Tax Laws Amendment (Simplified Superannuation) Act 2007 (9 of 2007)

Schedule 1   Main superannuation amendments

Part 1   Main amendments

Income Tax Assessment Act 1997

1   After Part 3-10

Insert:

Part 3-30 - Superannuation

Division 280 - Guide to the superannuation provisions

Table of sections

280-1 Effect of this Division

280-5 Overview

Contributions phase

280-10 Contributions phase - deductibility

280-15 Contributions phase - limits on superannuation tax concessions

Investment phase

280-20 Investment phase

Benefits phase

280-25 Benefits phase - different types of superannuation benefit

280-30 Benefits phase - taxation varies with age of recipient and type of benefit

280-35 Benefits phase - roll-overs

The regulatory scheme outside this Act

280-40 Other relevant legislative schemes

280-1 Effect of this Division

(1) This Division is a *Guide.

(2) Tax concessions in this Part are intended to encourage Australians to save in order to make provision for their retirement, recognising that superannuation investments, and the income from them, are quarantined for retirement.

280-5 Overview

(1) There are 3 phases in the tax treatment of superannuation, as follows:

(a) the contributions phase;

(b) the investment phase;

(c) the benefits phase.

(2) In the contributions phase, contributions are made to a superannuation plan in respect of a member of the plan.

(3) In the investment phase, these contributions are invested by the superannuation provider.

(4) In the benefits phase, these contributions, plus earnings from investing them, are usually paid as benefits to the member when he or she retires after reaching preservation age. In the event of death, the benefits are usually paid to the member’s dependants.

(5) There is also a regulatory scheme outside this Act that is relevant to the taxation treatment of superannuation. For example, other Acts set out prudential and operating standards for superannuation providers.

Contributions phase

280-10 Contributions phase - deductibility

Contributions that can be deducted

(1) Employers can usually deduct contributions they make in respect of their employees. Individuals can usually deduct contributions they make in respect of themselves if less than 10% of their total assessable income (plus reportable fringe benefits) for the income year is attributable to employment or similar activities.

Other contributions cannot be deducted

(2) Other contributions cannot be deducted. These include personal contributions made by individuals whose employment income is 10% or more of their total income, and contributions made by others in respect of them (such as contributions by a spouse or family member, or Government co-contributions).

280-15 Contributions phase - limits on superannuation tax concessions

(1) There is a limit to contributions that can be made in respect of an individual in a year that receive favourable tax treatment. This limit takes the form of a tax on excessive contributions, and neutralises the favourable tax treatment arising from the excessive contributions.

(2) If concessional contributions exceed an indexed cap, the individual concerned is taxed on the excess. This tax liability can be met by releasing money from his or her superannuation interests.

(3) If non-concessional contributions (including any excess for the purposes of the first cap) exceed a second indexed cap, the individual is taxed on the excess. The second cap is equivalent to three times the first cap. The payment of this tax liability must be accompanied by releasing money equivalent to the liability from his or her superannuation interests.

Investment phase

280-20 Investment phase

(1) Contributions that can be deducted are assessable income of the superannuation provider. Contributions that cannot be deducted are not assessable income of the superannuation provider. (There are some exceptions.)

(2) Earnings on the investment of amounts in a superannuation plan are assessable income of the superannuation provider.

(3) The superannuation provider’s taxable income is generally taxed at the concessional rate of 15%.

(4) However, superannuation providers pay no tax on earnings from the assets that support the payment of benefits in the form of income streams, once the income streams have commenced.

Benefits phase

280-25 Benefits phase - different types of superannuation benefit

Superannuation benefits can be drawn down as lump sums, income streams (such as pensions or annuities), or combinations of both. Different tax treatment may apply depending on whether a lump sum or income stream is paid.

280-30 Benefits phase - taxation varies with age of recipient and type of benefit

(1) The taxation of superannuation benefits depends primarily on the age of the member.

(2) If the member is aged 60 or over, superannuation benefits (both lump sums and income streams) are tax free if the benefits have already been subject to tax in the fund (that is, where the benefits comprise a taxed element). This covers the great majority of superannuation members.

(3) Where a superannuation benefit contains an amount that has not been subject to tax in the fund (an untaxed element), this element is subject to tax for those aged 60 or over, though at concessional rates. This is relevant generally to those people (for example, public servants), who are members of a superannuation fund established by the Australian Government or a state government.

(4) If the member is less than 60, superannuation benefits may receive concessional taxation treatment, though the treatment is less concessional than for those aged 60 and over.

(5) Superannuation benefits may also include a “tax free component”; this component of the benefit is always paid tax free.

(6) Additional tax concessions may apply when superannuation benefits are paid after a member’s death.

280-35 Benefits phase - roll-overs

A member can “roll over” their superannuation benefits from one complying superannuation plan to another, or between different interests in the same plan. This is usually done to keep the benefits invested in the superannuation system, or to convert a lump sum to a superannuation income stream. No tax is generally payable until the benefits are finally drawn down.

The regulatory scheme outside this Act

280-40 Other relevant legislative schemes

(1) The Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997 regulate the prudential and operating standards for superannuation providers. Concessional tax treatment is generally available only if providers comply with these standards.

(2) Other legislative schemes relevant to superannuation include the following:

(a) the Superannuation Guarantee (Administration) Act 1992, which requires that employers provide a minimum level of superannuation contributions for each of their eligible employees;

(b) the Superannuation (Government Co-contribution for Low Income Earners) Act 2003, which provides for Government co-contributions to low income earners’ superannuation;

(c) the Small Superannuation Accounts Act 1995, which provides a facility to accept payments of superannuation guarantee shortfalls;

(d) the Superannuation (Unclaimed Money and Lost Members) Act 1999, which provides for the payment of unclaimed superannuation money, and the maintenance of a register of lost members.

Division 290 - Contributions to superannuation funds

Table of Subdivisions

Guide to Division 290

290-A General rules

290-B Deduction of employer contributions and other employment-connected contributions

290-C Deducting personal contributions

290-D Tax offsets for spouse contributions

Guide to Division 290

290-1 What this Division is about

This Division sets out the rules for deductions and tax offsets for superannuation contributions.

Subdivision 290-A - General rules

Table of sections

290-5 Non-application to roll-over superannuation benefits etc.

290-10 No deductions other than under this Division

290-5 Non-application to roll-over superannuation benefits etc.

This Division does not apply to a contribution that is any of the following:

(a) a *roll-over superannuation benefit;

(b) a *superannuation lump sum that is paid from a *foreign superannuation fund.

290-10 No deductions other than under this Division

(1) You cannot deduct under this Act an amount you pay as a contribution to a *complying superannuation fund or *RSA, except as provided by this Division.

(2) You cannot deduct under this Act an amount you pay as a contribution to a *non-complying superannuation fund, except as provided by this Division.

Note: Under Subdivision 290-B (Deduction of employer contributions and other employment-connected contributions), you may be able to deduct contributions you make to a non-complying fund that you believe to be a complying fund.

Subdivision 290-B - Deduction of employer contributions and other employment-connected contributions

Table of sections

Deducting employer contributions

290-60 Employer contributions deductible

290-65 Application to employees etc.

Conditions for deducting an employer contribution

290-70 Assessable income or business conditions

290-75 Complying fund conditions

290-80 Age related conditions

Other employment-connected deductions

290-85 Contributions for former employees etc.

290-90 Controlling interest deductions

290-95 Amounts offset against superannuation guarantee charge

Returned contributions

290-100 Returned contributions assessable

Deducting employer contributions

290-60 Employer contributions deductible

(1) You can deduct a contribution you make to a *superannuation fund, or an *RSA, for the purpose of providing *superannuation benefits for another person who is your employee when the contribution is made (regardless whether the benefits are payable to a *SIS dependant of the employee if the employee dies before or after becoming entitled to receive the benefits).

Note: Other provisions of this Act and the Income Tax Assessment Act 1936 may reduce, increase or deny the deduction in certain circumstances. For example, see sections 85-25 and 86-75 of this Act and subsection 73B(14) of the Income Tax Assessment Act 1936.

(2) However, the conditions in sections 290-70, 290-75 and 290-80 must also be satisfied for you to deduct the contribution.

(3) You can deduct the contribution only for the income year in which you made the contribution.

(4) You cannot deduct the contribution if it is an amount paid by you, as mentioned in regulations under the Family Law Act 1975, to a regulated superannuation fund (within the meaning of that Act), or to an *RSA, to be held for the benefit of your *non-member spouse in satisfaction of his or her entitlement in respect of the *superannuation interest concerned.

290-65 Application to employees etc.

(1) At a time when an individual is an employee of an entity within the expanded meaning of employee given by section 12 of the Superannuation Guarantee (Administration) Act 1992, this Subdivision applies as if the individual were an employee of the entity.

(2) For the purposes of this Subdivision:

(a) in relation to a contribution by a partnership in respect of an employee of the partnership - treat the employee as an employee of the partnership; and

(b) in relation to a contribution by a partner in a partnership in respect of an employee of the partnership - treat the employee as an employee of the partner.

Conditions for deducting an employer contribution

290-70 Assessable income or business conditions

To deduct the contribution, the employee must be:

(a) engaged in producing your assessable income; or

(b) an Australian resident who is engaged in your business.

290-75 Complying fund conditions

(1) If the contribution was made to a *superannuation fund, at least one of these conditions must be satisfied:

(a) the fund was a *complying superannuation fund for the income year of the fund in which you made the contribution;

(b) at the time you made the contribution, you had reasonable grounds to believe that the fund was a complying superannuation fund for that income year;

(c) at or before the time you made the contribution, you obtained a written statement (given by or on behalf of the trustee of the fund) that the fund:

(i) was a resident regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); and

(ii) was not subject to a direction under section 63 of that Act (which prevents a fund from accepting employer contributions).

(2) However, the condition in paragraph (1)(b) or (c) cannot be satisfied if, when the contribution was made:

(a) you were:

(i) the trustee or the manager of the fund; or

(ii) an *associate of the trustee or the manager of the fund; and

(b) you had reasonable grounds to believe that:

(i) the fund was not a resident regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); or

(ii) the fund was operating in contravention of a regulatory provision (within the meaning of section 38A of that Act).

(3) For the purposes of subparagraph (2)(b)(ii), a contravention of the Superannuation Industry (Supervision) Act 1993 or regulations made under it is to be ignored unless the contravention is:

(a) an offence; or

(b) a contravention of a civil penalty provision of that Act or those regulations.

(4) For the purposes of subparagraph (2)(b)(ii), it is sufficient if a contravention is established on the balance of probabilities.

290-80 Age related conditions

(1) To deduct the contribution, either:

(a) you must have made the contribution on or before the day that is 28 days after the end of the month in which the employee turns 75; or

(b) you must have been required to make the contribution by an industrial award, determination or notional agreement preserving State awards (within the meaning given by Schedule 8 to the Workplace Relations Act 1996) that is in force under an *Australian law.

(2) If only paragraph (1)(b) applies, you can deduct only the amount of the contribution that is required by the industrial award, determination or notional agreement preserving State awards.

Note: An industrial agreement, such as an Australian Workplace Agreement, Collective Agreement or preserved State agreement under the Workplace Relations Act 1996, or a similar agreement made under a State law, is not an award or determination.

Other employment-connected deductions

290-85 Contributions for former employees etc.

(1) Section 290-60 applies as modified by this section if a contribution you make in respect of another person:

(a) reduces your charge percentage under sections 22 or 23 of the Superannuation Guarantee (Administration) Act 1992 in respect of the other person because of section 15B of that Act; or

(b) is a one-off payment in lieu of salary or wages that relate to a period of service during which the other person was your employee.

(2) Treat the other person as your employee for the purposes of subsection 290-60(1).

(3) Despite subsection 290-60(2), the condition in section 290-70 must be satisfied only at the most recent time when the other person was your employee (apart from subsection (2) of this section).

290-90 Controlling interest deductions

(1) Section 290-60 applies as modified by this section if you make a contribution in respect of another person at a time, and at that time:

(a) the other person is an employee of a company in which you have a controlling interest; or

(b) you are connected to the other person in the circumstances set out in subsection (5); or

(c) you are a company connected to the other person in the circumstances described in subsection (6).

(2) Treat the other person as your employee at that time for the purposes of subsection 290-60(1).

Note 1: A deduction may be denied by section 85-25 if the employee is your associate.

Note 2: Section 86-60 (read together with section 86-75) limits the extent to which superannuation contributions by personal service entities are allowable deductions.

(3) Despite subsection 290-60(2), for you to deduct the contribution the condition in subsection (4) needs to be satisfied instead of the condition in section 290-70.

(4) The other person must be either:

(a) engaged in producing the assessable income of the other person’s employer; or

(b) an Australian resident engaged in the business of the other person’s employer.

(5) For the purposes of paragraph (1)(b), the circumstances are:

(a) you are the beneficial owner of shares in a company of which the other person is an employee, but you do not have a controlling interest in the company; and

(b) you are at *arm’s length with the other person in relation to the contribution; and

(c) neither the other person, nor a *relative of the other person:

(i) has set apart an amount as a fund, or has made a contribution to a fund, for the purpose of providing *superannuation benefits for you or a relative of yours; or

(ii) has made an *arrangement under which the other person or relative will or may do so.

Company controlling interest deductions

(6) For the purposes of paragraph (1)(c), the circumstances are:

(a) the other person is an employee of an entity that has a controlling interest in the company; or

(b) an entity that has a controlling interest in the company also has a controlling interest in a company of which the other person is an employee.

290-95 Amounts offset against superannuation guarantee charge

You cannot deduct a contribution under this Act if you elect under subsection 23A(1) of the Superannuation Guarantee (Administration) Act 1992 that the contribution be offset against your liability to pay superannuation guarantee charge.

Note: You cannot deduct a charge imposed by the Superannuation Guarantee Charge Act 1992: see section 26-95.

Returned contributions

290-100 Returned contributions assessable

(1) Your assessable income includes a payment, or the value of a benefit, you receive in the income year so far as it reasonably represents the direct or indirect return of:

(a) a contribution for which you or another entity have deducted or can deduct an amount for any income year; or

(b) earnings on a contribution of that kind.

Note: An example of an indirect return of a contribution is if the fund to which it was made transfers to another fund assets that include the contribution, and the other fund returns the contribution to the person who made it.

(2) Subsection (1) does not apply if you receive the payment, or the value of the benefit, as a *superannuation benefit.

Subdivision 290-C - Deducting personal contributions

Table of sections

290-150 Personal contributions deductible

Conditions for deducting a personal contribution

290-155 Complying superannuation fund condition

290-160 Maximum earnings as employee condition

290-165 Age-related conditions

290-170 Notice of intent to deduct conditions

290-175 Deduction limited by amount specified in notice

290-180 Notice may be varied but not revoked or withdrawn

290-150 Personal contributions deductible

(1) You can deduct a contribution you make to a *superannuation fund, or an *RSA, for the purpose of providing *superannuation benefits for yourself (regardless whether the benefits are payable to your *SIS dependants if you die before or after becoming entitled to receive the benefits).

Note: Other provisions of this Act and the Income Tax Assessment Act 1936 may reduce, increase or deny the deduction in certain circumstances. For example, see section 26-55 of this Act.

