Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_9:p1
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 9 (pt 1/11)
Character Range: 661041–663664

9  Section 387‑505 (link note)
Repeal the link note, substitute:

[The next Division is Division 392.]

Division 392—Long‑term averaging of primary producers' tax liability

Table of Subdivisions

 Guide to Division 392

392‑A Is your income tax affected by averaging?

392‑B What kind of averaging adjustment must you make?

392‑C How big is your averaging adjustment?

392‑D Effect of permanent reduction of your basic taxable income

Guide to Division 392

392‑1  What this Division is about

      If you are a primary producer for 2 or more years in a row, this Division evens out your income tax liability from year to year. (It does so by reducing the effect that fluctuations in your taxable income have on the marginal rates of tax that apply to you from year to year.)

Table of sections

392‑5 Overview of averaging process

392‑5  Overview of averaging process

How averaging adjustments work

 (1) This Division reduces or increases your income tax liability to bring it closer to what it would have been if worked out using a special rate of income tax. That rate (the *comparison rate) is based on the income tax that you would pay for the *current year on the average of your taxable income for up to the last 5 income years.

Example: The graph shows how averaging taxable income reduces the effect of variations in taxable income (giving a fairly steady comparison rate from year to year).

Tax offset as averaging adjustment

 (2) You may be entitled to a *tax offset if the income tax you would pay on your *basic taxable income for the *current year at the *comparison rate is less than the income tax you would pay on that income (apart from this Division and certain other provisions).

See the examples of years 5, 6, 7 and 9 in the graph in subsection (4).

Extra income tax as averaging adjustment

 (3) You may be liable to extra income tax on some or all of your *basic taxable income for the *current year if the income tax you would pay on your basic taxable income for the current year at the *comparison rate is more than the income tax on that income (apart from this Division and certain other provisions).

See the examples of years 8 and 10 in the graph in subsection (4).

Example of the effect of averaging

 (4) The graph shows an example of the effect of averaging, using the same income figures as the graph in the example in subsection (1).

Note: The example assumes that all the basic taxable income was from a primary production business, and that the taxpayer's tax‑free threshold was not affected by family tax assistance (under Division 5 of Part