Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-D - Contributions excluded  

SECTION 295-260   Transfer of liability to investment vehicle  

295-260(1)    
The *superannuation provider in relation to a *complying superannuation fund or a *complying approved deposit fund (the transferor ) may reduce the amount that would otherwise be included in the fund ' s assessable income for an income year under Subdivision 295-C by agreement with another entity (the transferee ) in which it holds investments.

What the transferee must be

295-260(2)    
The transferee must be a *life insurance company or a *pooled superannuation trust.

Note:

Amounts transferred are included in the transferee ' s assessable income: see section 295-320 (for PSTs) and paragraph 320-15(1)(i) (for life insurance companies).

Agreement requirements

295-260(3)    
The transferor may make one agreement only for an income year with a particular transferee.

295-260(4)    
An agreement:

(a) must be in writing, and must be signed by or for the transferor and transferee; and

(b) must be made by the day the transferor lodges its *income tax return for its income year to which the agreement relates; and

(c) cannot be revoked.

Limits on transfer

295-260(5)    
The total amount covered by the agreements cannot exceed the amount that would otherwise be included in the transferor ' s assessable income under Subdivision 295-C for that income year.

295-260(6)    
The amount covered by an agreement with a particular transferee cannot exceed this amount:

Greatest equity value         Transferor ' s low tax component tax rate

where:

greatest equity value
is the greatest of these amounts during the transferor ' s income year:

(a) if the transferee is a *pooled superannuation trust - the *market value of the transferor ' s investment in units in the trust;

(b) if not - the market value of the transferor ' s investment in:

(i) *life insurance policies issued by the transferee; or

(ii) a trust whose assets consist only of life insurance policies issued by the transferee.

transferor ' s low tax component tax rate
is the rate of tax imposed on the *low tax component of the fund ' s taxable income for the income year.