(2) However, the conditions in sections 290-155, 290-160, 290-165 and 290-170 must also be satisfied for you to deduct the contribution.

(3) You can deduct the contribution only for the income year in which you made the contribution.

Conditions for deducting a personal contribution

290-155 Complying superannuation fund condition

If the contribution is made to a *superannuation fund, it must be a *complying superannuation fund for the income year of the fund in which you made the contribution.

290-160 Maximum earnings as employee condition

(1) This section applies if:

(a) in the income year in which you make the contribution, you engage in any of these activities:

(i) holding an office or appointment;

(ii) performing functions or duties;

(iii) engaging in work;

(iv) doing acts or things; and

(b) the activities result in you being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that Act had not been enacted).

(2) To deduct the contribution, less than 10% of the total of the following must be attributable to the activities:

(a) your assessable income for the income year;

(b) your *reportable fringe benefits total for the income year.

290-165 Age-related conditions

(1) If you were under the age of 18 at the end of the income year in which you made the contribution, you must have *derived income in the income year:

(a) from the carrying on of a *business; or

(b) attributable to activities covered by subsection 290-160(1).

(2) In any other case, you must have made the contribution on or before the day that is 28 days after the end of the month in which you turn 75.

290-170 Notice of intent to deduct conditions

Deductibility of contributions

(1) To deduct the contribution, or a part of the contribution:

(a) you must give to the trustee of the fund or the *RSA provider a valid notice, in the *approved form, of your intention to claim the deduction; and

(b) the notice must be given before:

(i) if you have lodged your *income tax return for the income year in which the contribution was made on a day before the end of the next income year - the end of that day; or

(ii) otherwise - the end of the next income year; and

(c) the trustee or provider must have given you an acknowledgment of receipt of the notice.

Validity of notices

(2) The notice is not valid if at least one of these conditions is satisfied:

(a) the notice is not in respect of the contribution;

(b) the notice includes all or a part of an amount covered by a previous notice;

(c) when you gave the notice:

(i) you were not a member of the fund or the holder of the *RSA; or

(ii) the trustee or *RSA provider no longer holds the contribution; or

(iii) the trustee or RSA provider has begun to pay a *superannuation income stream based in whole or part on the contributions;

(d) before you gave the notice:

(i) you had made a contributions-splitting application (within the meaning given by the regulations) in relation to the contribution; and

(ii) the trustee or RSA provider had not rejected the application.

Acknowledgment of notice

(3) The trustee or provider must, without delay, give you an acknowledgment of a valid notice, subject to subsection (4).

(4) The trustee or provider may refuse to give you an acknowledgment of receipt of a valid notice if the *value of the *superannuation interest into which the contribution is made, at the end of the day on which the trustee or *RSA provider received the notice, is less than the tax that would be payable in respect of your contribution (or part of the contribution) if the trustee or provider were to acknowledge receipt of the notice.

290-175 Deduction limited by amount specified in notice

You cannot deduct more for the contribution (or a part of the contribution) than the amount stated in the notice.

290-180 Notice may be varied but not revoked or withdrawn

(1) You cannot revoke or withdraw a valid notice in relation to the contribution (or a part of the contribution).

(2) You can vary a valid notice, but only so as to reduce the amount stated in relation to the contribution (including to nil). You do so by giving notice to the trustee or the *RSA provider in the *approved form.

(3) However, you cannot vary a valid notice after:

(a) if you have lodged your *income tax return for the income year in which the contribution was made on a day before the end of the next income year - the end of that day; or

(b) otherwise - the end of the next income year.

(4) Subsection (3) does not apply to a variation if:

(a) you claimed a deduction for the contribution (or a part of the contribution); and

(b) the deduction is not allowable (in whole or in part); and

(c) the variation reduces the amount stated in relation to the contribution by the amount not allowable as a deduction.

Subdivision 290-D - Tax offsets for spouse contributions

Table of sections

290-230 Offset for spouse contribution

290-235 Limit on amount of tax offsets

290-240 Tax file number

290-230 Offset for spouse contribution

(1) You are entitled to a *tax offset for an income year for a contribution you make in the income year to a *superannuation fund, or an *RSA, for the purpose of providing *superannuation benefits for your *spouse (regardless whether the benefits are payable to your spouse’s *SIS dependants if your spouse dies before or after becoming entitled to receive the benefits).

(2) You are entitled to the *tax offset only if:

(a) he or she was your *spouse when you made the contribution; and

(b) both you and your spouse were Australian residents when you made the contribution; and

(c) the total of your spouse’s assessable income and *reportable fringe benefits total for the income year is less than $13,800; and

(d) you have not deducted and cannot deduct an amount for the contribution under section 290-60 (employer contributions); and

(e) if the contribution is made to a *superannuation fund - it is a *complying superannuation fund for the income year of the fund in which you make the contribution.

(3) You are not entitled to the *tax offset if, when you make the contribution, you are living separately and apart from your *spouse on a permanent basis.

(4) You are not entitled to the *tax offset for an amount paid by you, as mentioned in regulations under the Family Law Act 1975, to a regulated superannuation fund (within the meaning of that Act), or to an *RSA, to be held for the benefit of your *non-member spouse in satisfaction of his or her entitlement in respect of the *superannuation interest concerned.

290-235 Limit on amount of tax offsets

(1) The total of the amounts of *tax offset to which you are entitled for contributions you make for an income year cannot exceed 18% of the lesser of the following:

(a) $3,000 reduced by the amount (if any) by which the total mentioned in paragraph 290-230(2)(c) for the income year exceeds $10,800;

(b) the sum of the *spouse contributions you make in the income year.

(2) The maximum *tax offset to which you are entitled for an income year is $540, even if you are entitled to a tax offset for more than 1 *spouse.

290-240 Tax file number

If you are entitled to the *tax offset for the contribution, you may, with your *spouse’s consent, quote your spouse’s *tax file number to the trustee (or *RSA provider) of the *superannuation fund (or *RSA) to which the contribution is made.

Division 292 - Excess contributions tax

Table of Subdivisions

Guide to Division 292

292-A Object of this Division

292-B Excess concessional contributions tax

292-C Excess non-concessional contributions tax

292-D Modifications for defined benefit interests

292-E Excess contributions tax assessments

292-F Amending excess contributions tax assessments

292-G Collection and recovery

292-H Other provisions

Guide to Division 292

292-1 What this Division is about

This Division limits the superannuation contributions made in a financial year for a person that receive concessionally taxed treatment.

Subdivision 292-A - Object of this Division

Table of sections

292-5 Object of this Division

292-5 Object of this Division

The object of this Division is to ensure that the amount of concessionally taxed *superannuation benefits that a person receives results from superannuation contributions that have been made gradually over the course of the person’s life.

Subdivision 292-B - Excess concessional contributions tax

292-10 What this Subdivision is about

This Subdivision defines concessional contributions and excess concessional contributions , and sets liability to pay excess concessional contributions tax.

Table of sections

Operative provisions

292-15 Liability for excess concessional contributions tax

292-20 Your excess concessional contributions for a financial year

292-25 Your concessional contributions for a financial year

Operative provisions

292-15 Liability for excess concessional contributions tax

You are liable to pay *excess concessional contributions tax imposed by the Superannuation (Excess Concessional Contributions Tax) Act 2007 if you have *excess concessional contributions for a *financial year.

Note: The amount of the tax is set out in that Act.

292-20 Your excess concessional contributions for a financial year

(1) You have excess concessional contributions for a *financial year if the amount of your *concessional contributions for the year exceeds your *concessional contributions cap for the year. The amount of the excess concessional contributions is the amount of the excess.

(2) Your concessional contributions cap for the 2007-2008 *financial year is $50,000. This amount is indexed annually.

Note: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the amount of the cap: see section 960-285.

Note 2: For transitional rules about the period from 1 July 2007 to 30 June 2012, see section 292-20 of the Income Tax (Transitional Provisions) Act 1997.

292-25 Your concessional contributions for a financial year

(1) The amount of your concessional contributions for a *financial year is the sum of:

(a) each contribution covered under subsection (2); and

(b) each amount covered under subsection (3).

Note: For rules about defined benefit interests, see Subdivision 292-D.

(2) A contribution is covered under this subsection if:

(a) it is made in the *financial year to a *complying superannuation plan in respect of you; and

(b) it is included in the assessable income of the *superannuation provider in relation to the plan; and

(c) it is not any of the following:

(i) an amount mentioned in subsection 295-200(2);

(ii) an amount mentioned in item 2 of the table in subsection 295-190(1);

(iii) a contribution made to a *constitutionally protected fund.

(3) An amount in a *complying superannuation plan is covered under this subsection if it is allocated by the *superannuation provider in relation to the plan for you for the year (other than an amount paid for or by you to the plan) to the extent to which the allocated amount exceeds an amount that, according to rules specified in the regulations, is reasonable having regard to:

(a) the amounts paid for or by you to the superannuation plan; and

(b) the plan’s investment earnings relating to your *superannuation interest or interests in the plan; and

(c) any other relevant matters.

(4) Disregard Subdivision 295-D for the purposes of paragraph (2)(b).

Subdivision 292-C - Excess non-concessional contributions tax

292-75 What this Subdivision is about

This Subdivision defines non-concessional contributions and excess non-concessional contributions , and sets liability to pay excess non-concessional contributions tax.

Table of sections

Operative provisions

292-80 Liability for excess non-concessional contributions tax

292-85 Your excess non-concessional contributions for a financial year

292-90 Your non-concessional contributions for a financial year

292-95 Contributions arising from structured settlements or orders for personal injuries

292-100 Contribution relating to some CGT small business concessions

292-105 CGT cap amount

Operative provisions

292-80 Liability for excess non-concessional contributions tax

You are liable to pay *excess non-concessional contributions tax imposed by the Superannuation (Excess Non-concessional Contributions Tax) Act 2007 if you have *excess non-concessional contributions for a *financial year.

Note: The amount of the tax is set out in that Act.

292-85 Your excess non-concessional contributions for a financial year

(1) You have excess non-concessional contributions for a *financial year if the amount of your *non-concessional contributions for the year exceeds your *non-concessional contributions cap for the year. The amount of the excess non-concessional contributions is the amount of the excess.

(2) Your non-concessional contributions cap for the year is the amount that is 3 times your *concessional contributions cap for the year.

(3) However, subsection (4) applies instead of subsection (2) in determining your non-concessional contributions cap for a *financial year (the first year ) if:

(a) your *non-concessional contributions for the first year exceed the amount mentioned in subsection (2) for that year; and

(b) you are under 65 years at any time in the first year; and

(c) a previous operation of subsection (4) does not determine your non-concessional contributions cap for the first year.

(4) Work out your non-concessional contributions cap for the first year and for the following 2 *financial years (the second year and third year ) as follows:

(a) your cap for the first year is 3 times the amount mentioned in subsection (2) for the first year;

(b) your cap for the second year is:

(i) if your *non-concessional contributions for the first year fall short of your cap for the first year (worked out under paragraph (a)) - the shortfall; or

(ii) otherwise - nil;

(c) your cap for the third year is:

(i) if your *non-concessional contributions for the second year fall short of your cap for the second year (worked out under paragraph (b)) - the shortfall; or

(ii) otherwise - nil.

292-90 Your non-concessional contributions for a financial year

(1) The amount of your non-concessional contributions for a *financial year is the sum of:

(a) each contribution covered under subsection (2); and

(b) the amount of your *excess concessional contributions (if any) for the financial year.

(2) A contribution is covered under this subsection if:

(a) it is made in the *financial year to a *complying superannuation plan in respect of you; and

(b) it is not included in the assessable income of the *superannuation provider in relation to the *superannuation plan; and

(c) it is not any of the following:

(i) a Government co-contribution made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003;

(ii) a contribution covered under section 292-95 (payments that relate to structured settlements or orders for personal injuries);

(iii) a contribution covered under section 292-100 (certain CGT-related payments), to the extent that it does not exceed your *CGT cap amount when it is made;

(iv) a contribution made to a *constitutionally protected fund (other than a contribution included in the *contributions segment of your *superannuation interest in the fund);

(v) contributions not included in the assessable income of the superannuation provider in relation to the superannuation plan because of a choice made under section 295-180;

(vi) a contribution that is a *roll-over superannuation benefit.

(3) Disregard Subdivision 295-D for the purposes of paragraph (2)(b).

292-95 Contributions arising from structured settlements or orders for personal injuries

(1) A contribution is covered under this section if:

(a) the contribution arises from:

(i) the settlement of a claim that satisfies the conditions in subsection (3); or

(ii) the settlement of a claim in relation to a personal injury suffered by you under a law of the Commonwealth or of a State or Territory relating to workers compensation; or

(iii) the order of a court that satisfies the conditions in subsection (4); and

(b) the contribution is made within 90 days after the later of the following:

(i) the day of receipt of the payment from which the contribution is made; or

(ii) in relation to subparagraph (a)(i) or (iii) - the day mentioned in subsection (2); and

(c) 2 legally qualified medical practitioners have certified that, because of the personal injury, it is unlikely that you can ever be *gainfully employed in a capacity for which you are reasonably qualified because of education, experience or training; and

(d) no later than the time the contribution is made to a *superannuation plan, you or your *legal personal representative notify the *superannuation provider in relation to the plan, in the *approved form, that this section is to apply to the contribution.

(2) For the purposes of subparagraph (1)(b)(ii), the day is:

(a) for a settlement mentioned in subparagraph (a)(i):

(i) the day on which the agreement mentioned in paragraph (3)(c) was entered into; or

(ii) if that agreement depends, for its effectiveness, on being approved (however described) by an order of a court, or on being embodied in a consent order made by a court - the day on which that order was made; or

(b) for an order mentioned in subparagraph (1)(a)(iii) - the day on which the order was made.

(3) For the purposes of subparagraph (1)(a)(i), the conditions are as follows:

(a) the claim:

(i) is for compensation or damages for, or in respect of, personal injury suffered by you; and

(ii) is made by you or your *legal personal representative;

(b) the claim is based on the commission of a wrong, or on a right created by statute;

(c) the settlement takes the form of a written agreement between the parties to the claim (whether or not that agreement is approved by an order of a court, or is embodied in a consent order made by a court).

(4) For the purposes of subparagraph (1)(a)(iii), the conditions are as follows:

(a) the order is made in respect of a claim that:

(i) is for compensation or damages for, or in respect of, personal injury suffered by you; and

(ii) is made by you or your *legal personal representative;

(b) the claim is based on the commission of a wrong, or on a right created by statute;

(c) the order is not an order approving or endorsing an agreement as mentioned in paragraph (3)(c).

(5) If a claim is both:

(a) for compensation or damages for personal injury suffered by you; and

(b) for some other remedy (for example, compensation or damages for loss of, or damage to, property);

subsections (3) and (4) apply to the claim, but only to the extent that it relates to the compensation or damages referred to in paragraph (a), and only to amounts that, in the settlement agreement, or in the order, are identified as being solely in payment of that compensation or those damages.

292-100 Contribution relating to some CGT small business concessions

(1) A contribution is covered under this section if:

(a) the contribution is made by you to a *complying superannuation plan in respect of you in a *financial year; and

(b) the requirement in subsection (2), (4), (7) or (8) is met; and

(c) you choose, in accordance with subsection (9), to apply this section to an amount that is all or part of the contribution.

