ITAA 1936 unless:

If the taxpayer is claiming a tax deduction for personal superannuation contributions made to more than one provider, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item D13 with the taxpayer’s name, address, tax file number and the following details for each superannuation fund or RSA provider from which the taxpayer received an acknowledgment notice:

If the taxpayer is claiming a deduction for contributions to only one provider write the full name of the fund or RSA and the taxpayer’s policy number in the boxes to the left of label H, item D13. Ensure the taxpayer signs the schedule.

Note: A taxpayer’s total reportable fringe benefits amounts are taken into account for the 1999–2000 income year.

Claim at label E, item D14, the amount of election expenses that the taxpayer can claim under sections 25-60 and 25-70 of ITAA 1997 or section 74A of ITAA 1936.

Claim at label J, item D14, the total of any amounts that the taxpayer can deduct under the income tax law in 1999–2000 other than the following:

If an amount is claimed at label J, print a description of the expense claimed in the Description of claim box at item D14. If the amount claimed at label J includes more than one kind of expense, attach to page 3 of the tax return a SCHEDULE OF ADDITIONAL INFORMATION—item D14 with the taxpayer’s name, address, tax file number and details of each type of expense claimed, including the amount claimed. Ensure the taxpayer signs the schedule.

Expenses that the taxpayer may be entitled to claim at this item include:

To claim this rebate complete Spouse details—married or de facto including labels S and O, on page 7 of the tax return and Your spouse’s name on page 1 of the tax return.

Write at Contributions paid, item R6, the total of eligible spouse contributions within the meaning of section 159TC of ITAA 1936 made by the taxpayer during 1999–2000.

Write at label A, item R6, the amount of the rebate to which the taxpayer is entitled under sections 159T and 159TA of ITAA 1936. If the taxpayer made contributions to a complying superannuation fund or retirement savings account on behalf of their non-working or low income earning spouse a rebate of up to $540 will be available where:

Except where the taxpayer qualifies for the rebate in respect of more than one spouse, the rebate is calculated as 18 per cent of the lesser of:

Write at label R, item R7, the total amount of any rebates to which the taxpayer is entitled under section 79A, section 79B or section 23AB of ITAA 1936.

Write at label X, item R8, the amount of any rebate to which the taxpayer is entitled under section 159P of ITAA 1936. The rebate is 20 per cent of the net medical expenses over $1250.

Write at label B, item R9, the amount of any rebate to which the taxpayer is entitled under section 159J of ITAA 1936 for the taxpayer’s invalid relative or parent, or spouse’s parent.

The landcare and water facility tax offset is a 34 cents in the dollar tax offset, and is an alternative to the deductions currently available under the following subdivisions of ITAA 1997:

Deductions for these types of expenditure are still available but taxpayers are able to choose the tax offset instead, subject to eligibility outlined below.

The landcare and water facility tax offset operates in a similar way to the relevant deductions, in that expenditure on landcare operations can be claimed as a tax offset in the year incurred and expenditure on facilities to conserve or convey water can be claimed as a tax offset over 3 years.

The landcare and water facility tax offset is available for expenditure incurred after the start 1997–98 income year and before the end of 2000–01 income year.

Write at label M, item R10, the amount of tax offset the taxpayer is claiming under Division 388 of ITAA 1997.

Write the appropriate code letter in the Claim type box at the right of label M.

Landcare operations only C

Water facilities only W

Both landcare operations and water facilities B

A taxpayer must work out their unused landcare and water facility tax offset for the years 1997–98 and/or 1998–99. This amount is then reduced by net exempt income (if any) in accordance with sections 65-30 and 65-35 of ITAA 1997. Every dollar of net exempt income reduces the brought forward tax offset by 34 cents.

Write at label T, item R10, the amount of brought forward landcare and water facility tax offset available to the taxpayer. This label only applies if the taxpayer’s income tax liability from the prior year did not absorb all of the landcare and water facility tax offset.

Write at label C, item R11, the total amount of any rebates/tax offsets to which the taxpayer is entitled under section 159UQ (heritage conservation rebate), section 159GZZZZG (infrastructure borrowings rebate) or section 160AB (interest on government securities) of ITAA 1936 or Division 396 of ITAA 1997 (land transport facilities tax rebate).

