"Minors" No Loger Eligible for Low Income Tax Offset

From 1 July 2011, the low income tax offset will no longer reduce tax payable on "unearned income" of minors (children under 18 years of age).

Unearned income includes distributions from discretionary trusts, dividends, interest, rent, royalties and other income from property.

Minors will still be able to use the low income tax offset to reduce tax payable on their earned income such as salary and wages. This measure will not affect those minors who are, for example, disabled, an orphan, or were engaged in a full-time occupation at the end of the income year.

Income earned by minors from the investment of any property transferred to them as a result of compensation payments, inheritances or marriage breakdown will also not be affected by this measure.

The low income tax offset is calculated by the ATO and these changes will impact 2011-12 tax returns. Minors may need to lodge a tax return if their income is greater than $416 and the income is not salary or wages.

See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle - checklist of eTax and Assessable Income and deductions and checklist of eTax and Allowable Deductions.

 For help with your eTax return see our eTax Return Checklist.

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