Income Tax Assessment Act 1997
View history note
Hide history noteThe object of this section is to ensure that the *tax free component and *taxable component of a *superannuation benefit are calculated by: (a) first, determining the proportions of the *value of the *superannuation interest that those components represent; and (b) next, applying those proportions to the benefit.
307-125(2)
The *superannuation benefit is taken to be paid in a way such that each of those components of the benefit bears the same proportion to the amount of the benefit that the corresponding component of the *superannuation interest bears to the *value of the superannuation interest.
Example:
The amount of a superannuation lump sum is $100. Just before the benefit is paid, the value of the superannuation interest was $1000 (of which $200 was the tax free component and $800 was the taxable component). For the lump sum, the tax free component is $20 and the taxable component is $80.
307-125(3)
For the purposes of subsection (2) , determine the *value of the *superannuation interest, and the amount of each of those components of the interest, at whichever of the following times is applicable: (a) if the *superannuation benefit is a *superannuation income stream benefit - when the relevant *superannuation income stream commenced; (b) if the superannuation benefit is a *superannuation lump sum - just before the benefit is paid; (c) despite paragraphs (a) and (b) , if the superannuation benefit arises from the commutation of a superannuation income stream:
(i) if subparagraph (ii) does not apply - when the relevant superannuation income stream commenced; or
(d) despite paragraphs (a) and (b) , if:
(ii) if the superannuation income stream is a *deferred superannuation income stream that had not commenced before the time the commutation happened - just before the time the commutation happened;
(i) the superannuation benefit is an *involuntary roll-over superannuation benefit paid from a superannuation interest; and
when that superannuation income stream commenced.
(ii) that interest was supporting a superannuation income stream immediately before that benefit was paid;
307-125(4)
Subsection (2) does not apply to a *superannuation benefit if any of the following applies: (a) the regulations specify an alternative method for determining those components of the benefit; (b) a determination under subsection (5) specifies an alternative method for determining those components of the benefit; (c) the Commissioner consents in writing to the use of another method for determining those components of the benefit.
If so, use that method to determine those components of the benefit.
307-125(5)
For the purposes of paragraph (4)(b) , the Commissioner may determine, by legislative instrument, one or more alternative methods for determining those components of a *superannuation benefit.
[ CCH Note: Legislative Instrument Income Tax : Pre-1 July 2021 alternative method for calculating the tax free component and taxable component of a superannuation benefit for recipients of certain pensions under the Defence Force Retirement and Death Benefits Act 1973 and the Trust Deed referred to in section 4 of the Military Superannuation and Benefits Act 1991 (F2021L00901) made under s 307-125(5), effective 1 July 2021, states:
]3. Application
This instrument specifies an alternative method for calculating the tax free component and taxable component of a superannuation benefit under section 307-125 of the Income Tax Assessment Act 1997 . It applies to superannuation benefits that are superannuation lump sums specified in clause 4 below which include superannuation benefits that have been paid both before and after the commencement of this instrument.
(a) The alternative method is that the superannuation benefit is taken to be paid in a way such that the tax free component and the taxable component of the benefit bears the same proportion to the amount of the benefit that the corresponding component of the superannuation interest identified in subclause 3(b) bears to the value of the superannuation interest. (b) For the purposes of subclause 3(a), the superannuation interest is the superannuation interest supporting a pension specified in clause 4. For the purposes of this clause, assume that the pension is a superannuation income stream. (c) For the purposes of subclause 3(a), determine the value of the superannuation interest and the amount of the tax free component and the taxable component of the interest when the relevant pension commenced. (d) For the avoidance of doubt, the tax free component and taxable component amounts determined in accordance with the alternative method set out in subclause 3(a) are subject to any modification to the tax free component and taxable component that may arise due to the application of section 307-145 or section 307-150 of the Income Tax Assessment Act 1997 . 4. Determination
This instrument applies to:
(a) superannuation benefits paid before 1 July 2021 that are superannuation lump sums paid to an individual as a pension in accordance with section 31(1) or section 32(1) of the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act) that commenced on or after 20 September 2007; (b) superannuation benefits paid before 1 July 2021 that are superannuation lump sums paid to an individual (reversionary beneficiary) as a pension in accordance with subsection 39(1), subsection 42(1) or subsection 43(1) of the DFRDB Act where the primary beneficiary received superannuation benefits as a pension in accordance with section 31 that commenced on or after 20 September 2007; (c) superannuation benefits paid before 1 July 2021 that are superannuation lump sums paid to an individual (non-reversionary beneficiary) as a pension in accordance with subsection 43A(1) or 43A(2) or subsection 44(2) of the DFRDB Act that commenced on or after 20 September 2007; (d) superannuation benefits paid before 1 July 2021 that are superannuation lump sums paid to an individual as a pension in accordance with rule 27(1) or rule 28(1) of the Military Superannuation and Benefits Rules set out in the Schedule to the Trust Deed as referred to in section 4 of the Military Superannuation and Benefits Act 1991 (MSBS Rules) that commenced on or after 20 September 2007; (e) superannuation benefits paid before 1 July 2021 that are superannuation lump sums paid to an individual (reversionary beneficiary) as a pension in accordance with rule 42(1), rule 42(3), or rule 46(1) of the MSBS Rules where the primary beneficiary received superannuation benefits as a pension in accordance with rule 27(1) or rule 28(1) that commenced on or after 20 September 2007. 5. Definitions
All terms take their meaning from the Income Tax Assessment Act 1997 , the DFRDB Act and the Military Superannuation and Benefits Act 1991 .
307-125(6)
If the *superannuation benefit is an *unclaimed money payment or a *small superannuation account payment, for the purposes of this section: (a) treat the benefit as a superannuation benefit paid from a *superannuation interest; and (b) treat the amount of the benefit as the *value of that superannuation interest just before the time the benefit is paid.
Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited
CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.
The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.