If the taxpayer has chosen under Division 16L of ITAA 1936 to have any interest from their investment in infrastructure borrowings included as part of their assessable income, or they have rebatable interest under Division 396 of ITAA 1997 they may be entitled to a rebate of up to 36 cents in the dollar of that interest. Where the taxpayer’s rebatable interest under Division 396 of ITAA 1997 is subject to an annual upper limit, as specified in the agreement between the lender(s), the borrower and the Minister for Transport and Regional Services, the taxpayer cannot claim a rebate for any part of rebatable interest that exceeds that upper limit.

If applicable, print code letter H for Heritage conversation in the Claim type box at the right of label C. If not applicable, leave the box blank.

If applicable, print code letter I for Land transport facilities/infrastructure borrowings in the Claim type box at the right of label C. If not applicable, leave the box blank.

If a rebate/tax offset is claimed for heritage conservation and land transport facilities/infrastructure borrowings, print the code letter that relates to the largest portion of the claim.

Attach income tax credit vouchers purchased for the taxpayer to page 3 of the tax return.

Show at label L, item C2, the amount of interest which is payable by the Commissioner to the taxpayer under section 8A of the Taxation (Interest on Overpayments and Early Payments) Act 1983, including interest for payment by the taxpayer of any of the following liabilities more than 14 days before the due date for payment:

• income tax (including Medicare Levy)
• assessed HECS debt shown on the taxpayer’s notice of assessment
• Student Financial Supplement Scheme debts shown on the taxpayer’s notice of assessment
• interest on distributions from non-resident trust estates payable under section 102AAM of ITAA 1936
• income tax penalties
• an income tax general interest charge relating to a late return or an amended assessment
• provisional tax
• instalments of provisional tax

For more information about interest on early payments, refer to the publication Interest on early payments and overpayments of income tax, which is available from the ATO.

• the interest period commences on the later of the date the taxpayer made the payment or the issue date of the notice informing the taxpayer of the amount of the tax, debt interest or instalment
• the interest period ends on the due date for payment
• the interest rate applying for each quarter of 1999–2000 is shown below.

Intesrest rates for early payments calculation

1 July 1999 to 30 September 1999 4.72%

1 October 1999 to 31 December 1999 4.73%

1 January 2000 to 31 March 2000 5.08%

1 April 2000 to 30 June 2000 5.65%

To complete items P1 to P14 please refer to the following for full descriptions of every item. The publications Guide to depreciation and Information for primary producers—2000 and the Business industry codes 2000 may also assist with completing these items.

The taxpayer’s main business activity is the business activity from which the business derives the greatest gross income. Please ensure you give a full description—for example, beef cattle breeder, vegetable grower, clothing manufacturer, confectionery wholesaler or electrical goods retailer. Do not use general descriptions such as farmer, manufacturer or wholesaler.

Write the appropriate 5-digit industry code that corresponds with the main business activity of the taxpayer’s business. These codes can be obtained from the Business industry codes 2000—refer to this publication before coding. Please ensure that all leading zeros are included at label A.

If the taxpayer received income from more than one business in 1999–2000, print X at label B1.

If the taxpayer ceased business during 1999–2000, print X at label B2.

If the taxpayer commenced a new business during 1999–2000, print X at label B3.

If more than one option applies, only print the first applicable option. For example, if the taxpayer has ceased business and commenced business during the year of income, only print X at label B2, ‘Ceased business’.

The business name does not have to be a registered name. The business name of the main business activity should be consistent from year to year, except in the year of a name change or when it is no longer the main business. If the business name is legally changed, the ATO should be advised in writing at the time of change. The current business name should be shown on the tax return.

This is the address where most of the taxpayer’s main business decisions are made.

If the answer to this question is yes, print Y at label Q. If the answer is no, print N at label Q.

