Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 307 - Key concepts relating to superannuation benefits  

SECTION 307-125   Treatment of tax free component of existing pension payments etc  

307-125(1)    
This section applies to a superannuation income stream from which at least one superannuation income stream benefit has been paid before 1 July 2007.

Note:

This section also applies to an income stream replacing an earlier one because of an involuntary roll-over (see section 307-127 ).

307-125(2)    
Despite subsection 307-125(2) of the Income Tax Assessment Act 1997 , work out the tax free component of superannuation income stream benefits paid from the superannuation income stream in an income year beginning on or after 1 July 2007 as follows:

(a) first, work out the deductible amount in relation to the superannuation income stream for the income year including 30 June 2007 in accordance with section 27H of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007);

(b) next, allocate the deductible amount worked out under paragraph (a) to each of those benefits in proportion to the amount of those benefits.

The amount allocated to a superannuation income stream benefit under paragraph (b) is the tax free component of the benefit. The taxable component of the benefit is the remainder of the benefit.

307-125(3)    
Subsection (2) does not apply to the payment of a superannuation income stream benefit after at least one of the following events has happened:

(a) the superannuation income stream has been wholly or partially commuted;

(b) the holder of the superannuation interest has died, if:

(i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or

(ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007 - all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day;

(ba) the holder of the superannuation interest is aged 60 or above on 1 July 2007, if none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund;

(c) the holder of the superannuation interest turns 60, if:

(i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or

(ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007 - all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day.

Continuing payments of superannuation income stream after subsection (3) event

307-125(4)    
If subsection (2) does not apply to the payment of a superannuation income stream benefit because of subsection (3):

(a) treat the time mentioned in subsection (5) as the applicable time for the purposes of subsection 307-125(3) of the Income Tax Assessment Act 1997 in relation to the benefit; and

(b) work out the tax free component of the superannuation interest for the purposes of section 307-125 of the Income Tax Assessment Act 1997 under subsections (6) and (6A).

307-125(5)    
For the purposes of subsection (4), the time is:

(a) the time just before the event mentioned in subsection (3) happens; or

(b) if there are 2 or more such events - the time just before the earliest of those events happens.

307-125(6)    
For the purposes of paragraph (4)(b), work out the tax free component of the superannuation interest as follows:

(a) first, assume that:

(i) an eligible termination payment had been made in respect of the holder of the interest just before the time mentioned in subsection (5); and

(ii) the amount of the eligible termination payment had been equal to the value of the superannuation interest at that time;

(b) next, work out the unused undeducted purchase price (within the meaning of paragraph (a) of the definition of that term in subsection 27A(1) of the Income Tax Assessment Act 1936 just before the commencement of this section, and disregarding paragraphs (b) and (c) of that definition) of the superannuation income stream, reduced by the tax free components (worked out under subsection (2)) of any benefits paid from the superannuation income stream after 30 June 2007;

(c) next, work out the pre-July 83 component (within the meaning of section 27A of the Income Tax Assessment Act 1936 just before the commencement of this section) of the eligible termination payment.

The tax free component is equal to the sum of the amounts worked out under paragraphs (b) and (c).

307-125(6A)    

Despite subsection (6), if:

(a) at least one superannuation income stream benefit was paid from the superannuation income stream before 1 July 1994; or

(b) section 27AAAA of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007) applied to the superannuation income stream just before 1 July 2007;

for the purposes of paragraph (4)(b), the tax free component is equal to the amount worked out under paragraph (6)(b).

307-125(7)    
For the purposes of paragraph (6)(c), disregard the value of the interest to the extent that it would consist, apart from this subsection, of the element untaxed in the fund of the taxable component of a superannuation benefit constituted by the eligible termination payment.

Commutation of superannuation income stream

307-125(8)    
If the superannuation income stream has been wholly or partially commuted as mentioned in paragraph (3)(a), treat the applicable time for the purposes of subsection 307-125(3) of the Income Tax Assessment Act 1997 in relation to a superannuation benefit arising from the commutation as:

(a) the time just before the commutation; or

(b) if 1 or more other events mentioned in subsection (3) happened before the commutation - the time just before the earliest of those events happens.