first child.....................................................

Subdivision 61-I

2 Section 61-345 (link note)

Repeal the link note, substitute:

Subdivision 61-I—First child tax offset (baby bonus)
Guide to Subdivision 61-I

61-350 What this Subdivision is about

You are entitled to a tax offset for your first child, for income years up to and including the year the child turns 5, if you meet certain conditions.

The amount of the offset is usually based on your tax liability in the year before you became responsible for the child, and on a comparison between your taxable income in that year and the year you are claiming for. However, if you are a low income taxpayer, a minimum offset will generally be available.

Instead of claiming the offset yourself, you may transfer your entitlement to your spouse.

Table of sections

Entitlement to the first child tax offset

61-355 Who is entitled to the tax offset

61-360 What is a child event?

61-365 First child only

61-370 Another carer with entitlement for another child

61-375 Selection rules

61-380 Special rules for death of first child

Transferring the entitlement

61-385 You may transfer your entitlement to the tax offset

61-390 Transfer is irrevocable

61-395 Transferor is not entitled to tax offset

61-400 Transferee is entitled to tax offset

Claiming the first child tax offset

61-405 How to claim a tax offset for a child

61-410 Claim is irrevocable

Amount of the first child tax offset

61-415 Formula for working out amount of tax offset

61-420 Component of formula—entitlement amount

61-425 Component of formula—total of the entitlement days

61-430 What is your base year?

[This is the end of the Guide.]

Entitlement to the first child tax offset

61-355 Who is entitled to the tax offset

(1) You are entitled to a ^*tax offset for a child for an income year if you meet the conditions in subsection (3) at any time in the income year.

(2) To meet those conditions for a child at a given time is to have a primary entitlement to the ^*tax offset for the child at that time.

(3) The conditions are that:

(a) you have had a ^*child event (see section 61-360) in relation to the child (whether or not in the income year); and

(b) section 61-365 (first child only) does not prevent you from having a ^*primary entitlement to the offset for the child; and

(c) at the time:

(i) the child is less than 5; and

(ii) you are ^*legally responsible for the child; and

(iii) the child is in your care; and

(iv) you are an Australian resident; and

(v) section 61-370 (another carer) does not prevent you from having a primary entitlement to the offset for the child; and

(vi) if section 61-375 (selection rules) applies—you are selected by subsection (3) of that section.

61-360 What is a child event?

You have a child event at a particular time (the event time) if:

(a) you become ^*legally responsible for a child at the event time; and

Example: Giving birth is generally an example of becoming legally responsible for a child.

(b) the event time is on or after 1 July 2001; and

(c) you are an Australian resident at the event time; and

(d) you were not legally responsible for the child at any time before 1 July 2001; and

(e) there is no other person who is also legally responsible for the child at the event time and who was legally responsible for the child at any time before 1 July 2001.

61-365 First child only

You cannot have a ^*primary entitlement to a ^*tax offset for a child if:

(a) you have had a ^*child event in relation to another child that was earlier than the child event you had for the first-mentioned child; and

(b) you meet, or met at any time, the conditions in subparagraphs 61-355(3)(c)(i) to (iv) for that other child.

61-370 Another carer with entitlement for another child

You cannot have a ^*primary entitlement to a ^*tax offset for a child at a time if:

(a) at that time:

(i) another person is ^*legally responsible for the child; and

(ii) the child is in the other person’s care; and

(b) the other person has, or had at any time, a primary entitlement to the offset for another child.

61-375 Selection rules

(1) This section applies if the conditions in subsection 61-355(3) (other than subparagraph (c)(vi)) are met by more than one person at the same time in relation to the same child.

(2) Only one of those persons can have a ^*primary entitlement to a ^*tax offset for the child at that time.

(3) The person who gets the ^*primary entitlement to the offset at that time is selected in the following order of priority:

(a) the natural mother;

(b) if only one is the adoptive mother—the adoptive mother;

(c) if only one is a woman—the woman;

(d) the natural father;

(e) if only one is the adoptive father—the adoptive father;

(f) the person determined by the Commissioner, having regard to:

(i) any agreement between the persons; and

(ii) any other matters that the Commissioner considers relevant.

61-380 Special rules for death of first child

Child dies aged less than 5

(1) This section applies if your ^*primary entitlement to a ^*tax offset for a child ends because the child dies aged less than 5.

Special extension of time in year of death

(2) Your ^*primary entitlement is extended until the end of the income year in which the death occurred.

Limit on application of first child only rule

(3) Section 61-365 does not prevent you from having a ^*primary entitlement to a ^*tax offset for another child after the end of the income year in which the death occurred.