The answer to this question should be yes if the taxpayer has an Internet presence and one or more of the following apply:

The answer to this question should be no if the taxpayer does not have an Internet presence, or the taxpayer does have an Internet presence and ALL of the following apply:

An Internet presence is any one or more of the following:

Accepting orders using the Internet includes the following:

It does not include orders received by postal mail, facsimile, telephone or in person as a result of advertising on the Internet.

Accepting payment using the Internet includes:

It does not include acceptance of credit card, charge card, or other payment card details received by postal mail, facsimile, telephone or in person. This is regardless of whether the goods or services were offered, ordered or delivered using the Internet.

Fulfilling orders using the Internet includes:

It does not include providing digitised goods and software on floppy disk or other medium, delivered by conventional postal services.

The ATO is committed to reducing the costs involved for businesses in complying with their taxation obligations. Your voluntary response on behalf of your client will help us to monitor these costs as closely as possible.

When completing this item you should consider the time rounded up to the nearest hour that your client spent compiling the information that has enabled you to complete the form.

The answer should relate only to the time your client spent compiling the information, including the time of any unpaid helpers and employees. You should not include the time you spent. Please consult with your client to obtain a reliable estimate.

Business income includes income derived by a non-employee taxi driver—for example, a driver operating under a standard bailment agreement with an owner/operator—at label J, in the income section, item P6.

Where applicable, GST payable is excluded from income and expenses are reduced by amounts of input tax credit entitlements-see What’s new? on page 24 of these instructions.

The list below shows where you should put certain types of assessable income in the return:

If the amount to be shown as Other business income at labels I or J or the Totals label was a loss, print L in the small box at the right of the label.

Include at label D all gross income derived directly by the taxpayer to which the prescribed payments system applies. Do not include any income distributed from partnerships or trusts. Gross PPS income is the total PPS income derived including any amounts of tax deducted.

The gross PPS income and any related credits are to be declared in the tax return for the individual taxpayer that actually derived the income—that is, under the TFN as shown on the payment summaries.

Include at labels E and/or F all gross income derived directly by the taxpayer to which the reportable payments system applies. Do not include any income distributed from partnerships or trusts. Gross RPS income at label E is the total derived from primary production including any amounts of tax deducted. Gross RPS income at label F is the total RPS income derived from non-primary production including any amounts of tax deducted.

The gross RPS income and any related credits are to be declared in the tax return for the individual taxpayer that actually derived the income—that is, under the TFN shown on the payment summaries.

If this amount includes a diesel fuel rebate, print the letter D in the Type box at the right of the appropriate label.

Generally, government grants, rebates, bounties and subsidies are included in the taxpayer’s assessable income if they are received in, or in relation to, the carrying on of a business. This generally includes payments of a capital nature. However, payments relating to the commencement or cessation of a business may not be assessable.

Show at these labels payments from all government sources which are assessable income—for example, export incentive grants, diesel fuel rebate, employee subsidies, bounties, drought relief and Medicare payments to medical practices.

The list below shows where you should put certain types of deductible expense in the return, but not at labels K to T:

This section is divided into a 3-column worksheet—primary production, non-primary production and totals.

All items that relate to the taxpayer’s business or businesses must be completed.

If any of the amounts shown at Cost of sales are negative and/or the amounts shown at Total expenses, including labels S and T, are negative, print L in the small box at the right of the applicable label.

Print the appropriate code letter, as described below, in the small boxes at the right of label M Closing stock and label N Motor vehicle expenses.

Print in the Type box at the right of label M the appropriate code letter from the following table representing the largest proportion of the closing stock amount.

Cost C

Market selling value M

Replacement price R

Print in the Type box at the right of label N the appropriate code letter from the following table that relates to the largest portion of the motor vehicle expenses amount shown at label N.

Cents per kilometre S

12 per cent of the original value T

One-third of actual expense O

Logbook B

Expenses of certain other vehicles:

• motorcycles and similar vehicles

• taxis taken on hire

• utility trucks or panel vans with a carrying capacity of 1 tonne or more

• other vehicles with a carrying capacity of 1 tonne or more or 9 or more passengers N

Show at the labels for Drought investment allowance the expenses deductible under Division 2 of Part XII of ITAA 1936.

Show at the labels for Environmental impact assessment and environmental protection expenses the expenses deductible under Division 400 of ITAA 1997.

