OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS 1987 (REPEALED)

PART IA - REASONABLE BENEFIT LIMITS  

Division 1 - Preliminary  

REGULATION 4A   INTERPRETATION  

4A(1)   [ Definitions ]  

In this Part, unless the contrary intention appears:

accrued retirement benefit component
, in relation to a disability superannuation pension payable to a person, means the amount worked out using the formula:

Capital Value −

(Capital Value × Pension Days) Accrual Days

where:

Capital Value
means the capital value of the pension as at the commencement day of the pension; and

Pension Days
means:

(a) in the case of the pension commencing to be paid before the person turns 65 - the number of days in the period from the beginning of the commencement day of the pension to the end of the day when the person turns 65; or

(b) in any other case - 0;

Accrual Days
means the number of days in the period commencing on the first day of the eligible service period of the pension and ending on the 65th birthday of the person;

approved early retirement scheme payment
, in relation to a person, has the same meaning as in subsection 27E(4) of the Tax Act;

benefit
(Omitted by SR No 463 of 1992)

bona fide redundancy payment
, in relation to a person, has the same meaning as in subsection 27F(1) of the Tax Act;

commencement day
(Omitted by SR No 463 of 1992)

deferred annuity
means an annuity that is not presently payable;

defined benefit superannuation fund
has the meaning it would have under regulation 3 if " superannuation fund " in that regulation had the meaning given by section 15E of the Act;

disability annuity
means an annuity payable to a person as a result of a permanent disability of the person, being a disability that at least 2 registered medical practitioners have certified is likely to result in the person being unable ever to work in a job for which the person is reasonably qualified by education, training or experience, and disability superannuation pension has a corresponding meaning;

eligible service period
, in relation to an ETP, has the same meaning as in subsection 27A(1) of the Tax Act;

eligible service period
, in relation to a superannuation pension payable to a person, means:

(a) except where paragraph (b) applies - the period commencing on:

(i) the day on which the person joined the superannuation fund; or

(ii) the first day of the period of employment to which the pension relates, including any qualifying period before the person was able to join the fund and any period during which the person was not a member of the fund;

whichever is the earlier, and ending on the commencement day of the pension; or

(b) if:

(i) the whole or a part of the capital value of the pension is attributable to an ETP the whole or a part of which had been rolled-over into the fund; and

(ii) the eligible service period of the ETP commences on an earlier day than the commencement of the period that would be the eligible service period of the pension under paragraph (a);

the period commencing on that earlier day and ending on the commencement day of the pension;

eligible service period
, in relation to an annuity payable to a person, means the sum of the number of days in the eligible service period in relation to the ETP that was rolled-over to purchase the annuity and the number of days in the period from the time when the annuity was purchased to the commencement day of the annuity;

ETP
(Omitted by SR No 463 of 1992)

gainful employment
, in relation to a financial year, means paid employment for at least 520 hours in that year for which the person is paid a salary of an amount that is at least 20 % of:

(a) the full-time adult average weekly ordinary time earnings first published by the Australian Statistician for the March quarter in the preceding financial year multiplied by 52; or

(b) the person ' s HAS;

whichever is the lesser;

HAS
, in relation to a person, means the highest average annual salary of the person over any 3 consecutive financial years (including a financial year in which the person did not earn salary for the whole of the year);

index number
, in relation to a quarter, means the amount of the full-time adult average weekly ordinary time earnings first published by the Australian Statistician for the middle month of that quarter;

invalidity payment
, in relation to a person, has the same meaning as in section 27G of the Tax Act;

lump sum RBL
, in relation to a person to whom a benefit has been paid or has commenced to be paid, means:

(a) subject to paragraph (b):

(i) the amount worked out by multiplying the person ' s HAS by the person ' s lump sum reasonable benefit multiple; or

(ii) $ 175,000;

whichever is the greater; or

(b) if the benefit is:

(i) an ETP that was made to the person on a day (in this paragraph called the start day ) before the person reached the age of 55 years; or