(2) The requirement in this subsection is met if:

(a) the contribution is equal to all or part of the *capital proceeds from a *CGT event for which you can disregard any *capital gain under section 152-105 (or would be able to do so, assuming that a capital gain arose from the event); and

(b) the contribution is made no later than either of the following:

(i) the day you are required to lodge your tax return for the income year in which the CGT event happened;

(ii) 30 days after the day you receive the capital proceeds.

(3) For the purposes of paragraph (2)(a), ignore the requirement in paragraph 152-105(b) if you are permanently incapacitated at the time of the *CGT event but were not permanently incapacitated at the time the relevant *CGT asset was acquired.

(4) The requirement in this subsection is met if:

(a) just before a *CGT event, you were a *CGT concession stakeholder of an entity that could, under section 152-110, disregard any *capital gain arising from the CGT event (or would be able to do so, assuming that a capital gain arose from the event); and

(b) the entity makes a payment to you within 2 years after the CGT event; and

(c) the contribution is equal to all or part of your stakeholder’s control percentage (within the meaning of subsection 152-125(3)) of the *capital proceeds from the CGT event (but not exceeding the amount of the payment mentioned in paragraph (b)); and

(d) the contribution is made within 30 days after the payment mentioned in paragraph (b).

(5) In determining whether the conditions in subsection (2) or (4) are satisfied for a *CGT event in relation to a *pre-CGT asset, treat the asset as a *post-CGT asset.

(6) For the purposes of paragraph (4)(a), ignore the requirement in paragraph 152-110(1)(b) if a *controlling individual was permanently incapacitated at the time of the *CGT event but was not permanently incapacitated when the relevant *CGT asset was acquired.

(7) The requirement in this subsection is met if:

(a) the contribution is equal to all or part of the *capital gain from a *CGT event that you disregarded under subsection 152-305(1); and

(b) the contribution is made no later than either of the following:

(i) the day you are required to lodge your tax return for the income year in which the CGT event happened;

(ii) 30 days after the day you receive the *capital proceeds from the CGT event.

(8) The requirement in this subsection is met if:

(a) just before a *CGT event, you were a *CGT concession stakeholder of an entity that could, under subsection 152-305(2), disregard all or part of a *capital gain arising from the CGT event; and

(b) the entity makes a payment to you that satisfies the conditions in section 152-325; and

(c) the contribution is equal to all or part of the capital gain arising from the CGT event (but not exceeding the amount of the payment mentioned in paragraph (b)); and

(d) the contribution is made within 30 days after the payment mentioned in paragraph (b).

(9) To make a choice for the purposes of paragraph (1)(c), you must:

(a) make the choice in the *approved form; and

(b) give it to the *superannuation provider in relation to the *complying superannuation plan on or before the time when the contribution is made.

292-105 CGT cap amount

(1) Your CGT cap amount at the start of the 2007-2008 *financial year is $1,000,000.

Note: For transitional rules about contributions made in the period from 10 May 2006 to 30 June 2007, see section 292-80 of the Income Tax (Transitional Provisions) Act 1997.

Reductions and increases

(2) If a contribution covered by section 292-100 is made in respect of you at a time, reduce your CGT cap amount just after that time:

(a) if the contribution falls short of your *CGT cap amount at that time - by the amount of the contribution; or

(b) otherwise - to nil.

(3) At the start of each *financial year after the 2007-2008 financial year, increase your CGT cap amount by the amount (if any) by which the index amount for that financial year exceeds the index amount for the previous financial year.

(4) For the purposes of subsection (3), the index amount for the 2007-2008 *financial year is $1,000,000. The index amount is then indexed annually.

Note: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the index amount: see section 960-285.

Subdivision 292-D - Modifications for defined benefit interests

292-155 What this Subdivision is about

This Subdivision modifies the meaning of concessional contributions relating to defined benefits interests.

Table of sections

Operative provisions

292-160 Application

292-165 Concessional contributions - special rules for defined benefit interests

292-170 Notional taxed contributions

292-175 Defined benefit interest

Operative provisions

292-160 Application

(1) This Subdivision applies if, in a *financial year, you have:

(a) a *superannuation interest that is or includes a *defined benefit interest; or

(b) more than one superannuation interest that is or includes a defined benefit interest.

(2) However, this Subdivision does not apply in relation to a *superannuation interest in a *constitutionally protected fund.

292-165 Concessional contributions - special rules for defined benefit interests

Despite section 292-25, the amount of your concessional contributions for the *financial year is the sum of:

(a) the contributions covered by subsection 292-25(2), and the amounts covered by subsection 292-25(3), to the extent to which they do not relate to the *defined benefit interest or interests; and

(b) your *notional taxed contributions for the financial year in respect of the defined benefit interest or interests.

292-170 Notional taxed contributions

(1) Your notional taxed contributions for a *financial year in respect of a *defined benefit interest has the meaning given by the regulations.

(2) Regulations made for the purposes of subsection (1) may provide for a method of determining the amount of the notional taxed contributions .

(3) Regulations made for the purposes of subsection (1) may define the *notional taxed contributions, and the amount of notional taxed contributions, in different ways depending on any of the following matters:

(a) the person who has the *superannuation interest that is or includes the *defined benefit interest;

(b) the *superannuation plan in which the superannuation interest exists;

(c) the *superannuation provider in relation to the superannuation plan;

(d) any other matter.

(4) Regulations made for the purposes of subsection (1) may specify circumstances in which the amount of *notional taxed contributions for a *financial year is nil.

(5) Subsections (2), (3) and (4) do not limit the regulations that may be made for the purposes of this section.

(6) Despite subsection (1), your notional taxed contributions for the *financial year in respect of the *defined benefit interest are equal to your *concessional contributions cap for the financial year if:

(a) this Subdivision applies in relation to you because you have a defined benefit interest in a financial year; and

(b) apart from this subsection, the notional taxed contributions for the financial year in respect of the defined benefit interest exceed your concessional contributions cap for the financial year; and

(c) either:

(i) you held the defined benefit interest in a *superannuation fund on 5 September 2006; or

(ii) all the requirements in subsection (7) are satisfied; and

(d) if subparagraph (c)(i) applies and the rules of the superannuation fund have changed since 5 September 2006:

(i) the notional taxed contributions mentioned in paragraph (b) do not exceed what they would have been if the rules of the fund had not changed since 5 September 2006; or

(ii) all changes to those rules since 5 September 2006 are of a kind specified in the regulations.

(7) For the purposes of subparagraph (6)(c)(ii), the requirements are as follows:

(a) you held a *defined benefit interest (the original interest ) in a *superannuation fund (the original fund ) on 5 September 2006;

(b) the defined benefit interest mentioned in paragraph (6)(a) (the current interest ) is in a different superannuation fund (the current fund );

(c) the entire *value of the original interest was transferred to the current interest after 5 September 2006;

(d) your rights under the current interest are equivalent to your rights under the original interest;

(e) the notional taxed contributions mentioned in paragraph (6)(b) do not exceed what they would have been if:

(i) the transfer mentioned in paragraph (c) had not taken place; and

(ii) the rules of the original fund had not changed since 5 September 2006, or all changes to those rules since 5 September 2006 are of a kind specified in the regulations;

(f) the requirements (if any) specified in the regulations are satisfied.

292-175 Defined benefit interest

(1) An individual’s *superannuation interest is a defined benefit interest to the extent that it defines the individual’s entitlement to *superannuation benefits payable from the interest by reference to one or more of the following matters:

(a) the individual’s salary, or allowance in the nature of salary, at a particular date or averaged over a period;

(b) another individual’s salary, or allowance in the nature of salary, at a particular date or averaged over a period;

(c) a specified amount;

(d) specified conversion factors.

(2) However, an individual’s *superannuation interest is not a defined benefit interest if it defines that entitlement solely by reference to one or more of the following:

(a) *disability superannuation benefits;

(b) *superannuation death benefits;

(c) payments of amounts mentioned in paragraph 307-10(a) (temporary disability payments).

Subdivision 292-E - Excess contributions tax assessments

Guide to Subdivision 292-E

292-225 What this Subdivision is about

The Commissioner may make an assessment of a person’s liability to pay excess contributions tax, and the excess contributions on which that liability is based.

Table of sections

Operative provisions

292-230 Commissioner must make an excess contributions tax assessment

292-235 Part-year assessment

292-240 Validity of assessment

292-245 Objections

292-250 Evidence

Operative provisions

292-230 Commissioner must make an excess contributions tax assessment

(1) The Commissioner must make an assessment (an excess contributions tax assessment ) of:

(a) if a person has *excess concessional contributions for a *financial year - the amount of the excess concessional contributions; and

(b) the amount (if any) of *excess concessional contributions tax which the person is liable to pay in relation to the financial year.

(2) The Commissioner must make an assessment (also an excess contributions tax assessment ) of:

(a) if a person has *excess non-concessional contributions for a financial year - the amount of the excess non-concessional contributions; and

(b) the amount (if any) of *excess non-concessional contributions tax which the person is liable to pay in relation to the financial year.

(3) The Commissioner must give the person notice in writing of an *excess contributions tax assessment as soon as practicable after making the assessment.

(4) The notice may be included in a notice of any other assessment under this Act (including an assessment under this section).

292-235 Part-year assessment

(1) The Commissioner may, at any time during a *financial year (the actual financial year ), make an assessment of the matters mentioned in subsection 292-230(1) for a person for a particular period within that year as if the beginning and end of that period were the beginning and end of a financial year.

(2) This Division applies, for the purposes of that assessment, as if:

(a) the start and end of the period were the start and end of a *financial year; and

(b) the assessment were an excess contributions tax assessment for that financial year.

(3) If the Commissioner makes an assessment under subsection (1), he or she must make an assessment under section 292-230 in relation to the actual financial year as soon as possible after the end of that year.

(4) However, the Commissioner does not need to make an assessment mentioned in subsection (3) if he or she is satisfied that the assessment would not differ in a material way from the assessment under subsection (1).

292-240 Validity of assessment

The validity of an *excess contributions tax assessment is not affected because any of the provisions of this Act have not been complied with.

292-245 Objections

If a person is dissatisfied with an *excess contributions tax assessment made in relation to the person, the person may object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953.

292-250 Evidence

Section 177 of the Income Tax Assessment Act 1936 applies as if a reference in that section to an assessment or a notice of assessment included a reference to an *excess contributions tax assessment or a notice of an excess contributions tax assessment, as required.

Subdivision 292-F - Amending excess contributions tax assessments

Guide to Subdivision 292-F

292-300 What this Subdivision is about

The Commissioner may amend excess contributions tax assessments within certain time limits.

Table of sections

Operative provisions

292-305 Amendments within 4 years of the original assessment

292-310 Amended assessments are treated as excess contributions tax assessments

292-315 Later amendments - on request

292-320 Later amendments - fraud or evasion

292-325 Further amendment of an amended particular

292-330 Amendment on review etc.

Operative provisions

292-305 Amendments within 4 years of the original assessment

(1) The Commissioner may amend an *excess contributions tax assessment for a person for a *financial year at any time during the period of 4 years after the *original excess contributions tax assessment day for the person for that year.

(2) The original excess contributions tax assessment day for a person for a *financial year is the day on which the Commissioner gives the first *excess contributions tax assessment to the person for the financial year.

292-310 Amended assessments are treated as excess contributions tax assessments

(1) Once an amended *excess contributions tax assessment for a person for a *financial year is made, it is taken to be an excess contributions tax assessment for the person for the year.

(2) If the Commissioner amends a person’s *excess contributions tax assessment, the Commissioner must give the person notice in writing of the amendment as soon as practicable after making the amendment.

(3) The notice may be included in a notice of any other assessment under this Act.

292-315 Later amendments - on request

The Commissioner may amend an *excess contributions tax assessment for a person for a *financial year after the end of the period of 4 years after the *original excess contributions tax assessment day for the person for the year if, within that 4 year period:

(a) the person applies for the amendment in the *approved form; and

(b) the person gives the Commissioner all the information necessary for making the amendment.

292-320 Later amendments - fraud or evasion

(1) If:

(a) a person (or a *superannuation provider covered under subsection (2)) does not make a full and true disclosure to the Commissioner of the information necessary for an *excess contributions tax assessment for the person for a *financial year; and

(b) in making the assessment, the Commissioner makes an under-assessment; and

(c) the Commissioner is of the opinion that the under-assessment is due to fraud or evasion;

the Commissioner may amend the assessment at any time.

(2) A *superannuation provider is covered under this subsection if any of the following conditions are satisfied:

(a) contributions have been made to a *superannuation plan of the provider on behalf of the person in the *financial year;

(b) an amount is included in the person’s *concessional contributions for the financial year under subsection 292-25(3) because the superannuation provider allocated it to the person;

(c) *notional taxed contributions are included in the person’s concessional contributions for the financial year under section 292-165 because of the person’s *defined benefit interest in a superannuation plan of the provider.

292-325 Further amendment of an amended particular

If:

(a) an *excess contributions tax assessment has been amended (the earlier amendment ) in any particular; and

(b) the Commissioner is of the opinion that it would be just to further amend the assessment in that particular;

the Commissioner may do so within a period of 4 years after the earlier amendment.

292-330 Amendment on review etc.

Nothing in this Subdivision prevents the amendment of an *excess contributions tax assessment:

(a) to give effect to a decision on a review or appeal; or

(b) to reduce the assessment as a result of an objection or pending an appeal or review.

Note: A person may make a complaint to the Superannuation Complaints Tribunal under section 15CA of the Superannuation (Resolution of Complaints) Act 1993 if the person is dissatisfied with a statement given to the Commissioner by a superannuation provider under section 390-5 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision 292-G - Collection and recovery

Guide to Subdivision 292-G

292-380 What this Subdivision is about

Excess contributions tax is due and payable at the end of 21 days after notice of assessment and the general interest charge applies to unpaid amounts. Money may be released from a superannuation plan to pay the tax.

Table of sections

Operative provisions

292-385 Due date for payment of excess contributions tax

292-390 General interest charge

292-395 Refunds of amounts overpaid

292-400 Security for payment of tax

292-405 Release authority

292-410 Giving a release authority to a superannuation provider

292-415 Superannuation provider given release authority must pay amount

Operative provisions

292-385 Due date for payment of excess contributions tax

*Excess contributions tax assessed for a person for a *financial year is due and payable at the end of 21 days after the Commissioner gives the person notice of the *excess contributions tax assessment.

292-390 General interest charge

If *excess contributions tax payable by a person remains unpaid after the time by which it is due and payable, the person is liable to pay the *general interest charge on the unpaid amount for each day in the period that:

(a) starts at the beginning of the day on which the excess contributions tax was due to be paid; and

(b) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the excess contributions tax;

(ii) general interest charge on any of the excess contributions tax.

Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.

292-395 Refunds of amounts overpaid

Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if references in that section to tax included references to *excess contributions tax.

292-400 Security for payment of tax

In section 213 of the Income Tax Assessment Act 1936 (under which the Commissioner may require security for the payment of income tax), a reference to income tax includes a reference to *excess contributions tax.

