Savings Tax Offset - eligibility

Is the taxpayer entitled to a Savings Tax Offset (STO) under Subdivision 61-A of the Income Tax Assessment Act 1997 (ITAA 1997) for the 1998-1999 income year?

Yes, the taxpayer is entitled to a STO under Subdivision 61-A of the ITAA 1997 for the 1998-1999 income year.

The taxpayer is a resident of Australia for tax purposes.

For the 1998-1999 income year, the sum of the taxpayer's: • savings and investment income less deductions relating to that income; and • personal superannuation contributions to a complying superannuation fund or a Retirement Saving Account (RSA) less contributions which were deductible under section 82AAT of the Income Tax Assessment Act 1936 (ITAA 1936) exceeded $3000.

The taxpayer's eligibility for a STO is determined under Subdivision 61-A of the ITAA 1997.

Subsection 61-55(1) of the ITAA 1997 provides that a taxpayer will be entitled to a STO if they are: • an individual; and • an Australian resident at any time during the income year.

The amount of STO available is calculated in accordance with subsection 61-55(2). Under that subsection, for the 1998-1999 income year, the amount of the STO was 7.5% of: • the taxpayer's savings and investment income for the income year, plus the sum of any contributions to a complying superannuation fund or a RSA made during the year; Less • the sum of any deductions for the income year, to the extent that they related to any or all of the taxpayer's savings and investment income, and any amount that the taxpayer could deduct under section 82AAT of the ITAA 1936 up to a maximum offset amount of $225.

Savings and investment income is defined in section 61-60 of the ITAA 1997. That section provides that savings and investment income is generally the total of all non salary and wage income.

The taxpayer satisfies the tests set out in subsection 61-55(1) and so is eligible for a STO. In addition, after applying the above formula to the taxpayer's circumstances, the taxpayer is entitled to the maximum STO of $225.

The STO provisions have been repealed and only apply to the 1998-1999 income year.