Treasury Laws Amendment (Legacy Retirement Product Commutations and Reserves) Regulations 2024 (F2024L01596)

Schedule 1   Amendments

Part 2   Allocations from reserves

Income Tax Assessment (1997 Act) Regulations 2021

19   At the end of Subdivision 292-C

Add:

292-90.02 Allocations from reserves - allocations that aren't included in your non-concessional contributions

(1) For the purposes of paragraph 292-90.01(2A)(c), this section applies in relation to the allocation of an amount in a complying superannuation plan for you for a financial year from a reserve if any of subsections (2) to (6) of this section applies.

Note: The result of this section applying in relation to an allocation is that the allocation does not satisfy the condition in subsection 292-90.01(2A) for inclusion in your non-concessional contributions for a financial year.

(2) This subsection applies if:

(a) the allocation of the amount for you is part of the allocation, in a fair and reasonable manner, of amounts to accounts for:

(i) every member of the complying superannuation plan; or

(ii) if you are member of a class of members of the complying superannuation plan, and the reserve relates only to that class of members - every member of the class; and

(b) the total amount that is allocated for you for the financial year as part of allocations to which paragraph (a) applies is less than 5% of the value of your interest in the complying superannuation plan at the time of allocation; and

(c) the amount would not be assessable income of the complying superannuation plan if it were made as a contribution.

(3) This subsection applies if:

(a) the reserve is a pension reserve of the complying superannuation plan; and

(b) the amount is allocated from the reserve for you to satisfy a pension liability; and

(c) that liability is paid during the financial year.

(4) This subsection applies if:

(a) the reserve is a pension reserve of the complying superannuation plan; and

(b) the reserve is used to discharge all or part of a liability of the plan to pay a superannuation income stream benefit from a superannuation income stream of which you are the recipient; and

(c) the superannuation income stream is commuted or ceases; and

(d) the commutation or cessation is not a result of the death of the primary beneficiary; and

(e) the amount is allocated from the reserve for you as a result of you having been (before the commutation or cessation) the recipient of the superannuation income stream; and

(f) if the reserve relates to more than one superannuation income stream - the allocation is fair and reasonable having regard to:

(i) for each superannuation income stream that has not been commuted or ceased - the value of the interest that supports the superannuation income stream; and

(ii) for each superannuation income stream that has been commuted or ceased - the value of the interest, that supported the superannuation income stream, immediately before the superannuation income stream was commuted or ceased.

(5) This subsection applies if:

(a) the reserve is a pension reserve of the complying superannuation plan; and

(b) the amount is allocated from the reserve for you as a result of the commutation of a superannuation income stream; and

(c) the commutation is a result of the death of the primary beneficiary; and

(d) you are a death benefits dependant of the primary beneficiary; and

(e) the amount is allocated from the reserve for you:

(i) to discharge liabilities of the plan in respect of a superannuation income stream benefit that is payable by the plan as a result of the death of the primary beneficiary; and

(ii) as soon as practicable on or after the commutation.

(6) This subsection applies if:

(a) the reserve is a pension reserve of the complying superannuation plan; and

(b) the amount is allocated from the reserve for you as a result of the commutation of a superannuation income stream; and

(c) the commutation is a result of the death of the primary beneficiary; and

(d) as soon as practicable on or after the commutation, the amount is:

(i) allocated for you; and

(ii) paid as a superannuation lump sum and a superannuation death benefit.

Meaning of pension reserve

(7) A reserve is a pension reserve of a complying superannuation plan at a particular time if the reserve is used at that time solely for the purpose (the pension liability purpose ) of enabling the plan to discharge all or part its pension liabilities (contingent or not) as soon as they become due.

(8) To avoid doubt, for the purposes of subsection (7), if:

(a) a reserve of a complying superannuation plan is used for the purpose of enabling the plan to discharge all or part of a liability of the plan to pay a superannuation income stream benefit from a superannuation income stream; and

(b) the superannuation income stream is commuted or otherwise ceases; and

(c) an amount is allocated from the reserve for a person as a result of the person having been (before the commutation or cessation) the recipient of the superannuation income stream; and

(d) immediately before the commutation or cessation, the reserve was a pension reserve;

the allocation is taken to be a use of the reserve for the pension liability purpose.