292-405 Release authority

(1) As soon as practicable after making an *excess contributions tax assessment for a person, the Commissioner must give the person the following, in accordance with this section:

(a) if the person is liable to pay an amount of *excess concessional contributions tax in accordance with the assessment - a release authority in respect of the amount;

(b) if the person is liable to pay an amount of *excess non-concessional contributions tax in accordance with the assessment - a release authority in respect of the amount.

(2) A release authority must:

(a) state the amount of *excess concessional contributions tax or *excess non-concessional contributions tax (whichever is applicable) that the person is liable to pay as a result of the assessment; and

(b) be dated; and

(c) contain any other information that the Commissioner considers relevant.

292-410 Giving a release authority to a superannuation provider

(1) The person may give the release authority to a *superannuation provider that holds a *superannuation interest (other than a *defined benefit interest) for the person within 90 days after the date of the release authority.

Note: Excess contributions tax is due and payable at the end of 21 days after notice of assessment: see section 292-385.

(2) However, if:

(a) the release authority is for *excess non-concessional contributions tax; and

(b) a *superannuation provider holds a *superannuation interest for the person (other than a *defined benefit interest);

the person must give the release authority to a superannuation provider holding a superannuation interest for the person (other than a defined benefit interest) within 21 days after the date of the release authority.

Note: Section 288-90 in Schedule 1 to the Taxation Administration Act 1953 provides for an administrative penalty for failing to comply with this subsection.

(3) Subsection (4) applies if:

(a) the release authority is for *excess non-concessional contributions tax; and

(b) a *superannuation provider holds a *superannuation interest for the person (other than a *defined benefit interest); and

(c) any of the following conditions are satisfied:

(i) the person does not give the release authority to a superannuation provider holding a superannuation interest for the person within 90 days after the date of the release authority in accordance with subsection (1);

(ii) if the person has made one or more requests as mentioned in paragraph 292-415(1)(a) in relation to the release authority within 90 days after the date of the release authority - the total of the amounts (if any) paid by superannuation providers in relation to the release authority falls short of the amount of the excess non-concessional contributions tax stated in the release authority;

(iii) the total of the *values of every superannuation interest (other than a defined benefit interest) held for the person by a superannuation provider to which the release authority is given falls short of the amount of the excess non-concessional contributions tax stated in the release authority.

(4) If the conditions in subsection (3) are satisfied, the Commissioner may give the release authority to one or more *superannuation providers that hold a *superannuation interest (other than a *defined benefit interest) for the person.

292-415 Superannuation provider given release authority must pay amount

(1) A *superannuation provider that has been given a release authority in accordance with section 292-410 must pay to the person or the Commissioner within 30 days after receiving the release authority the least of the following amounts:

(a) if the person or Commissioner requests the superannuation provider, in writing, to pay a specified amount in relation to the release authority - that amount;

(b) the amount of *excess concessional contributions tax or *excess non-concessional contributions tax (whichever is applicable) stated in the release authority;

(c) the sum of the *values of every *superannuation interest (other than a *defined benefit interest) held by the superannuation provider for the person.

Note 1: Section 288-95 in Schedule 1 to the Taxation Administration Act 1953 provides for an administrative penalty for failing to comply with this subsection.

Note 2: Section 288-100 in Schedule 1 to the Taxation Administration Act 1953 provides that the person giving the release authority to the superannuation provider can be liable to an administrative penalty if excess amounts are paid in relation to the release authority.

Note 3: For reporting obligations on the superannuation provider in these circumstances, see section 390-65 in Schedule 1 to the Taxation Administration Act 1953.

Note 4: For the taxation treatment of the payment, see section 304-15.

(2) The payment must be made out of one or more *superannuation interests (other than a *defined benefit interest) held by the *superannuation provider for the person.

(3) If the payment is made to the Commissioner, it is taken to be made in satisfaction (in whole or part) of the person’s liability for *excess concessional contributions tax or *excess non-concessional contributions tax stated in the release authority.

(4) If:

(a) the release authority was given by the Commissioner in accordance with subsection 292-410(4); and

(b) the payment is made to the Commissioner;

the Commissioner must, as soon as possible, give the person written notice that the payment has been made.

(5) Section 307-125 (the proportioning rule) does not apply to a payment made as required under this section.

Subdivision 292-H - Other provisions

Table of sections

292-465 Commissioner’s discretion to disregard contributions etc. in relation to a financial year

292-470 Power of Commissioner to obtain information

292-465 Commissioner’s discretion to disregard contributions etc. in relation to a financial year

(1) If you make an application in accordance with subsection (2), the Commissioner may make a written determination that, for the purposes of this Division:

(a) all or part of your *concessional contributions for a *financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination; and

(b) all or part of your *non-concessional contributions for a financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination.

(2) You may apply to the Commissioner in the *approved form for a determination under subsection (1). The application can only be made within:

(a) the period:

(i) starting on the day you receive an *excess contributions tax assessment for the *financial year; and

(ii) ending 60 days after that day; or

(b) a longer period allowed by the Commissioner.

(3) The Commissioner may make the determination only if he or she considers that:

(a) there are special circumstances; and

(b) making the determination is consistent with the object of this Division.

(4) In making the determination the Commissioner may have regard to the matters in subsections (5) and (6) and any other relevant matters.

(5) The Commissioner may have regard to whether a contribution made in the relevant *financial year would more appropriately be allocated towards another financial year instead.

(6) The Commissioner may have regard to whether it was reasonably foreseeable, when a relevant contribution was made, that you would have *excess concessional contributions or *excess non-concessional contributions for the relevant *financial year, and in particular:

(a) if the relevant contribution is made in respect of you by another person - the terms of any agreement or arrangement between you and that person as to the amount and timing of the contribution; and

(b) the extent to which you had control over the making of the contribution.

(7) The Commissioner must give you a copy of the determination.

292-470 Power of Commissioner to obtain information

Section 264 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if the reference in paragraph (1)(b) of that section to a person’s income or assessment were a reference to a matter relevant to the administration or operation of this Division.

Note: For superannuation providers’ reporting obligations see Division 390 in Schedule 1 to the Taxation Administration Act 1953.

Division 295 - Taxation of superannuation entities

Table of Subdivisions

Guide to Division 295

295-A Provisions of general operation

295-B Modifications of provisions of this Act

295-C Contributions included

295-D Contributions excluded

295-E Other income amounts

295-F Exempt income

295-G Deductions

295-H Components of taxable income

295-I No-TFN contributions

295-J Tax offset for no-TFN contributions income (TFN quoted within 4 years)

Guide to Division 295

295-1 What this Division is about

This Division sets out special rules about the taxation of superannuation entities.

It sets out how to calculate the taxable income of those entities and to identify the components of that taxable income for the purpose of applying the appropriate tax rate.

It sets out how to calculate the no-TFN contributions income of relevant entities for an income year for the purpose of applying the appropriate tax rate.

Subdivision 295-A - Provisions of general operation

Table of sections

295-5 Entities to which Division applies

295-10 How to work out the tax payable by superannuation entities

295-15 Division does not impose a tax on property of a State

295-20 Exempting laws ineffective

295-25 Assessments on basis of anticipated SIS Act notice

295-30 Effect of revocation etc. of SIS Act notices

295-35 Acronyms used in tables

295-5 Entities to which Division applies

(1) This Division applies to these entities:

(a) a *complying superannuation fund;

(b) a *non-complying superannuation fund;

(c) a *complying approved deposit fund;

(d) a *non-complying approved deposit fund;

(e) a *pooled superannuation trust;

whether they are established by an *Australian law, by a public authority constituted by or under such a law or in some other way.

(2) The *superannuation provider in relation to an entity referred to in paragraph (1)(a) to (d) is liable to pay tax on the taxable income of the entity.

Note: A superannuation provider in relation to an entity referred to in paragraphs (1)(a) and (b) or in relation to an RSA is liable to pay tax on the no-TFN contributions income of the entity: see section 295-605.

(3) The trustee of a *pooled superannuation trust is liable to pay tax on the taxable income of the trust.

(4) This Division also applies to an *RSA provider that is not a *life insurance company.

Note: Division 320 deals with RSA providers that are life insurance companies.

295-10 How to work out the tax payable by superannuation entities

(1) Use this method for *superannuation funds, *approved deposit funds and *pooled superannuation trusts:

Method statement

Step 1. For a *superannuation fund, work out the *no-TFN contributions income. Apply the applicable rates as set out in the Income Tax Rates Act 1986 to that income.

Step 2. Work out the entity’s assessable income and deductions taking account of the special rules in this Division. The special rules modify some provisions of this Act. They also include amounts in assessable income, allow deductions and exempt amounts from income tax.

Step 3. Work out the entity’s taxable income as if its trustee:

(a) were an Australian resident (except where paragraph (b) applies); or

(b) for a *non-complying superannuation fund that is a *foreign superannuation fund for the income year - were not an Australian resident.

Step 4. Work out the *low tax component and *non-arm’s length component of the taxable income of a *complying superannuation fund, *complying approved deposit fund or *pooled superannuation trust.

Step 5. Apply the applicable rates as set out in the Income Tax Rates Act 1986 to the components, or to the taxable income of a *non-complying superannuation fund or *non-complying approved deposit fund.

Step 6. Subtract the entity’s *tax offsets from the step 5 amount or, for a *superannuation fund, from the sum of the fund’s step 1 and step 5 amounts.

(2) Use this method for *RSA providers:

Method statement

Step 1. Work out the entity’s *no-TFN contributions income. Apply the applicable rates as set out in the Income Tax Rates Act 1986 to that income.

Step 2. Work out the entity’s assessable income and deductions taking account of the special rules in this Division.

Step 3. Work out the *RSA component and *standard component of the entity’s taxable income.

Step 4. Apply the applicable rates as set out in the Income Tax Rates Act 1986 to the components. The *RSA component is taxed at a concessional rate.

Step 5. Subtract the entity’s *tax offsets from the sum of the entity’s step 1 and step 4 amounts.

295-15 Division does not impose a tax on property of a State

This Division does not impose a tax on property of any kind belonging to a State (within the meaning of section 114 of the Constitution).

295-20 Exempting laws ineffective

A *Commonwealth law (other than this Act) does not have the effect of exempting the trustee of an entity to which this Division applies from the liability to pay tax unless it does so expressly.

295-25 Assessments on basis of anticipated SIS Act notice

(1) The Commissioner may make an assessment for a fund or trust that is not a *complying superannuation fund, *complying approved deposit fund or *pooled superannuation trust for the income year as if it were such an entity if the Commissioner considers it likely that a notice will be given under section 40 of the Superannuation Industry (Supervision) Act 1993 having the effect that it will become such an entity.

(2) However, the grounds for making an assessment under subsection (1) are taken never to have existed if:

(a) the Commissioner becomes satisfied that the notice will not be given; or

(b) *APRA does not receive the documents referred to in subsection 36(1) of the Superannuation Industry (Supervision) Act 1993 about the fund or trust before the end of 12 months after the assessment is made.

295-30 Effect of revocation etc. of SIS Act notices

This Division has effect as if a notice given under section 342 of the Superannuation Industry (Supervision) Act 1993 (about pre-1 July 88 funding credits) or under regulations made for the purposes of that section had never been given if:

(a) the notice is revoked; or

(b) the decision to give the notice is set aside.

295-35 Acronyms used in tables

In tables in this Division, these acronyms are used for these entities:

Subdivision 295-B - Modifications of provisions of this Act

Table of sections

295-85 CGT to be primary code for calculating gains or losses

295-90 CGT rules for pre-30 June 1988 assets

295-95 Deductions related to contributions

295-100 Deductions for investing in PSTs and life policies

295-105 Distributions to PST unitholders

295-85 CGT to be primary code for calculating gains or losses

(1) The modifications in subsection (2) apply if a *CGT event happens involving a *CGT asset that was owned by one of these entities just before the time of the event:

(a) a *complying superannuation fund;

(b) a *complying approved deposit fund;

(c) a *pooled superannuation trust.

(2) These provisions do not apply to the *CGT event:

(a) sections 6-5 (about *ordinary income), 8-1 (about amounts you can deduct), and 15-15 and 25-40 (about profit-making undertakings or plans);

(b) sections 25A and 52 of the Income Tax Assessment Act 1936 (about profit-making undertakings or schemes).

Exceptions

(3) The provisions referred to in subsection (2) can apply to the *CGT event if:

(a) any *capital gain or *capital loss from the event is attributable to currency exchange rate fluctuations; or

(b) the *CGT asset is one of these:

(i) debenture stock, a bond, *debenture, certificate of entitlement, bill of exchange, promissory note or other security;

(ii) a deposit with a bank, building society or other financial institution;

(iii) a loan (secured or not);

(iv) some other contract under which an entity is liable to pay an amount (whether the liability is secured or not).

(4) The provisions referred to in subsection (2) can also apply to the *CGT event if a *capital gain or *capital loss from the event is disregarded because of one of the provisions in this table:

295-90 CGT rules for pre-30 June 1988 assets

(1) This section applies to the trustee of:

(a) a *complying superannuation fund; or

(b) a *complying approved deposit fund; or

(c) a *pooled superannuation trust.

(2) Parts 3-1 and 3-3 (about capital gains and losses) apply to a *CGT asset that:

(a) the trustee or a former trustee owned at the end of 30 June 1988; and

(b) the trustee owned at the commencement of this section;

as if the trustee had *acquired the asset on 30 June 1988.

(3) Subsection (2) does not affect how to work out the asset’s *cost base or *reduced cost base.

Note: See Subdivision 295-B of the Income Tax (Transitional Provisions) Act 1997 for rules about cost base.

(4) Subsection 104-30(5) applies to an option granted by the trustee as if the reference in that subsection to 20 September 1985 were a reference to 1 July 1988.

295-95 Deductions related to contributions

(1) Provisions of this Act about deducting amounts apply to these entities as if all contributions made to them were included in their assessable income:

(a) *complying superannuation funds;

(b) *non-complying superannuation funds that are *Australian superannuation funds;

(c) *complying approved deposit funds;

(d) *non-complying approved deposit funds;

(e) *RSA providers.

Note 1: This means that the entities can deduct amounts incurred in obtaining the contributions.

Note 2: Examples of contributions that are not assessable are:

· contributions which the contributor cannot deduct;

· contributions excluded from assessable income under Subdivision 295-D.

(2) A *superannuation fund is an Australian superannuation fund at a time, and for the income year in which that time occurs, if:

(a) the fund was established in Australia, or any asset of the fund is situated in Australia at that time; and

(b) at that time, the central management and control of the fund is ordinarily in Australia; and

(c) at that time either the fund had no member covered by subsection (3) (an active member ) or at least 50% of:

(i) the total *market value of the fund’s assets attributable to *superannuation interests held by active members; or

(ii) the sum of the amounts that would be payable to or in respect of active members if they voluntarily ceased to be members;

is attributable to superannuation interests held by active members who are Australian residents.

(3) A member is covered by this subsection at a time if the member is:

(a) a contributor to the fund at that time; or

(b) an individual on whose behalf contributions have been made, other than an individual:

(i) who is a foreign resident; and

(ii) who is not a contributor at that time; and

(iii) for whom contributions made to the fund on the individual’s behalf after the individual became a foreign resident are only payments in respect of a time when the individual was an Australian resident.

