Document ID: chunk:federal_register_of_legislation:C2025C00029:section:14:p13
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 14 (pt 13/19)
Character Range: 5532434–5535402

above‑average special professional income.

Table of sections
405‑5 Special rate of income tax on your above‑average special professional income
405‑10 Overview of the Division

405‑5  Special rate of income tax on your above‑average special professional income
 (1) If you have above‑average special professional income, the Income Tax Rates Act 1986 generally sets a special rate so that the amount of income tax you pay on the top 4/5 of your above‑average special professional income is effectively 4 times what you would pay on the bottom 1/5 of that income at basic rates.
Note : Your overall income tax will be less only if 2 marginal rates of income tax would apply to your above‑average special professional income if it were treated as the top slice of your taxable income.
 (2) The following diagram illustrates how the special rate works.

405‑10  Overview of the Division

For which income years do you have above‑average special professional income?
 (1) The first income year for which you have above‑average special professional income is the first income year (professional year 1):
 (a) for which your taxable professional income is more than $2,500; and
 (b) during all or part of which you are an Australian resident.
 (2) After professional year 1, you have above‑average special professional income for any income year for all or part of which you are an Australian resident.
Note: You need not have been an Australian resident for every income year since professional year 1.

What is above‑average special professional income?
 (3) Your above‑average special professional income for the current year is the amount (if any) by which your taxable professional income exceeds your average taxable professional income.
See Subdivision 405‑A.

What is taxable professional income?
 (4) Your taxable professional income depends on your assessable professional income.
See section 405‑45.
 (5) Your assessable professional income is assessable income from your work as an author, inventor, performing artist, production associate or sportsperson.
See Subdivision 405‑B.

How do you work out your average taxable professional income?
 (6) Generally, your average taxable professional income for the current year is the average of your taxable professional income for the last 4 income years.
See section 405‑50.
 (7) However, special phasing‑in arrangements apply to work out your average taxable professional income for an income year that is less than 4 income years after professional year 1.
  These arrangements favour people who were Australian residents for at least part of the income year before professional year 1.
See section 405‑50.

Subdivision 405‑A—Above‑average special professional income

Table of sections
405‑15 When do you have above‑average special professional income?

405‑15  When do you have above‑average special professional income?
 (1) Your taxable income for the *current year includes above‑average special professional