Taxation Laws Amendment Act (No. 2) 1995 (169 of 1995)

Schedule 3   VARIOUS AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

Part 3   ROLL-OVER RELIEF FOR MERGING SUPERANNUATION FUNDS

28   After section 160ZZPH

Insert in Division 17 of Part IIIA:

Merger of qualifying superannuation funds

Application of section

"160ZZPI.(1) If:

(a) a taxpayer (the transferor) that is a qualifying superannuation

fund that was in existence on 1 July 1994 disposes of an asset (the

merger asset) to another qualifying superannuation fund (the

transferee); and

(b) the disposal occurs under a merger between the transferor and

the transferee; and

(c) the transferor and the transferee have, before the beginning of

the merger period in relation to the merger, jointly elected in

writing that this section apply to all disposals under the merger; and

(d) the transferor has retained the election and the transferee has

been given a copy of the election;

this section, section 160ZZPIA and section 160ZZU apply to the

disposal.

Note: Section 160ZZPIA sets out the circumstances in which a

disposal is under a merger and defines merger period and qualifying

superannuation fund.

Part IIIA not to apply

"(2) The other provisions of this Part do not apply to the disposal.

Capital gain-subsequent disposal

"(3) For the purposes of working out whether a capital gain accrued

to the transferee in the event of a subsequent disposal of the merger

asset by the transferee, the transferee is taken to have paid

whichever of the following amounts applies as consideration for the

acquisition of the merger asset:

(a) if the merger asset was disposed of by the transferee within 12

months after the day on which the merger asset was acquired by the

transferor-the amount that would have been the cost base to the

transferor of the merger asset for the purposes of the other

provisions of this Part if they had applied to the disposal of the

merger asset by the transferor to the transferee;

(b) in any other case-the amount that would have been the indexed

cost base to the transferor of the merger asset for the purposes of

the other provisions of this Part if they had applied to the disposal

of the merger asset by the transferor to the transferee.

Capital loss-subsequent disposal

"(4) For the purposes of working out whether the transferee incurred

a capital loss in the event of a subsequent disposal of the merger

asset by the transferee, the transferee is taken to have paid, as

consideration for the acquisition of the merger asset, the amount that

would have been the reduced cost base to the transferor of the merger

asset for the purposes of the other provisions of this Part if they

had applied to the disposal of the merger asset by the transferor to

the transferee.

Transitional-extension of time for election

"(5) If the merger period begins before the commencement of this

section, the election under paragraph (1)(c) may be made within 2

months after the commencement of this section.

Definitions for the purposes of section 160ZZPI

When disposal is under a merger

"160ZZPIA.(1) For the purposes of section 160ZZPI, the disposal of

an asset by the transferor to the transferee occurs under a merger

between the transferor and the transferee if the disposal of the asset

occurs during the merger period (see subsection (3)) in relation to a

merger (see subsection (2)) between the transferor and the transferee.

Meaning of merger

"(2) There is a merger between the transferor and the transferee if

the following conditions are satisfied:

(a) at a particular time (the merger beginning), the transferor for

the first time disposes of an asset to the transferee, where the

disposal of the asset occurs as part of the transfer of member

benefits by the transferor to the transferee;

(b) at a later time (the merger end), the transferor:

(i) has no remaining assets; and

(ii) has no remaining member benefits; and

(iii) has no members; and

(iv) will not accept new members;

(c) during the period from the merger beginning to the merger end,

the transferor does not transfer any of its member benefits other than

to the transferee, except where the transfer constitutes the making of

an eligible benefit payment;

(d) the merger beginning is not before 1 July 1994 and the merger

end is not after 30 June 1997;

(e) subject to subsection (6), the merger beginning and the merger

end occur during one year of income of the transferor;

Note: Subsection (6) is a transitional provision dealing with

merger periods ending after 30 June 1994 and before 1 October 1995.

(f) both the transferor and the transferee are complying

superannuation funds (within the meaning of Part IX) in relation to

the year of income in which the merger beginning and the merger end

occur.

Meaning of merger period

"(3) The merger period, in relation to a merger, is the period from

the merger beginning to the merger end.

Meaning of eligible benefit payment

"(4) The expression eligible benefit payment means a payment of an

eligible termination payment (within the meaning of subsection 27A(1))

that satisfies the following conditions:

(a) the payment is in accordance with payment standards prescribed

under subsection 31(1) of the Superannuation Industry (Supervision)

Act 1993;

(b) the whole of the payment is made because the member meets a

condition that relates to one or more of the following matters:

(i) retirement;

(ii) death;

(iii) permanent or temporary incapacity;

(iv) permanent departure from Australia;

(v) financial hardship;

(vi) the attainment of a particular age;

(vii) termination of employment.

Meaning of qualifying superannuation fund

"(5) The expression qualifying superannuation fund means a

superannuation fund other than:

(a) an excluded superannuation fund within the meaning of section 10

of the Superannuation Industry (Supervision) Act 1993; or

(b) an eligible rollover fund within the meaning of section 242 of

that Act.

Transitional-merger periods ending after 30 June 1994 and before 1

October 1995

"(6) For the purposes of subsection (2), if the year of income of

the transferor in which the merger beginning occurs ends after 30 June

1994 and before 1 October 1995:

(a) the reference in paragraph (2)(e) to one year of income of the

transferor; and

(b) the reference in paragraph (2)(f) to the year of income in which

the merger beginning and the merger end occur;

are instead references to the period from the commencement of the

transferor's year of income until the end of 30 September 1995.".