295-100 Deductions for investing in PSTs and life policies

(1) Provisions of this Act about deducting amounts apply to *complying superannuation funds and *complying approved deposit funds as if *ordinary income and *statutory income received from these investments were included in their assessable income:

(a) units in a *pooled superannuation trust;

(b) *life insurance policies issued by a *life insurance company;

(c) an interest in a trust whose assets consist only of life insurance policies issued by a life insurance company.

Note: Income from these investments is not assessable: see for example sections 295-105 and 118-350.

(2) A *complying superannuation fund cannot deduct an amount (otherwise than under section 295-465) for fees or charges incurred for:

(a) *virtual PST life insurance policies; or

(b) *exempt life insurance policies; or

(c) units in a *pooled superannuation trust that are *segregated current pension assets of the fund.

295-105 Distributions to PST unitholders

The assessable income of a *complying superannuation fund, *complying approved deposit fund or *pooled superannuation trust does not include amounts *derived by the entity because it holds units in a *pooled superannuation trust.

Note: These entities will not be subject to any tax liability when they dispose of the units: see subsection 295-85(2) and section 118-350.

Subdivision 295-C - Contributions included

Guide to Subdivision 295-C

295-155 What this Subdivision is about

There are basically 3 types of assessable contributions:

(a) those made by a contributor (for example, an employer) on behalf of someone else (for example, an employee); and

(b) those made on the contributor’s own behalf for which the contributor is entitled to a deduction; and

(c) those transferred from a foreign superannuation fund to an Australian superannuation fund.

There are some additions and exceptions.

Table of sections

Contributions and payments

295-160 Contributions and payments

295-165 Exception - spouse contributions

295-170 Exception - Government co-contributions and contributions for a child

295-175 Exception - payments by a member spouse

295-180 Exception - choice to exclude certain contributions

295-185 Exception - temporary residents

Personal contributions and roll-over amounts

295-190 Personal contributions and roll-over amounts

295-195 Exclusion of personal contributions

Transfers from foreign funds

295-200 Transfers from foreign superannuation funds

Application of tables to RSA providers

295-205 Application of tables to RSA providers

Former constitutionally protected funds

295-210 Former constitutionally protected funds

Contributions and payments

295-160 Contributions and payments

The assessable income of an entity includes contributions or payments as set out in this table for the income year in which the contributions or payments are received.

Note: For an explanation of the acronyms used, see section 295-35.

295-165 Exception - spouse contributions

(1) Item 1 of the table in section 295-160 does not include in assessable income a contribution made by an individual to a *complying superannuation fund or an *RSA:

(a) to provide *superannuation benefits for the individual’s *spouse (regardless whether the benefits are payable to the individual’s spouse’s *SIS dependants if the individual’s spouse dies before or after becoming entitled to receive the benefits); and

(b) that the individual cannot deduct under Subdivision 290-B.

(2) Paragraph (1)(a) does not apply to *superannuation benefits for a *spouse living permanently separately and apart from the individual.

295-170 Exception - Government co-contributions and contributions for a child

(1) Item 1 of the table in section 295-160 does not include in assessable income a contribution:

(a) that is a Government co-contribution made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003; or

(b) for the benefit of a person under 18 that is not made by or on behalf of the person’s employer.

(2) Item 4 of the table in section 295-160 does not include in assessable income a payment to the extent to which it represents a Government co-contribution or co-contributions made under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003.

295-175 Exception - payments by a member spouse

Contributions are not included in assessable income under section 295-160 if they are an amount paid by a member spouse, as mentioned in regulations under the Family Law Act 1975, to a regulated superannuation fund (within the meaning of that Act), or to an *RSA provider, to be held for the benefit of the *non-member spouse in satisfaction of the non-member spouse’s entitlement in respect of the *superannuation interest concerned.

295-180 Exception - choice to exclude certain contributions

(1) Item 1 of the table in section 295-160 does not include an amount in the assessable income of a *complying superannuation fund for an income year to the extent that the trustee chooses that it not be included.

(2) The entity that made the contributions must consent to the choice.

Note: Making this choice effectively shifts the liability for tax on the contributions to the recipient of the benefit. The benefit is treated as an element untaxed in the fund: see Subdivision 301-C.

(3) However, the choice cannot be made for an income year for an amount that exceeds the sum of amounts covered by notices given by the trustee under section 307-285 for *superannuation benefits paid in the income year.

(4) A choice under this section cannot be revoked or withdrawn.

(5) A choice under this section cannot be made in relation to a *superannuation plan that comes into operation after 5 September 2006.

295-185 Exception - temporary residents

Item 2 of the table in section 295-160 does not include a contribution in the assessable income of an entity if the individual (for whom it was made) is a *temporary resident at the end of the income year to which the contribution relates.

Personal contributions and roll-over amounts

295-190 Personal contributions and roll-over amounts

(1) The assessable income of an entity includes amounts as set out in this table.

Note: For an explanation of the acronyms used, see section 295-35.

(2) A contribution referred to in item 1 is included in the income year in which it is received if the notice is received by the *superannuation provider by the day the provider lodges its *income tax return for that income year.

(3) Otherwise it is included in the income year in which the notice is received.

(4) A payment referred to in item 2 or 3 is included in the income year in which it is received by the *superannuation provider.

295-195 Exclusion of personal contributions

Variation notice received before return lodged

(1) A contribution is not included in the assessable income of a *complying superannuation fund or *RSA provider to the extent that it has been reduced by a notice under section 290-180 if the notice is received by the *superannuation provider before it has lodged its *income tax return for the income year in which the contribution was made.

Variation notice received after return lodged

(2) A contribution is not included in the assessable income of a *complying superannuation fund or *RSA provider for the income year in which the contribution was made to the extent that it has been reduced by a notice under section 290-180 if:

(a) the notice is received by the *superannuation provider after it has lodged its *income tax return for the income year; and

(b) the provider exercises the option mentioned in subsection (3).

(3) An amount referred to in subsection (2) may, at the option of the provider, be excluded from the assessable income of the fund or *RSA provider for the income year referred to in subsection (2) if excluding it would result in a greater reduction in tax for that year than the reduction that would occur for the income year in which the notice is received if a deduction were allowed under item 2 of the table in subsection 295-490(1).

Note: The exclusion is an alternative to the fund deducting the amount under item 2 of the table in subsection 295-490(1).

Transfers from foreign funds

295-200 Transfers from foreign superannuation funds

(1) The assessable income of a fund that is an *Australian superannuation fund for the income year includes an amount transferred to the fund from a fund that was a *foreign superannuation fund for the income year in relation to a member of the foreign fund to the extent that the amount transferred exceeds amounts vested in the member at the time of the transfer.

(2) The assessable income of a fund that is a *complying superannuation fund for the income year includes so much of an amount transferred to the fund from a fund that was a *foreign superannuation fund for the income year as is specified in a choice made by a former member of the foreign fund under section 305-80.

(3) The amount is included in the income year in which the transfer happens.

Application of tables to RSA providers

295-205 Application of tables to RSA providers

The tables in this Subdivision apply to *RSA providers only to the extent that amounts are paid to *RSAs they provide.

Former constitutionally protected funds

295-210 Former constitutionally protected funds

(1) This section applies to a *complying superannuation fund for an income year if the fund ceased to be a *constitutionally protected fund during the year or at the end of the previous year.

(2) The assessable income of the fund for the income year includes the sum of the *roll-over superannuation benefits to the extent that they consist of the *element untaxed in the fund of the *taxable component that would be included in that assessable income if all contributions and earnings accumulated in the fund when the fund ceased to be a *constitutionally protected fund:

(a) had been paid out of the fund immediately before it ceased to be a constitutionally protected fund; and

(b) were paid to the fund as roll-over superannuation benefits immediately after that time.

Subdivision 295-D - Contributions excluded

Table of sections

295-260 Transfer of liability to investment vehicle

295-265 Application of pre-1 July 88 funding credits

295-270 Anticipated funding credits

295-260 Transfer of liability to investment vehicle

(1) The *superannuation provider in relation to a *complying superannuation fund or a *complying approved deposit fund (the transferor ) may reduce the amount that would otherwise be included in the fund’s assessable income for an income year under Subdivision 295-C by agreement with another entity (the transferee ) in which it holds investments.

What the transferee must be

(2) The transferee must be a *life insurance company or a *pooled superannuation trust.

Note: Amounts transferred are included in the transferee’s assessable income: see section 295-320 (for PSTs) and paragraph 320-15(1)(i) (for life insurance companies).

Agreement requirements

(3) The transferor may make one agreement only for an income year with a particular transferee.

(4) An agreement:

(a) must be in writing, and must be signed by or for the transferor and transferee; and

(b) must be made by the day the transferor lodges its *income tax return for its income year to which the agreement relates; and

(c) cannot be revoked.

Limits on transfer

(5) The total amount covered by the agreements cannot exceed the amount that would otherwise be included in the transferor’s assessable income under Subdivision 295-C for that income year.

(6) The amount covered by an agreement with a particular transferee cannot exceed this amount:

Greatest equity value / Transferor's low tax component tax rate

where:

greatest equity value is the greatest of these amounts during the transferor’s income year:

(a) if the transferee is a *pooled superannuation trust - the *market value of the transferor’s investment in units in the trust;

(b) if not - the market value of the transferor’s investment in:

(i) *life insurance policies issued by the transferee; or

(ii) a trust whose assets consist only of life insurance policies issued by the transferee.

transferor’s low tax component tax rate is the rate of tax imposed on the *low tax component of the fund’s taxable income for the income year.

295-265 Application of pre-1 July 88 funding credits

Choice to reduce contributions included in assessable income

(1) The *superannuation provider in relation to a *complying superannuation fund can choose to reduce the amount of contributions that would otherwise be included in the fund’s assessable income for an income year under item 1 of the table in section 295-160 if it has pre-1 July 88 funding credits available for the income year.

When funding credits are available

(2) Use this method to work out whether a fund has pre-1 July 88 funding credits available for an income year:

Method statement

Step 1. Identify the amount of pre-1 July 88 funding credits unused at the end of the previous income year.

Step 2. Index that amount.

Note: Subdivision 960-M shows you how to index amounts.

Step 3. Add any pre-1 July 88 funding credits transferred to the fund in the income year under regulations made for the purposes of subsection 342(7) of the Superannuation Industry (Supervision) Act 1993.

Step 4. Deduct from the step 3 amount:

(a) pre-1 July 88 funding credits transferred from the fund in the income year under regulations made for the purposes of subsection 342(7) of that Act; and

(b) amounts specified in a notice given to the *superannuation provider in relation to the fund under subsection 342(6) of that Act for the income year.

Step 5. The result is the pre-1 July 88 funding credits available to the fund for the income year.

That amount, reduced by any amount specified in a choice made under subsection (1) for the income year, is the amount of pre-1 July 88 funding credits unused at the end of the income year.

Note 1: Regulations under subsection 342(7) of the SIS Act allow APRA to approve transfers of pre-1 July 88 funding credits between funds.

Note 2: Subsection 342(6) of that Act covers the situation where the fund’s rules are changed to produce a reduction in pre-1 July 88 funding credits and the trustee notifies APRA of the change.

(3) If a notice is given to the *superannuation provider in relation to the fund under subsection 342(2) of the Superannuation Industry (Supervision) Act 1993 granting the trustee a pre-1 July 88 funding credit, this section applies as if the pre-1 July 88 funding credit had arisen at the beginning of the income year in which 1 July 1988 occurred.

(4) However, if a notice is given to the *superannuation provider in relation to the fund under subsection 342(4) of the Superannuation Industry (Supervision) Act 1993 for the income year, the fund has no pre-1 July 88 funding credits.

Note: Subsection 342(4) of that Act covers the situation where the fund’s rules are changed to produce a reduction in pre-1 July 88 funding credits and the provider fails to notify APRA of the change.

Limit on choice

(5) The total amount covered by the choice cannot exceed the pre-1 July 88 funding credits available to the fund for the income year.

(6) The total amount covered by the choice also cannot exceed the amount of contributions that would otherwise be included in the fund’s assessable income for the income year under item 1 of the table in section 295-160 that are used to fund liabilities that accrued before 1 July 1988.

(7) The regulations may prescribe either or both of the following:

(a) the manner in which the *superannuation provider in relation to a *superannuation fund is to work out the amount applicable to the fund under subsection (6) for an income year;

(b) methods (other than the method specified in subsection (6)) of working out how the provider of a superannuation fund can apply pre-1 July 88 funding credits.

(8) Methods prescribed under paragraph (7)(b) may be applicable to particular *superannuation funds or to a class or classes of superannuation funds.

295-270 Anticipated funding credits

(1) Subsection (2) has effect if the *superannuation provider in relation to a *complying superannuation fund expects a notice to be given under subsection 342(2) of the Superannuation Industry (Supervision) Act 1993 or under regulations made for the purposes of subsection 342(7) of that Act to the effect that pre-1 July 88 funding credits of a particular amount will be available to the fund for the income year.

(2) Section 295-265 applies to the fund as if pre-1 July 88 funding credits of the anticipated amount were available to the fund for the income year (in addition to any other pre-1 July 88 funding credits available to the fund for the year).

(3) However, section 295-265 applies to the fund for the income year as if pre-1 July 88 funding credits of the anticipated amount were not available to the fund for the income year if:

(a) it becomes clear that the expected notice will not be given or that the specified amount of pre-1 July 88 funding credits will not be available; or

(b) *APRA does not receive the things referred to in subsection 342(3) of the Superannuation Industry (Supervision) Act 1993 (for a notice expected under subsection 342(2) of that Act) or the things required to be given under regulations made for the purposes of subsection 342(7) of that Act (for a notice under those regulations) before the earlier of:

(i) the end of 12 months after the fund’s assessment is made for the income year; and

(ii) the time the things are required to be given by the regulations.

Subdivision 295-E - Other income amounts

Table of sections

Amounts included

295-320 Other amounts included in assessable income

295-325 Previously complying funds

295-330 Previously foreign funds

Amounts excluded

295-335 Amounts excluded from assessable income

Amounts included

295-320 Other amounts included in assessable income

The assessable income of an entity includes the amounts as set out in this table.

Note: For an explanation of the acronyms used, see section 295-35.

295-325 Previously complying funds

The amount of *ordinary income and *statutory income from previous years included in the assessable income of a fund in an income year under item 2 of the table in section 295-320 is:

295-330 Previously foreign funds

The amount of *ordinary income and *statutory income from previous years included in the assessable income of a fund in an income year under item 3 of the table in section 295-320 is:

Amounts excluded

295-335 Amounts excluded from assessable income

The assessable income of an entity does not include the amounts set out in this table.

Note: For an explanation of the acronyms used, see section 295-35.

Subdivision 295-F - Exempt income

Table of sections

295-385 Income from assets set aside to meet current pension liabilities

295-390 Income from other assets used to meet current pension liabilities

295-395 Meaning of segregated non-current assets

295-400 Income of a PST attributable to current pension liabilities

295-405 Other exempt income

295-410 Amount credited to RSA

295-385 Income from assets set aside to meet current pension liabilities

(1) The *ordinary income and *statutory income of a *complying superannuation fund for an income year is exempt from income tax to the extent that:

(a) it would otherwise be assessable income; and

(b) it is from *segregated current pension assets.

Exception

(2) Subsection (1) does not apply to:

(a) *non-arm’s length income; or

(b) amounts included in assessable income under Subdivision 295-C.