(ii) a superannuation pension or annuity that does not meet the pension and annuity standards where the commencement day of the pension or annuity occurred before the person reached that age;

the amount worked out using the formula:

RBL × [ 1 − (0.025 × P) ]

where:

RBL
means the amount applicable under paragraph (a); and

P
means the number of whole years in the period starting on the birthday of the person immediately before the start day or the commencement day or, if that day falls on a birthday of the person, on that birthday, and ending on the day on which the person will reach the age of 55 years;

lump sum reasonable benefit multiple
, in relation to a person to whom a benefit has been paid or has commenced to be paid, means:

(a) if the eligible service period in relation to the ETP, pension or annuity commenced on or after 1 July 1990 - the number obtained by dividing the sum of:

(i) 7 times $ 39,970 or, if the person ' s HAS is less than $ 39,970, 7 times the person ' s HAS; and

(ii) 5 times the part (if any) of the person ' s HAS that exceeds $ 39,970 but does not exceed $ 74,220; and

(iii) 3 times the part (if any) of the person ' s HAS that exceeds $ 74,220;

by the person ' s HAS; or

(b) in any other case - the number worked out using the formula:

OLD SP × OLD RBM + NEW SP × NEW RBM

where:

OLD SP
means the number worked out by dividing the number of days in the relevant eligible service period that occurred before 1 July 1990 by the total number of days in the relevant eligible service period; and

OLD RBM
means the multiple applicable to the benefit under Schedule 2 ; and

NEW SP
means the number worked out by dividing the number of days in the relevant eligible service period that occurred on or after 1 July 1990 by the total number of days in the relevant eligible service period; and

NEW RBM
means the number that would be the person ' s lump sum reasonable benefit multiple if the relevant eligible service period had commenced on or after 1 July 1990;

net business income
, in relation to a business the gross income of which in respect of a financial year exceeds all deductions for that year with respect to the business that are allowable deductions for the purposes of the Tax Act (other than any deductions allowable under section 82AAC or 82AAT , or Division 16C of Part III , of that Act), means the amount of that excess;

net business losses
, in relation to a business where all deductions for the financial year commencing on 1 July 1990 or a later financial year with respect to the business that are allowable deductions for the purposes of the Tax Act (other than any deductions allowable under section 82AAC or 82AAT , or Division 16C of Part III , of that Act) exceed the gross income of the business in respect of that year, means the amount of that excess;

non-qualifying component
, in relation to a payment that is an immediate annuity eligible termination payment for the purposes of subsection 27A(1) of the Tax Act, has the same meaning as in that subsection;

pension and annuity standards
means:

(a) in relation to annuities - the standards of subregulation 3E(2) ; or

(b) in relation to pensions - the standards of subregulation 3F(2) ;

pension RBL
, in relation to a person to whom a benefit has been paid or has commenced to be paid, means:

(a) the amount calculated by multiplying the person ' s HAS by the person ' s pension reasonable benefit multiple; or

(b) $ 281,250;

whichever is the greater;

pension reasonable benefit multiple
, in relation to a person to whom a benefit has been paid or has commenced to be paid, means:

(a) if the eligible service period in relation to the benefit commenced on or after 1 July 1990 - the number worked out using the formula:

M     HAS

× 15

where:

M
means the sum of:

(i) 0.75 times $ 39,970 or, if the person ' s HAS is less than $ 39,970, 0.75 times the person ' s HAS; and

(ii) 0.55 times the part (if any) of the person ' s HAS that exceeds $ 39,970 but does not exceed $ 74,220; and

(iii) 0.35 times the part (if any) of the person ' s HAS that exceeds $ 74,220; or

(b) in any other case - the number worked out using the formula:

OLD SP × OLD RBM + NEW SP × NEW RBM

where:

OLD SP
means the number worked out by dividing the number of days in the relevant eligible service period that occurred before 1 July 1990 by the total number of days in the relevant eligible service period; and