Any recoupment of those expenses, which is assessable under Division 20 of ITAA 1997, should be shown as an income reconciliation adjustment.

Show at the labels for Landcare operations and water conservation/conveying expenses the reconciliation amount representing deductions under Subdivisions 387-A or 387-B of ITAA 1997.

Income reconciliation adjustments—label X

Show at this label the net income related reconciliation adjustment. The amounts to be included here fall into two classes that will either increase or reduce the net adjustment:

Where the income subtractions exceed the income add backs, the total is a negative amount. In this case you should print L in the small box at the right of this label.

Refer to the Appendix on page 25 of these instructions for examples of necessary reconciliation adjustments.

Show at this label the net amount for expense related reconciliation adjustments. The amounts to be included here will also increase or reduce the net adjustment:

• expense add backs—amounts that were included as expenses in the profit and loss statement but which are not allowable deductions for tax purposes, including timing adjustments. These items increase the total amount shown at this label
• expense subtractions—amounts not included as expenses in the profit and loss statement but which are allowable deductions for income tax purposes, including timing adjustments. These items reduce the total amount shown at this label. Do not make any adjustment for the drought investment allowance at this label. The drought investment allowance deduction should be shown at Drought investment allowance label U.

Where the expense subtractions exceed the expense add backs, the total is a negative amount. In this case you should print L in the small box at the right of this label.

Refer to the Appendix on page 25 of these instructions for examples of necessary reconciliation adjustments.

If a loss was made for any of the labels for Net income or loss from business, print L in the small box at the right of the applicable label.

From the list below, find the letter that matches the description of the expense component where salary or wages have been wholly or predominantly reported. Print the letter in the Type box at the right of the amount at Total salary and wage expenses, label G, item P9.

All included in the expense component Cost of sales C

All included in the expense component All other expenses A

All included in the expense components Cost of sales and All other expenses B

Other than Cost of sales and/or All other expenses O

Complete this label where an amount has been entered at Gross prescribed payments system income, label D, item P6. Show at this label the gross amount of PPS income as shown at label D, item P6, less any allowable deductions related to earning that income. If the allowable deductions relate to both PPS and non-PPS income the amount should be apportioned.

If the PPS income net of expenses is a negative figure—that is, a loss—print L in the small box at the right of label K.

The value of the trading stock may be less than the value of:

If this is due to obsolescence or other special circumstances, you must notify the ATO that the taxpayer has elected to use the lower valuation. To do this, print Y at this label on the Business and professional items schedule 2000–tax agents.

Income add backs: Income not shown in the accounts which is assessable income for tax purposes:

1. assessable balancing adjustment charge on sale of fixed assets

2. other assessable income not included in profit and loss statement

Income subtractions: Income shown in the accounts which is not assessable income:

3. profit on sale of fixed assets shown in the accounts

Note: You need to subtract the total of items 3 and 4 from the total of items 1 and 2 to work out the net income reconciliation adjustment. The amount calculated is to be shown at label X on the Business and professional items schedule 2000—tax agents.

The net total of the primary production and non-primary production income reconciliation adjustments must agree with the amount shown at label X on Business and professional items schedule 2000—tax agents.

Where the net total is a negative amount, print L in the small box at the right of label X.

Expense add backs: Expenses shown in the accounts which are not tax deductible:

5. depreciation charged in accounts

6. loss on sale of fixed assets shown in accounts

7. other items not allowable as a deduction:

Expense subtractions: Items not shown as expenses which are deductible for tax purposes:

8. Depreciation deducted for tax purposes

9. Tax loss on disposal of depreciable assets

10. Other deductible items for tax purposes

Note: You need to subtract the total of items 8, 9 and 10 from the total of items 5, 6 and 7 to work out the net expense reconciliation adjustment. The amount calculated is to be shown at label H on the Business and professional items schedule 2000—tax agents.

The net total of the primary production and non-primary production expense reconciliation adjustments must agree with the amount shown at label H on Business and professional items schedule 2000—tax agents.

Where the net total is a negative amount, print L in the small box at the right of label H.