Meaning of segregated current pension assets

(3) Assets of a *complying superannuation fund are segregated current pension assets at a time if:

(a) the assets are invested, held in reserve or otherwise dealt with at that time solely to enable the fund to discharge all or part of its liabilities (contingent or not) in respect of *superannuation income stream benefits that are payable by the fund at that time; and

(b) the trustee of the fund obtains an *actuary’s certificate before the date for lodgment of the fund’s *income tax return for the income year to the effect that the assets and the earnings that the actuary expects will be made from them would provide the amount required to discharge in full those liabilities, or that part of those liabilities, as they fall due.

(4) Assets of a *complying superannuation fund are also segregated current pension assets of the fund at a time if the assets are invested, held in reserve or otherwise being dealt with at that time for the sole purpose of enabling the fund to discharge all or part of its liabilities (contingent or not), as they become due, in respect of *superannuation income stream benefits:

(a) that are payable by the fund at that time; and

(b) prescribed by the regulations for the purposes of this section.

(5) Subsection (4) does not apply unless, at all times during the income year, the liabilities of the fund (contingent or not) to pay *superannuation income stream benefits payable by the fund were liabilities in respect of superannuation income stream benefits that are prescribed by the regulations for the purposes of this section.

295-390 Income from other assets used to meet current pension liabilities

(1) A proportion of the *ordinary income and *statutory income of a *complying superannuation fund that would otherwise be assessable income is exempt from income tax under this section. The proportion is worked out under subsection (3).

Exception

(2) Subsection (1) does not apply to:

(a) *non-arm’s length income; or

(b) amounts included in assessable income under Subdivision 295-C; or

(c) income *derived from *segregated non-current assets; or

(d) income that is exempt from income tax under section 295-385.

Formula

(3) The proportion is:

Average value of current pension liabilities / Average value of superannuation liabilities

where:

average value of current pension liabilities is the average value for the income year of the fund’s current liabilities (contingent or not) in respect of *superannuation income stream benefits that are payable by the fund in that year. This does not include liabilities for which *segregated current pension assets are held.

average value of superannuation liabilities is the average value for the income year of the fund’s current and future liabilities (contingent or not) in respect of *superannuation income stream benefits in respect of which contributions have, or were liable to have, been made. This does not include liabilities for which *segregated current pension assets or *segregated non-current assets are held.

Actuary’s certificate

(4) The value of particular liabilities of the fund at a particular time is the amount of the fund’s assets, together with future contributions in respect of the benefits concerned and expected earnings on the assets and contributions after that time, that would provide the amount required to discharge those liabilities as they fall due. This must be specified in an *actuary’s certificate obtained by the trustee of the fund before the date for lodgment of the fund’s *income tax return for the income year.

(5) The expected earnings are worked out at the rate the actuary expects will be the rate of the fund’s earnings on its assets (except *segregated current pension assets or *segregated non-current assets).

Superannuation liabilities where no current certificate

(6) The superannuation liabilities do not have to be valued by an actuary for the income year if the fund has no *segregated current pension assets or *segregated non-current assets for the income year. Instead, the value can be worked out using this formula:

(Last value of superannuation liabilities / Last value of assets) x Current value of assets

where:

current value of assets is the value of all of the fund’s assets at a time in the income year, as specified in an *actuary’s certificate obtained by the trustee of the fund before the date for lodgment of the fund’s *income tax return for the income year.

last value of assets is the most recent value of all of the fund’s assets specified in an *actuary’s certificate.

last value of superannuation liabilities is the value, at the time of that most recent valuation, of the fund’s superannuation liabilities specified in an *actuary’s certificate.

Note: This allows a fund to avoid the expense of an actuarial valuation of its superannuation liabilities, except in those years that a valuation is required by the SIS Act in order for the fund to continue to be complying.

(7) Subsections (4), (5) and (6) do not apply in working out the amounts to be used in the formula in subsection (3) if, at all times during the income year, the liabilities of the fund in respect of *superannuation income stream benefits payable at those times were liabilities in respect of superannuation income stream benefits that are prescribed by the regulations for the purposes of this subsection.

295-395 Meaning of segregated non-current assets

(1) Assets of a *complying superannuation fund are segregated non-current assets at a time in an income year if:

(a) the assets are invested, held in reserve or otherwise dealt with at that time solely to enable the fund to discharge all or part of its current and future liabilities (contingent or not) to pay benefits in respect of which contributions have, or were liable to have, been made; and

(b) the trustee of the fund obtains an *actuary’s certificate before the date for lodgment of the fund’s *income tax return for the income year to the effect that the amount of the assets, together with any future contributions, and the earnings that the actuary expects will be made from them will provide the amount required to discharge in full those liabilities, or that part of those liabilities, as they fall due.

(2) The liabilities referred to in paragraph (1)(a) do not include liabilities (contingent or not) in respect of *superannuation income stream benefits payable by the fund at that time.

295-400 Income of a PST attributable to current pension liabilities

(1) This proportion of the *ordinary income and *statutory income that would otherwise be assessable income of a *pooled superannuation trust is *exempt income:

Average number of units in the trust during the income year that are segregated current pension assets of unitholders that are complaying superannuation funds / Average number of units in the trust during the income year

Exceptions

(2) Subsection (1) does not apply to:

(a) *non-arm’s length income; or

(b) amounts included in assessable income under item 1 of the table in section 295-320.

Alternative exemption

(3) However, the trustee of the *pooled superannuation trust can choose that a different amount be *exempt income of the trust under this section if a percentage of the assessable income of the trust would have been exempt income under section 295-385 or 295-390 if it had been *derived instead by the unitholders in the trust in proportion to their holdings.

(4) That percentage of the trust’s *ordinary income and *statutory income is then *exempt income.

295-405 Other exempt income

The *ordinary income or *statutory income of an entity is exempt from income tax as set out in this table.

Note: For an explanation of the acronyms used, see section 295-35.

295-410 Amount credited to RSA

For item 3 of the table in section 295-405, the part of the amount credited to the *RSA that is *exempt income is worked out by:

(a) multiplying the amount by the number of days in the income year for which the pension (within the meaning of the Retirement Savings Accounts Act 1997) was paid; and

(b) dividing the result by the number of days in the income year that the RSA existed.

Subdivision 295-G - Deductions

Table of sections

Death or disability benefits

295-460 Benefits for which deductions are available

295-465 Complying funds - deductions for insurance premiums

295-470 Complying funds - deductions for future liability to pay benefits

295-475 RSA providers - deductions for insurance premiums

295-480 Meaning of whole of life policy and endowment policy

Increased amount of superannuation lump sum death benefits

295-485 Deductions for increased amount of superannuation lump sum death benefit

Other deductions

295-490 Other deductions

Certain amounts cannot be deducted

295-495 Amounts that cannot be deducted

Death or disability benefits

295-460 Benefits for which deductions are available

Sections 295-465 (about deductions for complying funds for insurance premiums), 295-470 (about deductions for complying funds for future liability to pay benefits) and 295-475 (about deductions for *RSA providers for insurance premiums) apply to these benefits:

(a) a *superannuation death benefit;

(b) a *disability superannuation benefit;

(c) a benefit consisting of an amount payable to a person under an income stream because of the person’s temporary inability to perform normal employment duties, that is payable for no longer than:

(i) 2 years; or

(ii) if an approval under section 62 of the Superannuation Industry (Supervision) Act 1993 is in force for benefits of that kind and the approval specifies a longer maximum period - that longer period; or

(iii) if there is no such approval in force - a longer period allowed by the Commissioner.

Note 1: The fund can deduct amounts in relation to these benefits under either section 295-465 or 295-470, but not both.

Note 2: The taxable component of the superannuation lump sums will contain an element untaxed in the fund: see section 307-290.

295-465 Complying funds - deductions for insurance premiums

(1) A *complying superannuation fund can deduct the proportions specified in this table of premiums it pays for insurance policies that are (wholly or partly) for current or contingent liabilities of the fund to provide benefits referred to in section 295-460 for its members. It can deduct the amounts for the income year in which the premiums are paid.

Note: If the fund receives a rebate or refund of an insurance premium, the amount may be included in its assessable income: see table item 4 in section 295-320.

(2) A *complying superannuation fund can also deduct the amount it could reasonably be expected to pay in an *arm’s length transaction to obtain an insurance policy to cover it for that part of its current or contingent liabilities to provide benefits referred to in section 295-460 for which it does not have insurance coverage. It can deduct the amount for the income year when it has the liability.

Actuary’s certificate

(3) The trustee must obtain an *actuary’s certificate before the date for lodgment of the fund’s *income tax return for the income year in order to deduct an amount referred to in item 6 of the table or in subsection (2).

Choice not to deduct amounts under this section

(4) The trustee may choose not to deduct amounts under this section for an income year and to deduct instead (under section 295-470) amounts based on the fund’s future liability to pay the benefits.

(5) The choice applies also to future income years unless the Commissioner decides that it should not.

295-470 Complying funds - deductions for future liability to pay benefits

(1) A *complying superannuation fund can deduct an amount under this section for an income year if:

(a) the trustee of the fund makes a choice under subsection 295-465(4) and the choice applies to the income year; and

(b) the trustee pays:

(i) a benefit referred to in paragraph 295-460(a) or (b) for the income year in consequence of the termination of a member’s employment; or

(ii) a benefit referred to in paragraph 295-460(c).

(2) The amount the fund can deduct is:

Benefit amount x (Future service days / Total service days)

where:

benefit amount is:

(a) for a benefit that is a *superannuation lump sum - the amount of the lump sum; or

(b) for a benefit that is a *superannuation income stream - the *value of the *superannuation interest supporting the income stream; or

(c) for a benefit referred to in paragraph 295-460(c) - the total of the amounts paid during the income year.

future service days is the number of days in the period starting when:

(a) the termination happened; or

(b) for a benefit referred to in paragraph 295-460(c) - the member became unable to perform normal work duties;

and ending on the member’s *last retirement day.

total service days is the sum of future service days and the number of days in:

(a) for a benefit that is a *superannuation lump sum - the *service period for the superannuation lump sum; or

(b) for another benefit - the period ending on the first day of the period to which the first payment of the benefit relates and starting on the earliest of:

(i) the day on which the member joined the relevant *superannuation fund; and

(ii) the first day of the period of employment to which the benefit relates (including a qualifying period before the member could join the fund and any period when the member was not a member of the fund); and

(iii) the day applicable under subsection (3).

(3) The applicable day is the first day of the *service period for a *superannuation lump sum that is a *roll-over superannuation benefit if all or part of the *value of the other benefit is attributable to the roll-over superannuation benefit.

295-475 RSA providers - deductions for insurance premiums

An *RSA provider can deduct premiums it pays for insurance policies that are wholly for its liability to provide benefits referred to in section 295-460 for its *RSA holders. It can deduct the amounts for the income year in which the premiums are paid.

Note: If the RSA provider receives a rebate or refund of an insurance premium, the amount may be included in its assessable income: see table item 5 in section 295-320.

295-480 Meaning of whole of life policy and endowment policy

(1) A whole of life policy is an insurance policy:

(a) that includes an investment component; and

(b) the premiums for which are not dissected; and

(c) where the sum insured (and any bonuses) are payable on:

(i) the death of the individual insured; or

(ii) the earlier of the death of the individual insured and the individual attaining the age specified in the policy (being at least the age of 85).

(2) An endowment policy is an insurance policy:

(a) that includes an investment component; and

(b) the premiums for which are not dissected; and

(c) where the sum insured (and any bonuses) are payable on:

(i) a day specified in, or worked out under, the policy; or

(ii) the death of the individual insured if that happens before that day;

but does not include a *whole of life policy.

Increased amount of superannuation lump sum death benefits

295-485 Deductions for increased amount of superannuation lump sum death benefit

(1) An entity that is a *complying superannuation fund, or a *complying approved deposit fund, and has been since 1 July 1988 (or since it came into existence if that was later) can deduct an amount under this section if:

(a) it pays a *superannuation lump sum because of the death of a person to the trustee of the deceased’s estate or an individual who was a *spouse, former spouse or child of the deceased at the time of death or payment; and

(b) it increases the lump sum by an amount, or does not reduce the lump sum by an amount (the tax saving amount ) so that the amount of the lump sum is the amount that the fund could have paid if no tax were payable on amounts included in assessable income under Subdivision 295-C.

(2) The fund can deduct the amount in the income year in which the lump sum is paid.

(3) The amount the fund can deduct is:

Tax saving amount / Low tax component rate

where:

low tax component tax rate is the rate of tax imposed on the *low tax component of the fund’s taxable income for the income year.

Note: The deduction is designed to compensate the fund for the tax payable on the contributions that are used to fund the lump sum.

(4) The amount the fund can deduct for a *superannuation lump sum paid because of the death of a person to the trustee of the deceased’s estate is so much of the subsection (3) amount as is appropriate having regard to the extent to which individuals referred to in paragraph (1)(a) can reasonably be expected to benefit from the estate.

Other deductions

295-490 Other deductions

(1) An entity can deduct amounts as set out in this table.

Note: For an explanation of the acronyms used, see section 295-35.

(2) A fund cannot deduct an amount under item 3 of the table for a levy imposed by regulations under section 6 of the Superannuation (Financial Assistance Funding) Levy Act 1993 to the extent that:

(a) the levy is remitted; or

(b) there is a refund or other application of an overpayment of the levy.

(3) No other provision of this Act affects a fund’s income tax liability in relation to the levy.

Certain amounts cannot be deducted

295-495 Amounts that cannot be deducted

These entities cannot deduct anything for these amounts:

Note: For an explanation of the acronyms used, see section 295-35.

Subdivision 295-H - Components of taxable income

Table of sections

295-545 Components of taxable income - complying superannuation funds, complying ADFs and PSTs

295-550 Meaning of non-arm’s length income

295-555 Components of taxable income - RSA providers

295-545 Components of taxable income - complying superannuation funds, complying ADFs and PSTs

(1) The taxable income of these entities is split into a *non-arm’s length component and a *low tax component:

(a) *complying superannuation funds;

(b) *complying approved deposit funds;

(c) *pooled superannuation trusts.

Note: A concessional rate applies to the low tax component, while the non-arm’s length component is taxed at the highest marginal rate. The rates are set out in the Income Tax Rates Act 1986.

(2) The non-arm’s length component for an income year is the entity’s *non-arm’s length income for that year less any deductions to the extent that they are attributable to that income.

(3) The low tax component is any remaining part of the entity’s taxable income for the income year.

295-550 Meaning of non-arm’s length income

(1) An amount of *ordinary income or *statutory income is non-arm’s length income of a *complying superannuation fund, a *complying approved deposit fund or a *pooled superannuation trust (other than an amount to which subsection (2) applies or an amount *derived by the entity in the capacity of beneficiary of a trust) if:

(a) it is derived from a *scheme the parties to which were not dealing with each other at *arm’s length in relation to the scheme; and

(b) that amount is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm’s length in relation to the scheme.

(2) An amount of *ordinary income or *statutory income is also non-arm’s length income of the entity if it is:

(a) a *dividend paid to the entity by a *private company; or

(b) ordinary income or statutory income that is reasonably attributable to such a dividend;

unless the amount is consistent with an *arm’s length dealing.

