The Income of Minors and Taxation - Part 3

What rate of tax applies to the income of minors?

The tax rates given below apply in 2006–07 for minors who:

• are residents of Australia
• are not excepted persons, and
• have no excepted income.

Rates

$0 - $416 other income = Nil tax

$417 - $1307 other income = Nil + 66% of the excess over $416

Over $1307 other income = 45% of the total amount of income that is not excepted income.

If the minor’s taxable income is less than $40,000, they will get the low income tax offset. The maximum tax offset of $600 applies if their taxable income is $25,000 or less. This amount is reduced by four cents for each dollar over $25,000.

Example:

Kris is 15 years old. She has no excepted income and $900 in other income. The tax payable on her income is:

Excess over $416 = $900 – 416 = $484
66% of the excess = $484 x 66% = $319.44

As Kris’s taxable income is less than $25,000, she gets the maximum tax offset of $600. The net amount payable by Kris is $0 ($319.44 - $600).

What if the application of the special rules results in serious financial hardship?

If a minor faces serious financial hardship as a result of the application of the special rules, they may get a tax offset of some or all of the extra tax payable if we consider there is serious hardship due to higher tax rates applying rather than ordinary tax rates.

If you are in this situation, you will need to provide information stating the reasons for your hardship when you lodge your income tax return.

Source: Australian Taxation Office