The increase in the low-income tax offset to $1,500 for 2010/11 (from $1,350 in 2009/10) effectively means that $3,333 can be distributed to minors tax-free in the 2010/11 year.
Ordinarily, and excluding the offset, once a minor's income exceeds $1,307, the entire amount is taxed at 45%.
However, applying the low-income tax offset of $1,500 means that no income tax will be payable until the minor's taxable income exceeds $3,333, i.e., $1,500 divided by 0.45 = $3,333.
Source: AFA Wealth; www.afawealth.com.au
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