(3) In deciding whether an amount is consistent with an *arm’s length dealing under subsection (2), have regard to:

(a) the value of *shares in the company that are assets of the entity; and

(b) the cost to the entity of the shares on which the *dividend was paid; and

(c) the rate of that dividend; and

(d) whether the company has paid a dividend on other shares in the company and, if so, the rate of that dividend; and

(e) whether the company has issued any shares to the entity in satisfaction of a dividend paid by the company (or part of it) and, if so, the circumstances of the issue; and

(f) any other relevant matters.

(4) Income *derived by the entity as a beneficiary of a trust, other than because of holding a fixed entitlement to the income, is non-arm’s length income of the entity.

(5) Other income *derived by the entity as a beneficiary of a trust through holding a fixed entitlement to the income of the trust is non-arm’s length income of the entity if:

(a) the entity acquired the entitlement under a *scheme, or the income was derived under a scheme, the parties to which were not dealing with each other at *arm’s length; and

(b) the amount of the income is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm’s length.

(6) This section:

(a) applies to a *non-share equity interest in the same way as it applies to a *share; and

(b) applies to an *equity holder in a company in the same way as it applies to a shareholder in the company; and

(c) applies to a *non-share dividend in the same way as it applies to a *dividend.

295-555 Components of taxable income - RSA providers

(1) The taxable income of an *RSA provider is split into an *RSA component and a *standard component.

Note: The RSA component is taxed at the same concessional rate that applies to the low tax component of complying superannuation funds, complying approved deposit funds and pooled superannuation trusts. The standard component is taxed at the standard company rate.

(2) The RSA component for an income year is worked out in this way:

Method statement

Step 1. Add these amounts included in the provider’s assessable income for the income year:

(a) amounts included under Subdivision 295-C; and

(b) other amounts credited during the year to *RSAs that it provides.

Step 2. Subtract from the step 1 amount amounts paid from those *RSAs (except benefits for the RSA holders or tax).

Step 3. The result is the RSA component .

(3) However, if the amount worked out under subsection (2) is more than the *RSA provider’s taxable income:

(a) the provider’s taxable income is equal to the *RSA component; and

(b) this Act applies to the provider as if it had a *tax loss for the income year of an amount that would have been that loss if the RSA component were not *ordinary income or *statutory income.

(4) The standard component is any remaining part of the *RSA’s taxable income for the income year.

Subdivision 295-I - No-TFN contributions

Table of sections

295-605 Liability for tax on no-TFN contributions income

295-610 No-TFN contributions income

295-615 Meaning of quoted (for superannuation purposes)

295-620 No reduction under Subdivision 295-D

295-625 Assessments

295-605 Liability for tax on no-TFN contributions income

(1) A *superannuation provider in relation to a *complying superannuation fund is liable to pay tax on the *no-TFN contributions income of the fund for an income year.

(2) A *superannuation provider in relation to a *non-complying superannuation fund is liable to pay tax on the *no-TFN contributions income of the fund for an income year.

(3) An *RSA provider is liable to pay tax on its *no-TFN contributions income for an income year.

Note 1: The tax is imposed by the Income Tax Act 1986.

Note 2: The no-TFN contributions income is subject to a special rate of tax under the Income Tax Rates Act 1986.

Note 3: The Commissioner may make an assessment of the amount of income tax on the no-TFN contributions income: see section 169 of the Income Tax Assessment Act 1936.

295-610 No-TFN contributions income

(1) An amount included by Subdivision 295-C in the assessable income of a *complying superannuation fund, a *non-complying superannuation fund or an *RSA provider for an income year is no-TFN contributions income for the year if:

(a) it is included by that Subdivision in the assessable income of the income year of the fund or RSA provider in which 1 July 2007 occurs, or a later income year; and

(b) it is a contribution made to the fund or *RSA on or after 1 July 2007 to provide *superannuation benefits for an individual; and

(c) by the end of the income year, the individual has not *quoted (for superannuation purposes) his or her *tax file number to the *superannuation provider.

Exception

(2) However, an amount is not no-TFN contributions income if:

(a) the contribution was made in relation to a *superannuation interest or an *RSA of the individual that existed prior to 1 July 2007; and

(b) the total contributions made in relation to the superannuation interest or RSA for the income year that are included in assessable income under Subdivision 295-C did not exceed $1,000.

295-615 Meaning of quoted (for superannuation purposes)

An individual has quoted (for superannuation purposes) a *tax file number to an entity at a time if the individual:

(a) quotes his or her tax file number to the entity at that time; or

(b) is taken by the Superannuation Industry (Supervision) Act 1993, the Retirement Savings Accounts Act 1997 or this Act to quote his or her tax file number to the entity at that time;

in connection with the operation or the possible future operation of one or more of the following Acts:

(c) the Superannuation Acts (within the meaning of Part 25A of the Superannuation Industry (Supervision) Act 1993);

(d) the Retirement Savings Accounts Act 1997.

295-620 No reduction under Subdivision 295-D

There is no reduction of the amount of *no-TFN contributions income by Subdivision 295-D.

Note: Subdivision 295-D can reduce an amount that would otherwise be included in assessable income. It does not reduce the amount of no-TFN contributions income. An amount is still no-TFN contributions income even if, because of Subdivision 295-D, the amount (or part of it) is not included in assessable income.

295-625 Assessments

(1) If the Commissioner makes an assessment of the amount of income tax on the *no-TFN contributions income, notice of the assessment may be included in a notice of any other assessment under this Act.

Self-assessment

(2) If the conditions in subsection (3) are met, the Commissioner is taken to have made an assessment of a kind set out in subsection (4).

(3) The conditions are:

(a) one of the following gives the Commissioner an *income tax return for an income year on a particular day (the return day ):

(i) a *superannuation provider in relation to a *complying superannuation fund;

(ii) a superannuation provider in relation to a *non-complying superannuation fund;

(iii) an *RSA provider; and

(b) the return is the first income tax return given by the provider for the year; and

(c) the Commissioner has not already made an assessment of a kind set out in subsection (4) for the provider for the year.

(4) The assessment is taken to have been made for the provider for the income year on the return day, and to be an assessment, in accordance with the information stated in the return, of the amount of income tax payable on the *no-TFN contributions income (if any) of the provider (or to be an assessment that no tax is payable).

(5) The return is taken to be notice of the assessment signed by the Commissioner and given to the provider on the return day.

Note: The return may also be taken to be a notice of another assessment: see section 166A of the Income Tax Assessment Act 1936.

Subdivision 295-J - Tax offset for no-TFN contributions income (TFN quoted within 4 years)

Table of sections

295-675 Entitlement to a tax offset

295-680 Amount of the tax offset

295-675 Entitlement to a tax offset

(1) A *superannuation provider in relation to a *superannuation fund or an *RSA provider is entitled to a *tax offset for an income year (the current year ) commencing on or after 1 July 2007 for amounts of tax that count towards the offset for the provider for the current year.

(2) An amount of tax counts towards the offset for the provider for the current year if:

(a) the tax was payable by the provider in one of the most recent 3 income years ending before the current year; and

(b) the tax was payable on an amount of *no-TFN contributions income of the fund or *RSA provider; and

(c) the amount of no-TFN contributions income was a contribution made to the fund or provider to provide *superannuation benefits for an individual who, in the current year, has *quoted (for superannuation purposes) his or her *tax file number to the provider for the first time.

Note: In certain circumstances the superannuation provider or RSA provider can get a refund of the tax offset under Division 67.

295-680 Amount of the tax offset

The amount of the *tax offset is the sum of each amount of tax that counts towards the offset for the provider for the current year.

Division 301 - Superannuation member benefits paid from complying plans etc.

Table of Subdivisions

Guide to Division 301

301-A Application

301-B Member benefits: general rules

301-C Member benefits: elements untaxed in fund

301-D Departing Australia superannuation payments

301-E Superannuation lump sum member benefits less than $200

Guide to Division 301

301-1 What this Division is about

This Division sets out the tax treatment of superannuation benefits received by members of complying plans etc. This treatment varies depending on the age of the member when they receive the benefit. This Division also sets out the tax treatment of departing Australia superannuation payments and certain payments less than $200.

Subdivision 301-A - Application

Table of sections

301-5 Division applies to superannuation member benefits paid from complying plans etc.

301-5 Division applies to superannuation member benefits paid from complying plans etc.

This Division applies to:

(a) *superannuation member benefits that are paid from a *complying superannuation plan; and

(b) *superannuation guarantee payments; and

(c) *small superannuation account payments; and

(d) *unclaimed money payments; and

(e) *superannuation co-contribution benefit payments; and

(f) *superannuation annuity payments.

Note: For the tax treatment of superannuation death benefits paid from complying plans, see Division 302. Superannuation benefits paid from superannuation plans that are not complying superannuation plans are dealt with in Division 305.

Subdivision 301-B - Member benefits: general rules

Table of sections

Member benefits - recipient aged 60 or above

301-10 All superannuation benefits are tax free

Member benefits - recipient aged over preservation age and under 60

301-15 Tax free status of tax free component

301-20 Superannuation lump sum - taxable component taxed at 0% up to low rate cap amount, 15% on remainder

301-25 Superannuation income stream - taxable component attracts 15% offset

Member benefits - recipient aged under preservation age

301-30 Tax free status of tax free component

301-35 Superannuation lump sum - taxable component taxed at 20%

301-40 Superannuation income stream - taxable component is assessable income, 15% offset for disability benefit

Member benefits - recipient aged 60 or above

301-10 All superannuation benefits are tax free

If you are 60 years or over when you receive a *superannuation benefit, the benefit is not assessable income and is not *exempt income.

Note 1: Your superannuation benefit may be a superannuation lump sum or a superannuation income stream benefit: see sections 307-65 and 307-70.

Note 2: If your superannuation benefit includes an element untaxed in the fund, see Subdivision 301-C.

Member benefits - recipient aged over preservation age and under 60

301-15 Tax free status of tax free component

If you are under 60 years but have reached your *preservation age when you receive a *superannuation benefit, the *tax free component of the benefit is not assessable income and is not *exempt income.

Note 1: Your superannuation benefit may be a superannuation lump sum or a superannuation income stream benefit: see sections 307-65 and 307-70).

Note 2: For tax free component , see Subdivision 307-C.

301-20 Superannuation lump sum - taxable component taxed at 0% up to low rate cap amount, 15% on remainder

(1) If you are under 60 years but have reached your *preservation age when you receive a *superannuation lump sum, the *taxable component of the lump sum is assessable income.

Note 1: For taxable component , see Subdivision 307-C.

Note 2: If your lump sum includes an element untaxed in the fund, see Subdivision 301-C.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the amount mentioned in subsection (3) does not exceed 0%.

(3) The amount is so much of the total of the *taxable components included in your assessable income for the income year under subsection (1) as does not exceed your *low rate cap amount (see section 307-345) for the income year.

(4) You are entitled to a *tax offset that ensures that the rate of income tax on the amount mentioned in subsection (5) does not exceed 15%.

(5) The amount is so much of the total of the *taxable components included in your assessable income for an income year under subsection (1) as exceeds your *low rate cap amount for the income year.

Note: This amount will be nil if the total of the taxable components falls short of your low rate cap amount for the income year.

301-25 Superannuation income stream - taxable component attracts 15% offset

(1) If you are under 60 years but have reached your *preservation age when you receive a *superannuation income stream benefit, the *taxable component of the benefit is assessable income.

(2) You are entitled to a *tax offset equal to 15% of the *taxable component of the benefit.

Note 1: For taxable component , see Subdivision 307-C.

Note 2: If your superannuation income stream benefit includes an element untaxed in the fund, see Subdivision 301-C.

Member benefits - recipient aged under preservation age

301-30 Tax free status of tax free component

If you are under your *preservation age when you receive a *superannuation benefit, the *tax free component of the benefit is not assessable income and is not *exempt income.

Note 1: Your superannuation benefit may be a superannuation lump sum or a superannuation income stream benefit: see sections 307-65 and 307-70.

Note 2: For tax free component , see Subdivision 307-C.

301-35 Superannuation lump sum - taxable component taxed at 20%

(1) If you are under your *preservation age when you receive a *superannuation lump sum, the *taxable component of the lump sum is assessable income.

Note: For taxable component , see Subdivision 307-C.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the *taxable component of the lump sum does not exceed 20%.

Note: If your lump sum includes an element untaxed in the fund, see Subdivision 301-C.

301-40 Superannuation income stream - taxable component is assessable income, 15% offset for disability benefit

(1) If you are under your *preservation age when you receive a *superannuation income stream benefit, the *taxable component of the benefit is assessable income.

Note: For taxable component , see Subdivision 307-C.

Offset for disability benefit

(2) If the benefit is a *superannuation income stream benefit and a *disability superannuation benefit, you are entitled to a *tax offset equal to 15% of the *taxable component of the benefit.

Subdivision 301-C - Member benefits: elements untaxed in fund

Table of sections

301-90 Tax free component and element taxed in fund dealt with under Subdivision 301-B, but element untaxed in the fund dealt with under this Subdivision

Member benefits (element untaxed in fund) - recipient aged 60 or above

301-95 Superannuation lump sum - element untaxed in fund taxed at 15% up to untaxed plan cap amount, top rate on remainder

301-100 Superannuation income stream - element untaxed in fund attracts 10% offset

Member benefits (element untaxed in fund) - recipient aged over preservation age and under 60

301-105 Superannuation lump sum - element untaxed in fund taxed at 15% up to low rate cap amount, 30% up to untaxed plan cap amount, top rate on remainder

301-110 Superannuation income stream - element untaxed in fund is assessable income

Member benefits (element untaxed in fund) - recipient aged under preservation age

301-115 Superannuation lump sum - element untaxed in fund taxed at 30% up to untaxed plan cap amount, top rate on remainder

301-120 Superannuation income stream - element untaxed in fund is assessable income

301-90 Tax free component and element taxed in fund dealt with under Subdivision 301-B, but element untaxed in the fund dealt with under this Subdivision

If you receive a *superannuation benefit that includes an *element untaxed in the fund:

(a) the *tax free component (if any) of the benefit is treated in the same way as the tax free component of a superannuation benefit under Subdivision 301-B; and

(b) the *element taxed in the fund (if any) included in the benefit is treated in the same way as the taxable component of a superannuation benefit under Subdivision 301-B; and

(c) the element untaxed in the fund is treated in accordance with this Subdivision.

Member benefits (element untaxed in fund) - recipient aged 60 or above

301-95 Superannuation lump sum - element untaxed in fund taxed at 15% up to untaxed plan cap amount, top rate on remainder

(1) If you are 60 years or over when you receive a *superannuation lump sum from a *superannuation plan, the *element untaxed in the fund of the lump sum is assessable income.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the amount mentioned in subsection (3) does not exceed 15%.

Note: The remainder of the element untaxed in the fund is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986.

(3) The amount is so much of the *element untaxed in the fund as does not exceed your *untaxed plan cap amount for the *superannuation plan at the time you receive the benefit.

301-100 Superannuation income stream - element untaxed in fund attracts 10% offset

(1) If you are 60 years or over when you receive a *superannuation income stream benefit, the *element untaxed in the fund of the benefit is assessable income.

