Deductions to prevent double taxation

Preamble

1. Where a taxpayer is individually assessed on land which has also been included in another assessment, a credit of tax payable is allowed to prevent double taxation. This credit is known as an allowable deduction.

2. The purpose of this ruling is to explain how the allowable deduction is determined.

Ruling

3. The calculation of the allowable deduction is based on the proportionate interest of land that is included in both assessments. The deduction is the lesser result of two calculations.

4. Following is an example of the method used to determine an allowable deduction:

   For the 1992 tax year, Mr and Mrs A own taxable land having an adjusted value of $250,000, on which tax payable jointly is $1,450.

   The proportionate interest owned by Mr A is $125,000 and he also owns in his own right land having an adjusted value of $90,000. The total adjusted value of land, including his proportionate interest, is therefore $215,000 on which the assessed tax is $925.

   To prevent double taxation of the proportionate interest owned by Mr A, the assessed tax is reduced by the allowable deduction.

   The calculation of the allowable deduction would be the lesser of:

   1. (i) Proportionate interest of Mr A = $125,000

      ------------ x $1,450 = $725.00

      Total adjusted value of land owned jointly by Mr and Mrs A = $250,000

   OR

   2. (ii) Proportionate interest of Mr A = $125,000

      ------------ x $925 = $537.80

   Total adjusted value of land owned by Mr A (including the proportionate interest) = $215,000

   The allowable deduction is therefore $537.80 which, when deducted from the assessed tax of $925.00, results in nett tax payable by Mr A of $387.20.

5. Calculations used to determine an allowable deduction will be shown on the support schedule attached to the notice of assessment.