Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Appendix 5A
| Transferring assets (including money) to a virtual PST | Effect of transfer (other than because of the deemed sale/disposal) | Consequences of the deemed sale and disposal of the asset |
|---|---|---|
| If the company determines insufficient assets are segregated at a valuation time, assets that have a total transfer value not exceeding the difference can be transferred to its virtual PST. The transfer is taken to have been made in the year of income at the end of which the valuation time occurred if it is made within 30 days after the day on which the valuations are made.
[ss320-180(2) and (4)]
If the company determines at a time other than a valuation time insufficient assets are segregated, the company can transfer to its virtual PST, assets having a total transfer value not exceeding the difference. [ss320-185(1)] |
Include in the virtual PST component the transfer values of any assets transferred during the income year. This reduces the ordinary component of taxable income. [p320-205(3)(b)] | If an asset (other than money) is transferred the company is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer for a consideration equal to its market value.
[ss320-200(2)]
.
The company's assessable income includes the amount (if any) that arises because of s320-200 as a consequence of the sale and disposal of the asset. [s320-15(e)] For other consequences see s320-200. |
| The company can at any time transfer an asset to a virtual PST in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer. [ss320-185(2)] | As above. | |
| The company can transfer to a virtual PST, assets having a total transfer value not exceeding the total amount of the life insurance premiums paid to the company for the purchase of virtual PST life insurance policies. [ss320-185(3)] | Include in assessable income the total amount of life insurance premiums received in the income year.
[p320-15(a)]
Allocate to the virtual PST component the transfer value of the premiums transferred. [p320-205(3)(b)] Allow a deduction for the amount transferred to the virtual PST (other than the risk component). [s320-55] Allocate the deduction to the virtual PST. [p320-205(4)(f)] |
As above. |
| If the company determines excess assets are segregated at a valuation time, it must, within 30 days after the day on which the valuations are made, transfer from the virtual PST, assets having a total transfer value equal to the excess. The transfer is taken to have been made in the year of income at the end of which the valuation time occurred.
[ss320-180(1) and (3)]
If the company imposes any fees or charges in relation to its virtual PST assets, or in respect of virtual PST life insurance policies (other than policies that provide participating death or disability benefits where the liabilities for those benefits are to be discharged out of its virtual PST) or the company determines at a time other than a valuation time 'excess' assets are segregated, assets having a total transfer value equal to the fees, charges or excess must be transferred from the virtual PST at the time the fees or charges are imposed or the excess is determined. [ss320-195(3)] |
Reduce the virtual PST component by the transfer values of the assets transferred.
[p320-205(4)(c)]
This increases the ordinary component of taxable income. |
If an asset (other than money) is transferred the company is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer for a consideration equal to its market value.
[ss320-200(2)]
.
The company's assessable income includes the amount (if any) that arises because of s320-200 as a consequence of the sale and disposal of the asset [s320-15(e)] . This amount is allocated to the virtual PST. [p320-205(3)(c)] For other consequences see s320-200. |
| The company can at any time transfer an asset from its virtual PST in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer. [ss320-195(2)] | As above. | |
| If an amount held in a virtual PST relates to a pension or annuity that commences to be paid, assets with a total transfer value not exceeding the company's liabilities in respect of the pension or annuity can be transferred from its virtual PST to its segregated exempt assets. [ss320-195(1)] | If the asset (other than money) is disposed of, or transferred from the segregated exempt assets, the company must include in its assessable income, at the time of the disposal or transfer of those assets from the segregated exempt assets, the lesser of:
[s320-20, 320-25] The amount is allocated to the virtual PST component . [p320-205(3)(f) and 320-205(4)(g)] For other consequences, including deductions that may be available, see s320-90, 320-95 and 320-255 |
| Transferring assets (including money) to a life insurance company's segregated exempt assets | Effect of transfer (other than because of the deemed sale/disposal) | Consequences of the deemed sale and disposal of the asset |
|---|---|---|
| If the company determines insufficient assets are segregated at a valuation time, assets having a total transfer value not exceeding the difference can be transferred to its segregated exempt assets. The transfer is taken to have been made in the year of income at the end of which the valuation time occurred if it is made within 30 days after the day on which the valuations are made.
[ss320-235(2) and (4)]
If the company determines at a time other than a valuation time insufficient assets are segregated, the company can transfer to its segregated exempt assets, assets of any kind having a total transfer value not exceeding the difference. [ss320-240(1)] |
The company can claim a deduction for the transfer values of assets transferred in the income year. [ss320-105(1)] | If an asset (other than money) is transferred to the segregated assets, the company is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer for a consideration equal to its market value.
[s320-255]
.
The company's assessable income includes the amount (if any) that arises because of s320-255 as a consequence of the sale and disposal. [p320-15(g)] For other consequences see s320-200. |
| The company can at any time transfer an asset to its segregated exempt assets in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer. [ss320-240(2)] | As above. | |
| The company can at any time transfer to its segregated exempt assets, assets having a total transfer value not exceeding the total amount of the life insurance premiums paid to it for the purchase of exempt life insurance policies. [ss320-240(3)] | The company's assessable income includes the total amount of life insurance premiums paid to it in the income year.
