Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)

Schedule 6   Reducing tax on excessive ETPs

Part 1   Main amendments

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

16   At the end of section 9

Add:

Reduced surchargeable contributions

(9) The amount of the surchargeable contributions of a member for a financial year is the amount worked out under subsection (2) or (4) (as appropriate), reduced by the amount worked out under subsection (10), if:

(a) an eligible termination payment is made to the member in the financial year from the constitutionally protected superannuation fund; and

(b) the eligible termination payment has an excessive component.

(10) The amount of the reduction is worked out as follows:

Amount of the reduction

Step 1. Work out the amount that would have been the taxed element of the retained amount of the post-June 83 component of the eligible termination payment if the amount of the excessive component of the eligible termination payment had been nil.

Step 2. Work out the taxed element of the retained amount of the post-June 83 component of the eligible termination payment.

Step 3. Subtract the result of step 2 from the result of step 1.

Step 4. Divide the result of step 3 by 0.85.

Step 5. Subtract the result of step 3 from the result of step 4.

Step 6. Add the result of step 5 to the excessive component of the eligible termination payment.

Step 7. Identify the amount of the surchargeable contributions (apart from subsection (9)) of the member reported for the financial year by the entity that paid the eligible termination payment.

Step 8. Identify the lesser of the results of steps 6 and 7 (or either result if they are the same).