Taxation Laws Amendment (Superannuation) Act 1993 (7 of 1993)

PART 2   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 4   Amendments relating to ETP rules for death benefits

13  

After section 27A of the Principal Act the following section is inserted:

"27AAA. Special rules for death benefits

(Outline of section)

(1) This section:

(a) defines the types of payments that are treated as death benefits for the purpose of the rules providing for taxing of ETPs; and

(b) provides concessional treatment for death benefits that are paid in relation to dependants.

(Table of death benefits)

"(2) Table 1 sets out the payments that are death benefits for the purposes of this section. In applying the table, the dependant's concessions provided by this section are ignored in deciding whether a payment is covered by a particular ETP paragraph.

TABLE 1-DEATH BENEFITS

Item ETP When payment is a death benefit Dependant's

paragraph concession (if

any)

1 (a), (b), if the payment is made after the calculated

(c), (d), death of the taxpayer to the under

(e), (g) or trustee of the taxpayer's estate subsection (3)

(h)

2 (aa), (ba), always calculated

(ca), (db), under

(f), (gb) or subsection (4)

(j)

3 (da) or always calculated

(ga) under

subsection (3)

4 (d) or (g) if the payment is connected calculated

with a deceased person as under

described in subsection (6) subsection (4)

and is made within the period

specified in subsection (7)

(Dependant's concession for Items 1 and 3)

"(3) In the case of a death benefit covered by Item 1 or 3 in Table 1, the amount that would otherwise be an ETP in relation to the deceased taxpayer is to be reduced by such amount (if any) as the Commissioner considers appropriate having regard to the extent to which dependants of the deceased taxpayer may reasonably be expected to benefit from the estate. However, the ETP is not to be reduced to an amount less than the notional excessive component (if any) that applies to the death benefit under subsection (5).

(Dependant's concession for Items 2 and 4)

"(4) This subsection applies if a death benefit covered by Item 2 or 4 in Table 1 is paid to a taxpayer who was a dependant of the deceased person referred to in the relevant ETP paragraph, either at the time of the deceased person's death or at the time of payment of the death benefit. The amount that would otherwise be an ETP in relation to the taxpayer is not to exceed the notional excessive component (if any) that applies to the death benefit under subsection (5).

(Notional excessive component of a death benefit)

"(5) The notional excessive component of a death benefit is the amount that would be worked out under Division 14 as the excessive component of the death benefit if the whole of the death benefit were treated as an ETP for the purposes of that Division.

(Required link with deceased person for Item 4 death benefit)

"(6) In order to be covered by Item 4 in Table 1, the pension or annuity that was commuted as mentioned in ETP paragraph (d) or (g) must be a pension or annuity that:

(a) before it became payable to the taxpayer, was payable to another person who has died; or

(b) became payable to the taxpayer because of the death of another person.

(Period for paying Item 4 death benefit)

"(7) In order to be covered by Item 4 in Table 1, the payment must be made:

(a) within 6 months after the death of the deceased person mentioned in subsection (6); or

(b) within 3 months after the grant of probate of that deceased person's will or letters of administration of that deceased person's estate;

whichever is the longer period.

(Definitions)

"(8) In this section:

'ETP paragraph' means any of the paragraphs of the definition of 'eligible termination payment' in subsection 27A(1).".