[p320-15(a)]
The company can deduct the amounts of life insurance premiums transferred in the income year. [s320-60] |
As above. |
| If am amount held in a virtual PST relates to a pension or annuity that commences to be paid, assets with a total transfer value not exceeding the company's liabilities in respect of the pension or annuity can be transferred from its virtual PST to its segregated exempt assets. [ss320-240(4)] | See 'Transferring assets (including money) from a virtual PST'. | |
| If the company determines excess assets are segregated at a valuation time, it must, within 30 days after the day on which the valuations are made, transfer from the segregated exempt assets, assets having a total transfer value equal to the excess. The transfer is taken to have been made in the year of income at the end of which the valuation time occurred.
[ss320-235(1) and (3)]
If the company:
assets having a total transfer value equal to the fees, charges or excess must be transferred from the segregated exempt assets when the fees or charges are imposed or the excess is determined. [ss320-250(2)] |
Include in the company's assessable income the transfer values of the assets transferred. [p320-15(f)] | If an asset, other than money, is transferred, the company is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer.
The consideration the asset is sold for and purchased at depends on the asset transferred. [p320-255(1)(a), ss320-255(2), (5), (7) and (8)] The company cannot deduct an amount or make a capital loss as a result of the transfer. [ss320-255(4)] For other consequences see s320-255. |
| The company can at any time transfer an asset from its segregated exempt assets in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer. [ss320-250(1)] | As above. |
| Transferring assets (including money) to a life insurance company's segregated exempt assets | Effect of transfer (other than because of the deemed sale/disposal) | Consequences of the deemed sale and disposal of the asset |
|---|---|---|
| If the trustee determines insufficient assets are segregated at a valuation time, assets having a total transfer value not exceeding the difference can be transferred to its segregated assets
[ss273C(2)]
. The transfer is taken to have been made in the year of income at the end of which the valuation time occurred if it is made within 30 days after the day on which the valuations are made.
[ss273C(4)]
If the trustee determines at a time other than a valuation time insufficient assets are segregated, the trustee can transfer to its segregated assets, assets having a total transfer value not exceeding the difference. [ss273D(1)] |
The fund or PST can claim a deduction for the transfer values of assets transferred in the income year. [s281B and 296B respectively] | If an asset (other than money) is transferred to the segregated assets the fund or PST is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer for a consideration equal to its market value.
[p273H(1)(b), ss273H(2) and (6)]
The assessable income of the fund or PST includes the amount (if any) that arises because of s273H as a consequence of the sale and disposal. [p281A(1)(b) and 296A(1)(b)] For other consequences see s273H. |
| The trustee can at any time transfer an asset to its segregated assets in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer.
[ss273D(4)]
When a current pension begins to be paid by a complying superannuation fund, or an ETP is rolled over to purchase a current pension, the trustee must transfer, at that time, assets having a total transfer value equal to the amount required to pay the pension or the amount of the ETP to its segregated assets. [ss273D(5)] When an amount is paid to a PST in respect of exempt units, the trustee must transfer, at that time, assets having a total transfer value equal to the amount paid to the its segregated assets. [ss273D(6)] |
As above. | |
| If a current pension begins to be paid to a member of a complying superannuation fund other than because of the roll-over of an ETP, the trustee of the fund can transfer to its segregated assets, assets having a total transfer value not exceeding the current pension liabilities of the fund attributable to the current pension.
[ss273D(2)]
If a unit in a PST becomes an exempt unit because of ss273D(2) or because of ss320-195(1), the trustee can transfer to the segregated assets, assets having a total transfer value not exceeding the value of the unit. [ss273D(3)] |
If the asset (other than money) is disposed of, or transferred from the segregated assets, the fund or PST must include in its assessable income, at the time of the disposal or transfer of those assets from the segregated assets, the lesser of:
[ss281A(2) and (3), 296A(2) and (3)] For other consequences, including deductions that may be available, see s273H, 281AA and 296AA. |
|
| If the trustee determines excess assets are segregated at a valuation time, the trustee must, within 30 days after the day on which the valuations are made, transfer from the segregated assets, assets having a total transfer value equal to the excess.
[ss273C(1)]
The transfer is taken to have been made in the year of income at the end of which the valuation time occurred.
[ss273C(3)]
If the trustee:
assets having a total transfer value equal to the fees, charges or excess must be transferred, from the segregated assets when the fees or charges are imposed or the excess is determined. [ss273G(2)] |
Include in the assessable income of the fund or PST the transfer values of the assets transferred. [p281A(1)(a) and 296A(1)(a) respectively] | If an asset, other than money, is transferred, the fund or PST is taken to have sold the asset immediately before the transfer and to have purchased the asset again at the time of the transfer.
The consideration the asset is sold for and purchased at depends on the asset transferred. [p273H(1)(a), ss273H(2), (5), (7) and (8)] The fund or PST cannot deduct an amount or make a capital loss as a result of the transfer. [ss273H(4)] For other consequences see s273H. |
| The trustee can at any time transfer an asset from its segregated assets in exchange for an amount of money equal to the transfer value of the asset at the time of the transfer. [ss273G(1)] | As above. |