OLD RBM
means the multiple applicable to the benefit under Schedule 2 ; and

NEW SP
means the number worked out by dividing the number of days in the relevant eligible service period that occurred on or after 1 July 1990 by the total number of days in the relevant eligible service period; and

NEW RBM
means the number that would be the person ' s pension reasonable benefit multiple if the relevant eligible service period commenced on or after 1 July 1990;

post-June 83 component
, in relation to an ETP, has the same meaning as in subsection 27A(1) of the Tax Act as in force on 30 June 1990;

pre-July 83 component
, in relation to an ETP, has the same meaning as in subsection 27A(1) of the Tax Act as in force on 30 June 1990;

quarter
means a period of 3 months ending on 31 March, 30 June, 30 September or 31 December, called the March, June, September or December quarter respectively;

RBL amount
, in relation to a benefit paid or commencing to be paid to a person, means the amount of the benefit that is to be counted towards the person ' s reasonable benefit limits under regulation 4Q , 4R , 4S , 4T or 4U ;

rebatable superannuation pension
has the same meaning as in subsection 159SJ(1) of the Tax Act;

rules
(Omitted by SR No 463 of 1992)

salary
means salary, wages, commissions, bonuses, fees, allowances or gratuities paid to a person during a financial year, and includes:

(a) other earnings (other than earnings on investments); and

(b) the amount that would be the value of a benefit to which section 57 , 57A or 58 of the Fringe Benefits Tax Assessment Act 1986 applies if that benefit were not an exempt benefit; and

(c) a payment made by a company by way of remuneration to a director of the company; and

(d) in the case of a person who is an Australian citizen, or a resident of Australia within the meaning of the Tax Act - any amounts paid to the person from a source outside Australia that would fall within this definition if they had been paid from a source in Australia;

but does not include:

(e) a distribution from a trust estate; or

(f) allowances to cover expenses incurred on behalf of the person ' s employer or business; or

(g) any ETP; or

(h) a superannuation pension or an annuity; or

(i) a payment to which section 26AC or 26AD of the Tax Act applies;

standard indexation rate
, in relation to a financial year, means the rate determined under regulation 4DA in respect of that year;

superannuation fund
has the same meaning as in subsection 15E(1) of the Act;

taxed element
, in relation to the post-June 83 component of an ETP, has the same meaning as in subsection 27A(1) of the Tax Act as in force on 30 June 1990;

undeducted purchase price
, in relation to a superannuation pension, has the same meaning as in subsection 27A(1) of the Tax Act;

untaxed element
, in relation to the post-June 83 component of an ETP, has the same meaning as in subsection 27A(1) of the Tax Act as in force on 30 June 1990.

4A(2)   [ " salary " ]  

For the purposes of the definition of salary in subregulation (1):

(a) amounts to which paragraph (d) of that definition applies are to be converted into Australian currency at the rate that is the average of the exchange rates for the currency in which the foreign source amounts were paid at the start, and at the end, of the financial year in which the amounts were paid; and

(i) at the start, and at the end, of the financial year in which the amounts were paid; or

(ii) if the amounts were not paid throughout a financial year - at the start, and at the end, of the period over which the amounts were paid; and

(b) if a person carries on a business (either alone or in partnership with another person):

(i) the person ' s salary is to be increased by the person ' s share of the net business income; or

(ii) the person ' s salary is to be decreased by the person ' s share of the net business losses; and

(c) if:

(i) a person is an associate of the person ' s employer; and

(ii) the person ' s salary is greater or lesser than the amount (in this paragraph called the arm ' s length salary ) that would, in the opinion of the Commissioner, be the person ' s salary if the person had not been an associate of the employer;

the person ' s salary for the purposes of this Part is taken to be the arm ' s length salary.

4A(3)   [ " Arm ' s length salary " ]  

In determining the arm ' s length salary under subregulation (2), the Commissioner is to have regard to:

(a) the nature of the work performed; and

(b) the hours worked; and

(c) the salary that would be payable to a person who is not an associate of the employer for performing similar work for similar hours; and

(d) any other relevant matters.