Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p14
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 14/18)
Character Range: 5460993–5463592

would pay income tax are:
 (a) if you are a resident taxpayer as defined in the Income Tax Rates Act 1986—the rates of income tax in paragraph (1)(b) of Part I of Schedule 7 to that Act, taking into account the way it would apply with any changes to your tax‑free threshold under section 20 of that Act; or
 (b) if you are a non‑resident taxpayer as defined in the Income Tax Rates Act 1986—the rates of income tax in paragraph 1(b) of Part II of Schedule 7 to that Act.

Disregard certain provisions in working out amounts
 (5) Work out the amount of income tax mentioned in paragraph (1)(b) as if:
 (a) the following provisions did not apply:
 (i) this Division;
 (ii) section 94 (Partner not having control and disposal of share in partnership income) of the Income Tax Assessment Act 1936;
 (iii) Division 6AA (Income of certain children) of Part III of the Income Tax Assessment Act 1936;
 (iv) Part VIIB (Medicare levy) of the Income Tax Assessment Act 1936; and
 (b) you were not entitled to any rebate or credit under the Income Tax Assessment Act 1936 or to any *tax offset under this Act.

No adjustment
 (6) This Division does not affect your income tax for the *current year if the income tax you would pay at the *comparison rate equals the amount of income tax you would pay at *basic rates.
Note: The 2 amounts will be equal if:
                   * your basic taxable income and your average income are both below the tax‑free threshold; or
                   * your average income equals your basic taxable income for the current year.

How to work out the comparison rate

392‑40  Identify income years for averaging your basic taxable income
  The income years over which you must average your *basic taxable income are:
 (a) if this Division has applied to your assessment for at least 4 income years in a row (including the *current year)—the current year and the 4 previous income years; or
 (b) if this Division has applied to your assessment for less than 4 income years in a row (including the *current year)—those income years and the last income year before them.
Note: You may need to average your basic taxable income for one or more income years before the 1998‑99 income year. See section 392‑1 of the Income Tax (Transitional Provisions) Act 1997.

392‑45  Work out your average income for those years
 (1) Work out your average income in this way:

      Method statement
           Step 1. Add up your *basic taxable income for each of the income years over which you must average your basic taxable income.
           Step 2. Divide the sum by the number of those