Transferring the entitlement

61-385 You may transfer your entitlement to the tax offset

(1) If you are entitled to a ^*tax offset for a child for an income year under section 61-355, you may transfer that entitlement to another person.

(2) A transfer has effect only if:

(a) the transferee was your ^*spouse at all times when you had a ^*primary entitlement for the child for the income year; and

(b) the transferee does not have a primary entitlement for that, or another, child for any time during the income year; and

(c) you have not already claimed the ^*tax offset for the income year; and

(d) you make the transfer after the end of the income year; and

(e) the transfer is in the ^*approved form.

61-390 Transfer is irrevocable

A transfer cannot be changed or revoked.

61-395 Transferor is not entitled to tax offset

You are no longer yourself entitled to a ^*tax offset for a child for an income year if you transfer the entitlement under section 61-385 for that income year.

61-400 Transferee is entitled to tax offset

If an entitlement to a ^*tax offset is transferred under section 61-385, the transferee is entitled to the offset for the income year.

Claiming the first child tax offset

61-405 How to claim a tax offset for a child

If you are entitled under this Subdivision to a ^*tax offset for an income year, you may claim the offset only:

(a) in the return you give the Commissioner for that income year; or

(b) if you are not required to give the Commissioner a return for the income year—in the ^*approved form.

61-410 Claim is irrevocable

A claim for a ^*tax offset under this Subdivision cannot be revoked.

Amount of the first child tax offset

61-415 Formula for working out amount of tax offset

The amount of your ^*tax offset for an income year is the amount (rounded up to the nearest whole dollar) worked out using the formula:

where:

entitlement amount has the meaning given by section 61-420.

total of the entitlement days has the meaning given by section 61-425.

61-420 Component of formula—entitlement amount

(1) In section 61-415, the entitlement amount is the amount (rounded up to the nearest whole dollar) worked out using the formula:

where:

base amount is the lesser of:

(a) one-fifth of your basic income tax liability for your ^*base year (as worked out in step 2 of the method statement in subsection 4-10(3)); and

(b) $2,500.

(2) However, if:

(a) the current income year is not your ^*base year; and

(b) your taxable income for the current income year is not more than $25,000; and

(c) the amount worked out under subsection (1) is less than $500;

then the entitlement amount is $500.

(3) If the amount worked out under subsection (1) is negative, then, unless subsection (2) applies, the entitlement amount is nil.

61-425 Component of formula—total of the entitlement days

(1) In section 61-415, the total of the entitlement days is the total number of days for which the primary person (see subsection (3)) had a ^*primary entitlement to a ^*tax offset for the child for the income year.

(2) In addition, if:

(a) the relevant ^*child event happened in the primary person’s ^*base year; and

(b) the primary person did not transfer the entitlement under section 61-385 for the primary person’s base year; and

(c) the relevant child turns 5 during the income year;

the total of the entitlement days also includes the number of days in the base year for which the primary person had a primary entitlement to a ^*tax offset for the child.

(3) In this section, the primary person is:

(a) if you are claiming the offset as a person who has a ^*primary entitlement to the offset for the child—you; or

(b) if you are claiming the offset as a transferee under section 61-400—the transferor.

61-430 What is your base year?

Primary entitlement

(1) Your base year for an entitlement to a ^*tax offset for a child under section 61-355 is:

(a) if you were an Australian resident at any time in the income year just before the income year in which the ^*child event for the child happened (the event year)—the income year just before the event year; and

(b) otherwise—the event year.

(2) If paragraph (1)(a) applies to you, you may choose the event year to be your base year, in the ^*approved form. A choice cannot be revoked.

(3) A choice cannot be made:

(a) after you have claimed the ^*tax offset for any income year; or

(b) after you have transferred your entitlement under section 61-385 for any income year.

Transferred entitlement

(4) Your base year for an entitlement transferred to you under section 61-385 is the income year before the first income year for which the entitlement for the child was transferred to you.

[The next Division is Division 65.]

3 At the end of section 67-25

Add:

First child

(4) First child tax offsets under Subdivision 61-I are subject to the refundable tax offset rules.

4 Subsection 995-1(1)

Insert:

base year, for your entitlement to a ^*tax offset under Subdivision 61-I, has the meaning given by section 61-430.

5 Subsection 995-1(1)

Insert:

child event has the meaning given by section 61-360.

6 Subsection 995-1(1)

Insert:

legally responsible for a child means legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the child.

7 Subsection 995-1(1)

Insert:

primary entitlement to a ^*tax offset under Subdivision 61-I has the meaning given by subsection 61-355(2).

Schedule 2—Income Tax Assessment Act 1936

1 Subsection 170(10AA) (after table item 20)

Insert: