Income Tax Amendment Act 1982, Supplement 1

This commentary item was published in Public Information Bulletin Volume 120,Supplement 1, August 1983

More information about Public Information Bulletins.

1982 Legislation

This pubication contains answers to a number of questions which have been raised since Public Information Bulletin Number 120 was printed.

The information contained in these answers was not covered in PIB 120

Income Tax Amendment Act 1982

Section 8 - Principal Income Earner Rebate (Section 50B of principal Act)

Question

When can National Superannuitants claim the principal income earner rebate?

Answer

The rebate can be claimed in the returns of income filed by or on behalf of National Superannuitants in the year they first receive National Superannuation and the year of death (except where National Superannuation commences on 1 April or death occurs on 31 March). The rebate is calculated in the ordinary way on the income derived during the whole year.

Sections 8 and 13 - Principal Income Earner Rebate (Sections 50B and 53C of the Principal Act)

Question 1

In grossing up the family income for the purposes of the family rebate, are incomes of both husband and wife grossed up full year equivalents and on what basis are they grossed up?

Answer

The incomes of both husband and wife are grossed up for the purpose of the rebate. The grossing up is based on the period of time each taxpayer is in the country, not on the basis of the length of time employed.

Question 2

What is the relationship between grossing up of the principle income earner rebate and the family rebate and section 56?

Answer

The correct treatment will depend on whether the taxpayer is "an absentee personally present in New Zealand" or a "resident" during the period he is personally present in New Zealand.

Under section 37 an "absentee" means a person who has not been a "resident" during any part of the income year.

Under section 241 a "resident" is defined as a person who, either -

1. has his permanent place of abode in New Zealand, or
2. is personally present in New Zealand for a continuous period of 365 days or more.

This means that for a person who enters or departs from New Zealand during the income year and is resident in New Zealand during his presence (eg, he arrives with the intention of taking up permanent residence) the income is grossed up to its annual equivalent under the new sections 50B and 53C of the Act. Section 56 has no application in this case as the taxpayer is not an absentee, by virtue of the fact that for a part of the income year he was resident in New Zealand.

On the other hand a person who enters or departs from New Zealand during the income year and was an "absentee" during his stay (eg, a person on a 3 month working holiday in New Zealand) is treated as follows:

1. Firstly, that person's income is grossed up to its annual equivalent under the provisions of sections 50B and 53C of the Act and the rebate is calculated.
2. Secondly, section 56 allows this rebate subject to an apportionment based on the period of time the person was employed in New Zealand.