Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-F - Exempt income  

SECTION 295-390   Fixed interest complying ADFs - exemption of income attributable to certain 25 May 1988 deposits  

295-390(1)    
A proportion of the ordinary income and statutory income of a continuously complying fixed interest ADF of an income year that would otherwise be assessable income is exempt from income tax under this section. The proportion is worked out under subsection (3).

295-390(2)    
Subsection (1) does not apply to:

(a) non-arm ' s length income; or

(b) amounts included in assessable income under Subdivision 295-C of the Income Tax Assessment Act 1997 .

295-390(3)    
The proportion is:

Aggregate of current 25 May balances

Aggregate current balance

where:

Aggregate current balance
is the total amount deposited with the fund (together with accumulated earnings), as at the reckoning time in relation to the income year.

Aggregate of current 25 May balances
is the aggregate of the current 25 May balances of eligible depositors, as at the reckoning time in relation to the income year.

295-390(4)    
A choice for the purposes of the definition of reckoning time in subsection (5) must be made on or before the date of lodgment of the income tax return of the ADF for the income year to which the choice relates, or before a later day allowed by the Commissioner.

295-390(5)    

In this section:

continuously complying fixed interest ADF
, in relation to an income year (the current year ), means a fund that is a fixed interest complying ADF in relation to each of the following years:

(a) the current year;

(b) the income year in which 1 July 1988 occurred;

(c) each income year later than the year mentioned in paragraph (b) and earlier than the current year.

current 25 May balance
, in relation to an eligible depositor as at the reckoning time, is the balance as at that time determined by varying the original 25 May balance, in accordance with the following rules, during the period from 26 May 1988 to the reckoning time:

(a) the balance from time to time is not to exceed the original 25 May balance and is not to be less than nil;

(b) subject to paragraph (a), an amount deposited with the ADF by the depositor before 1 September 1989 is to be added to the balance;

(c) subject to paragraph (a), an amount repaid to the depositor from the ADF is to be deducted from the balance.

eligible depositor
, in relation to an ADF, means:

(a) a depositor whose 55th birthday occurred on or before 25 May 1988; or

(b) a depositor whose 50th birthday occurred on or before 25 May 1988 and who, on or before that day, made a deposit with the ADF that consisted wholly or partly of the roll-over (as defined in Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 as in force on that day) of an eligible termination payment as so defined, being an eligible termination payment that included a concessional component (as so defined).

fixed interest complying ADF
, in relation to a year of income, means a complying ADF where both of the following conditions are satisfied:

(a) not less than 90% of the amount that, apart from this section, would be the assessable income of the ADF of the income year (other than non-arm ' s length income or amounts included in assessable income under Subdivision 295-C of the Income Tax Assessment Act 1997 ) consists of any one or more of the following:

(i) interest or a payment in the nature of interest;

(ii) any profit arising on the disposal, redemption, cancellation or maturity of a CGT asset referred to in paragraph 295-85(3)(b) of the Income Tax Assessment Act 1997 ;

(iii) an amount included in assessable income under Division 16E of Part III of the Income Tax Assessment Act 1936 (or would be so included if Division 230 of the Income Tax Assessment Act 1997 did not apply);

(b) at no time during the year of income did the assets of the fund consist of or include any of the following:

(i) units in a PST;

(ii) virtual PST life insurance policies (as defined in the Income Tax Assessment Act 1997 ) issued by a life insurance company.

original 25 May balance
, in relation to an eligible depositor, means the amount of the deposits (together with accumulated earnings) standing to the credit of the depositor as at the end of 25 May 1988.

reckoning time
, in relation to an ADF in relation to an income year, means the beginning of the income year, or such other time during the income year as the ADF chooses in accordance with subsection (4).

295-390(6)    
This section does not apply to an ADF in relation to an income year unless the whole of the benefit that would accrue to the ADF from the application of this section in relation to the income year has been, or can reasonably expected to be, passed on to eligible depositors.