Taxation Laws Amendment (Superannuation) Act 1992 (208 of 1992)

Part 2   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 10   Amendments relating to the components of ETPs known as bona fide redundancy payments, approved early retirement scheme payments and invalidity payments

50   Interpretation

Section 27A of the Principal Act is amended:

(a) by inserting before paragraph (k) of the definition of "eligible termination payment" in subsection (1) the following paragraph:
            

"(ja) the tax-free amount of a bona fide redundancy payment, or of an approved early retirement scheme payment, made on or after 1 July 1994;";

(b) by omitting from subsection (1) the definition of "concessional component" and substituting the following definition:
            

"'concessional component', in relation to an ETP, means so much of the ETP as consists of, or is attributable to:

(a) a bona fide redundancy payment made before 1 July 1994; or

(b) an approved early retirement scheme payment made before 1 July 1994; or

(c) an invalidity payment made before 1 July 1994;";

(c) by inserting the following definitions in subsection (1):
            

"'post-June 1994 invalidity component', in relation to an ETP, means so much of the ETP as consists of, or is attributable to, an invalidity payment made on or after 1 July 1994;

'tax-free amount', in relation to a bona fide redundancy payment or an approved early retirement scheme payment, has the meaning given by subsection (19);";

(d) by adding at the end the following subsections:
            

"(19) For the purposes of this Subdivision, the tax-free amount of a bona fide redundancy payment, or of an approved early retirement scheme payment, made during a year of income is so much of the payment as does not exceed:

(a) if the year of income is the 1994-95 year of income-the amount worked out using the formula:

$4,000 + $2,000 x Years of service

where:

'Years of service' means the number of whole years in the period, or the aggregate of the periods, of the employment to which the payment relates; or

(b) if the year of income is a later year of income-the amount worked out using that formula subject to the indexation arrangements set out in subsection (20).

"(20) The formula in subsection (19) applies for the 1995-96 year of income or a later year of income as if each indexable amount were replaced by the amount worked out using the formula:

Indexation factor x Previous indexable amount

where:

'Indexation factor' means the indexation factor for the year of income worked out under section 159SG;

'Previous indexable amount' means the indexable amount for the previous year of income.

"(21): In subsection (20):

'indexable amount' means:

(a) an amount of $4,000 or $2,000 specified in the formula in subsection (19); or

(b) if that amount has previously been altered under subsection (20)-the altered amount.".