House of Representatives
TAXATION LAWS AMENDMENT (SUPERANNUATION) BILL 1993
Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)Glossary of commonly used terms
| Term | Definition |
|---|---|
| ADF | Approved deposit fund. |
| AERSP | Approved early retirement scheme payment. |
| Annuity | Is an annuity (as defined in section 3 of the OSS Act) purchased wholly or partly with rolled-over amounts. |
| Applied amount | The amount of an ETP a taxpayer wants to roll-over into a particular roll-over fund. |
| Approved early retirement scheme payment | An approved early retirement scheme is a scheme approved by the Commissioner of Taxation providing for early retirement of a specified class of employees with a view to rationalising or re-organising the operations of the employer. A payment made under such a scheme is an AERSP to the extent that it exceeds the amount that could reasonably be expected to have been received if the employee had voluntarily retired at the same time. |
| Benefit | In relation to person, is:
|
| BFRP | Bona fide redundancy payment. |
| Bona fide redundancy payment | A payment received on redundancy which exceeds the amount that could reasonably be expected to have been received if the employee had voluntarily retired at the same time. |
| Commencement day | Is the first day of the period of which the first payment of a superannuation pension or annuity relates. |
| Complying superannuation fund | A superannuation fund accepted by the Insurance and Superannuation Commission as having satisfied the superannuation fund conditions. |
| Deductible amount | The amount excluded from assessable income in relation to a pension or annuity because it represents a return of capital. The deductible amount is calculated by dividing the UPP by the number of years that the pension or annuity is expected to be paid. |
| Eligible person | A person entitled to a tax deduction for personal superannuation contributions. |
| Eligible personal superannuation contribution | Personal superannuation contribution paid to a complying superannuation fund. |
| Eligible service period in relation to a pension | See the comments on 'Superannuation pensions' in the section on 'How much of the benefit is counted towards the person's RBL?'. |
| Eligible termination payment | Broadly speaking, a payment made in consequence of termination of employment. It also includes lump sum payments from superannuation funds and roll-over funds. |
| Employer superannuation support | A person receives employer superannuation support in a year of income if it would be reasonable to expect that superannuation benefits received on retirement or death would be attributable to that year of income and that the benefits would not be wholly attributable to the person's own superannuation contributions. In practice it is usually the employer who provides superannuation support, but the term 'employer superannuation support' encompasses superannuation support from any person. |
| ETP | Eligible termination payment |
| Excessive amount | Is the amount of a superannuation pension or annuity that the Commissioner has determined exceeds the person's RBL. |
| Excessive component | Is the amount of an ETP that the Commissioner has determined exceeds the person's RBL. |
| Index number | Is the amount of the full time adult average weekly ordinary times earnings first published by the Australian Statistician for the middle month of the quarter. |
| Invalidity payment | The future service component of an ETP (based on prospective service to usual retirement age) paid to an employee as a consequence of his or her physical or mental incapacity to engage in the particular employment. For payments made on or after 1 July 1994, the employee's incapacity must be certified by two medical practitioners as rendering the employee incapable of ever being employed in a capacity for which he or she is reasonably qualified. |
| ISC | Insurance and Superannuation Commission. |
| ISC determination | The ISC work out if an ETP is within a taxpayers RBL. If it is over the taxpayers RBL, the ISC will work out the excessive amount and will adjust the other components of the ETP. The ISC will send the taxpayer a determination (referred to as an 'ISC determination') which shows the excessive amount and the adjusted components. |
| Life assurance company | A company registered under section 19 of the Life Insurance Act 1945 or an SGIO. |
| Notional components | The components of an applied amount. |
| OSS Act | Occupational Superannuation Standards Act 1987. |
| Payer | Is a person or other entity (other than a continuously non-complying ADF) that makes, or is liable to make, a payment of a benefit. |
| Pension and annuity standards | Are the standards set out in the regulations. |
| Pension | Is a pension as defined in section 3 of the OSS Act. |
| Personal superannuation contribution | A contribution paid to a superannuation fund to obtain superannuation benefits for the person or, in the event of the death of the person, the dependants of the person. |
| RBL | Reasonable benefit limit. |
| RBL determination | The measurement by the Commissioner of Taxation (after 1 July 1994) of an ETP, or the capital value of a pension or annuity, against the recipient's RBL. The RBL determination will show the amount by which an ETP exceeds the RBL and the rebatable proportion of a pension or annuity. |
| Reasonable benefit limit | The limit placed on the amount of concessionally taxed retirement income a person can receive in a life time. |
| Recipient | If the benefit is an ETP it is the person in relation to whom the ETP is paid. If the benefit is a superannuation pension or annuity it is the person to whom the pension or annuity is payable. |
| Registered organisation | A trade union, friendly society or an association of employees within the meaning of the Industrial Relations Act 1988. |
| Retained amount of the ETP | The amount of an ETP that has not been rolled-over. |
| Roll-over | Taxation of an ETP may be deferred by rolling it over into a concessionally taxed roll-over fund (i.e. a deferred annuity or approved deposit fund). |
| Roll-over fund | A complying superannuation fund, a complying ADF or an eligible annuity. |
| Rolled-over | Where some or all of an ETP is paid into a roll-over fund. |
| Section 159SS notice | A notice which, in conjunction with a subsection 274(7) notice, allows a superannuation fund to transfer the tax on last minute employer contributions to the member. |
| SGC | Superannuation guarantee charge. |
| Substantially self-employed person | A person whose assessable or exempt income for the year from employment providing employer superannuation support is less than 10% of his or her assessable income. |
| Superannuation guarantee charge | The charge levied on employers in accordance with the Superannuation Guarantee (Administration) Act 1992 |
| Superannuation pension: | A pension payable from a superannuation fund. |
| Tax file number | Has the same meaning as in Part VA of the Act. |
| Tax-free amount | The tax exempt amount of a BFRP or AERSP which is within the limit prescribed by new subsection 27A(19). |
| Taxed element | That part of the post-June 83 component of the ETP that has come from a taxed source. A taxed source is a fund subject to the 15% taxing arrangements. In most cases the post-June 83 component of a payment from a superannuation fund, approved deposit fund or a roll-over annuity will have a taxed element. |
| Trustee | Includes a trustee for the purposes of Part IX of the Act. |
| Untaxed element | That part of the post-June 83 component of the ETP that has not come from a taxed source. The post-June 83 component of most payments made directly by an employer will have an untaxed element. These payments are often called 'golden handshakes.' |
| UPP | Undeducted purchase price. |
| UUPP | Unused undeducted purchase price. |
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