(2) You are entitled to a *tax offset equal to 10% of the *element untaxed in the fund of the benefit.

Member benefits (element untaxed in fund) - recipient aged over preservation age and under 60

301-105 Superannuation lump sum - element untaxed in fund taxed at 15% up to low rate cap amount, 30% up to untaxed plan cap amount, top rate on remainder

(1) If you are under 60 years but have reached your *preservation age when you receive a *superannuation lump sum from a *superannuation plan, the *element untaxed in the fund of the lump sum is assessable income.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the amount worked out under subsection (3) does not exceed 30%.

(3) The amount is so much of the *element untaxed in the fund as does not exceed your *untaxed plan cap amount for the *superannuation plan at the time you receive the benefit.

Note: To the extent that the element untaxed in the fund exceeds the amount worked out under this subsection, it is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986.

(4) If you are entitled to one or more *tax offsets under subsection (2) for *superannuation benefits that you receive in an income year, you are entitled to a tax offset that ensures that the rate of income tax on the amount worked out under subsection (5) does not exceed 15%.

(5) The amount is so much of the total of the one or more amounts worked out under subsection (3) as does not exceed your *low rate cap amount for the income year.

(6) If you are also entitled to a *tax offset under subsection 301-20(2) for the income year, reduce your *low rate cap amount for the purposes of subsection (5) of this section for the income year by the amount mentioned in subsection 301-20(3).

301-110 Superannuation income stream - element untaxed in fund is assessable income

If you are under 60 years but have reached your *preservation age when you receive a *superannuation income stream benefit, the *element untaxed in the fund of the benefit is assessable income.

Member benefits (element untaxed in fund) - recipient aged under preservation age

301-115 Superannuation lump sum - element untaxed in fund taxed at 30% up to untaxed plan cap amount, top rate on remainder

(1) If you are under your *preservation age when you receive a *superannuation lump sum from a *superannuation plan, the *element untaxed in the fund of the lump sum is assessable income.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the amount mentioned in subsection (3) does not exceed 30%.

Note: The remainder of the element untaxed in the fund is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986.

(3) The amount is so much of the *element untaxed in the fund as does not exceed your *untaxed plan cap amount for the *superannuation plan at the time you receive the benefit.

301-120 Superannuation income stream - element untaxed in fund is assessable income

If you are under your *preservation age when you receive a *superannuation income stream benefit, the *element untaxed in the fund of the benefit is assessable income.

Subdivision 301-D - Departing Australia superannuation payments

Table of sections

301-170 Departing Australia superannuation payments

301-175 Treatment of departing Australia superannuation benefits

301-170 Departing Australia superannuation payments

A departing Australia superannuation payment is a *superannuation lump sum that:

(a) is paid to a person who has departed Australia; and

(b) is paid:

(i) in accordance with regulations under the Superannuation Industry (Supervision) Act 1993 or the Retirement Savings Accounts Act 1997 that are specified in regulations made for the purposes of this definition; or

(ii) in accordance with section 67A of the Small Superannuation Accounts Act 1995; or

(iii) by an exempt public sector superannuation scheme (within the meaning of section 10 of the Superannuation Industry (Supervision) Act 1993) and is made in accordance with rules of the fund that are substantially similar to the regulations specified as mentioned in subparagraph (i).

301-175 Treatment of departing Australia superannuation benefits

(1) Despite anything else in this Division, if you receive a *superannuation benefit that is a *departing Australia superannuation payment, the benefit is not assessable income and is not *exempt income.

(2) However, you are liable to pay income tax on that payment at the rate declared by the Parliament in respect of *departing Australia superannuation payments.

Note 1: The tax is imposed in the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 and the amount of the tax is set out in that Act.

Note 2: See the Taxation Administration Act 1953 for provisions dealing with the payment of the tax.

Subdivision 301-E - Superannuation lump sum member benefits less than $200

Table of sections

301-225 Superannuation lump sum member benefits less than $200 are tax free

301-225 Superannuation lump sum member benefits less than $200 are tax free

Despite anything else in this Division (apart from Subdivision 301-D), a *superannuation member benefit that you receive is not assessable income and is not *exempt income if:

(a) the benefit is a *superannuation lump sum; and

(b) the amount of the benefit is less than $200; and

(c) the *value of the *superannuation interest from which the benefit is paid is nil just after the benefit is paid; and

(d) the requirements (if any) specified in the regulations in relation to the benefit are satisfied.

Division 302 - Superannuation death benefits paid from complying plans etc.

Table of Subdivisions

Guide to Division 302

302-A Application

302-B Death benefits to dependant

302-C Death benefits to non-dependant

302-D Definitions relating to dependants

Guide to Division 302

302-1 What this Division is about

This Division sets out the tax treatment of superannuation death benefits received by members of complying plans etc. This treatment varies depending on the age of the deceased when they died (and in some cases on the age of the recipient of the benefit).

Subdivision 302-A - Application

Table of sections

302-5 Division applies to superannuation death benefits paid from complying plans etc.

302-10 Superannuation death benefits paid to trustee of deceased estate

302-5 Division applies to superannuation death benefits paid from complying plans etc.

This Division applies to *superannuation death benefits that are:

(a) paid from a *complying superannuation plan; or

(b) *superannuation guarantee payments, *small superannuation account payments, *unclaimed money payments, *superannuation co-contribution benefit payments or *superannuation annuity payments.

Note: For the tax treatment of superannuation member benefits paid from complying plans, see Division 301. Superannuation benefits paid from superannuation plans that are not complying superannuation plans are dealt with in Division 305.

302-10 Superannuation death benefits paid to trustee of deceased estate

(1) This section applies to you if:

(a) you are the trustee of a deceased estate; and

(b) you receive a *superannuation death benefit in your capacity as trustee.

(2) To the extent that 1 or more beneficiaries of the estate who were *death benefits dependants of the deceased have benefited, or may be expected to benefit, from the *superannuation death benefit:

(a) the benefit is treated as if it had been paid to you as a person who was a death benefits dependant of the deceased; and

(b) the benefit is taken to be income to which no beneficiary is presently entitled.

(3) To the extent that 1 or more beneficiaries of the estate who were not *death benefits dependants of the deceased have benefited, or may be expected to benefit, from the *superannuation death benefit:

(a) the benefit is treated as if it had been paid to you as a person who was not a death benefits dependant of the deceased; and

(b) the benefit is taken to be income to which no beneficiary is presently entitled.

Subdivision 302-B - Death benefits to dependant

Table of sections

Lump sum death benefits to dependants are tax free

302-60 All of superannuation lump sum is tax free

Superannuation income stream - either deceased died aged 60 or above or dependant aged 60 or above

302-65 Superannuation income stream benefits are tax free

Superannuation income stream - deceased died aged under 60 and dependant aged under 60

302-70 Superannuation income stream - tax free status of tax free component

302-75 Superannuation income stream - taxable component attracts 15% offset

Death benefits to dependant - elements untaxed in fund

302-80 Treatment of element untaxed in the fund of superannuation income stream death benefit to dependant

302-85 Deceased died aged 60 or above or dependant aged 60 years or above - superannuation income stream - element untaxed in fund attracts 10% offset

302-90 Deceased died aged under 60 and dependant aged under 60 - superannuation income stream - element untaxed in fund is assessable income

Lump sum death benefits to dependants are tax free

302-60 All of superannuation lump sum is tax free

A *superannuation lump sum that you receive because of the death of a person of whom you are a *death benefits dependant is not assessable income and is not *exempt income.

Superannuation income stream - either deceased died aged 60 or above or dependant aged 60 or above

302-65 Superannuation income stream benefits are tax free

A *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant is not assessable income and is not *exempt income in either or both of the following cases:

(a) you are 60 years or over when you receive the benefit;

(b) the deceased died aged 60 or over.

Note: If your superannuation income stream benefit includes an element untaxed in the fund, see section 302-85.

Superannuation income stream - deceased died aged under 60 and dependant aged under 60

302-70 Superannuation income stream - tax free status of tax free component

The *tax free component of a *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant is not assessable income and is not *exempt income if:

(a) you are under 60 when you receive the benefit; and

(b) the deceased died aged under 60.

Note: For tax free component , see Subdivision 307-C.

302-75 Superannuation income stream - taxable component attracts 15% offset

(1) The *taxable component of a *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant is assessable income if:

(a) you are under 60 when you receive the benefit; and

(b) the deceased died aged under 60.

Note: For taxable component , see Subdivision 307-C.

(2) You are entitled to a *tax offset equal to 15% of the *taxable component of the benefit.

Death benefits to dependant - elements untaxed in fund

302-80 Treatment of element untaxed in the fund of superannuation income stream death benefit to dependant

If a *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant includes an *element untaxed in the fund:

(a) the *tax free component (if any) of the benefit is treated in the same way as the tax free component of a superannuation income stream benefit under section 302-65 or 302-70; and

(b) the *element taxed in the fund (if any) of the benefit is treated in the same way as the *taxable component of a superannuation income stream benefit under section 302-65 or 302-75; and

(c) the element untaxed in the fund is treated in accordance with section 302-85 or 302-90.

302-85 Deceased died aged 60 or above or dependant aged 60 years or above - superannuation income stream: element untaxed in fund attracts 10% offset

(1) The *element untaxed in the fund of a *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant is assessable income in either or both of the following cases:

(a) you are 60 years or over when you receive the benefit;

(b) the deceased died aged 60 or above.

(2) You are entitled to a *tax offset equal to 10% of the *element untaxed in the fund of the benefit.

302-90 Deceased died aged under 60 and dependant aged under 60 - superannuation income stream: element untaxed in fund is assessable income

The *element untaxed in the fund of a *superannuation income stream benefit that you receive because of the death of a person of whom you are a *death benefits dependant is assessable income if:

(a) you are aged under 60 when you receive the benefit; and

(b) the deceased died aged under 60.

Subdivision 302-C - Death benefits to non-dependant

Table of sections

Superannuation lump sum

302-140 Superannuation lump sum - tax free status of tax free component

302-145 Superannuation lump sum - element taxed in the fund taxed at 15%, element untaxed in the fund taxed at 30%

Superannuation lump sum

302-140 Superannuation lump sum - tax free status of tax free component

The *tax free component of a *superannuation lump sum that you receive because of the death of a person of whom you are not a *death benefits dependant is not assessable income and is not *exempt income.

Note: For tax free component , see Subdivision 307-C.

302-145 Superannuation lump sum - element taxed in the fund taxed at 15%, element untaxed in the fund taxed at 30%

(1) If you receive a *superannuation lump sum because of the death of a person of whom you are not a *death benefits dependant, the *taxable component of the lump sum is assessable income.

Note: For taxable component , see Subdivision 307-C.

(2) You are entitled to a *tax offset that ensures that the rate of income tax on the *element taxed in the fund of the lump sum does not exceed 15%.

(3) You are entitled to a *tax offset that ensures that the rate of income tax on the *element untaxed in the fund of the lump sum does not exceed 30%.

Subdivision 302-D - Definitions relating to dependants

Table of sections

302-195 Meaning of death benefits dependant

302-200 What is an interdependency relationship ?

302-195 Meaning of death benefits dependant

A death benefits dependant , of a person who has died, is:

(a) the deceased person’s *spouse or former spouse; or

(b) the deceased person’s *child, aged less than 18; or

(c) any other person with whom the deceased person had an interdependency relationship under section 302-200 just before he or she died; or

(d) any other person who was a dependant of the deceased person just before he or she died.

302-200 What is an interdependency relationship ?

(1) Two persons (whether or not related by family) have an interdependency relationship under this section if:

(a) they have a close personal relationship; and

(b) they live together; and

(c) one or each of them provides the other with financial support; and

(d) one or each of them provides the other with domestic support and personal care.

(2) In addition, 2 persons (whether or not related by family) also have an interdependency relationship under this section if:

(a) they have a close personal relationship; and

(b) they do not satisfy one or more of the requirements of an interdependency relationship mentioned in paragraphs (1)(b), (c) and (d); and

(c) the reason they do not satisfy those requirements is that either or both of them suffer from a physical, intellectual or psychiatric disability.

(3) The regulations may specify:

(a) matters that are, or are not, to be taken into account in determining under subsection (1) or (2) whether 2 persons have an interdependency relationship under this section; and

(b) circumstances in which 2 persons have, or do not have, an interdependency relationship under this section.

Division 303 - Superannuation benefits paid in special circumstances

Table of sections

303-5 Commutation of income stream if you are under 25 etc.

303-5 Commutation of income stream if you are under 25 etc.

(1) A *superannuation lump sum that you receive from a *complying superannuation plan is not assessable income and is not *exempt income if:

(a) the superannuation lump sum arises from the commutation of a *superannuation income stream; and

(b) any of these conditions are satisfied:

(i) you are under 25 when you receive the superannuation lump sum;

(ii) the commutation takes place because you turn 25;

(iii) you are permanently disabled when you receive the superannuation lump sum; and

(c) you had received one or more *superannuation income stream benefits from the superannuation income stream before the commutation because of the death of a person of whom you are a *death benefits dependant.

(2) Subsection (1) applies despite Divisions 301 and 302.

Division 304 - Superannuation benefits in breach of legislative requirements etc.

Guide to Division 304

304-1 What this Division is about

This Division overrides the tax treatment in Divisions 301 and 302 if payments from complying superannuation plans etc. are in breach of payment and other rules.

Table of sections

Operative provisions

304-5 Application

304-10 Superannuation benefits in breach of legislative requirements etc.

304-15 Excess payments from release authorities

Operative provisions

304-5 Application

This Division applies despite Divisions 301, 302 and 303.

304-10 Superannuation benefits in breach of legislative requirements etc.

(1) Include in your assessable income the amount of a *superannuation benefit if:

(a) any of the following applies:

(i) you received the benefit from a *complying superannuation fund or from a *superannuation fund that was previously a complying superannuation fund;

(ii) the benefit is attributable to the assets of a complying superannuation fund or from a superannuation fund that was previously a complying superannuation fund; and

(b) any of the following applies:

(i) the fund was not (when you received the benefit) maintained as required by section 62 of the Superannuation Industry (Supervision) Act 1993;

(ii) you received the benefit otherwise than in accordance with payment standards prescribed under subsection 31(1) of the Superannuation Industry (Supervision) Act 1993.

(2) Include in your assessable income the amount of a *superannuation benefit if:

(a) any of the following applies:

(i) you received the benefit from a *complying approved deposit fund or from an *approved deposit fund that was previously a complying approved deposit fund;

(ii) the benefit is attributable to the assets of a complying approved deposit fund or from an approved deposit fund that was previously a complying approved deposit fund; and

(b) you received the benefit otherwise than in accordance with payment standards prescribed under subsection 32(1) of the Superannuation Industry (Supervision) Act 1993.

(3) Include in your assessable income the amount of a *superannuation benefit you receive from an *RSA in breach of the Retirement Savings Accounts Act 1997, regulations under that Act or payment standards prescribed under subsection 38(2) of that Act.

(4) However, you do not have to include the amount in your assessable income to the extent that the Commissioner is satisfied that it is unreasonable that it be included having regard to:

(a) for subsection (1) or (2) - the nature of the fund; and

(b) any other matters that the Commissioner considers relevant.

304-15 Excess payments from release authorities

(1) This section applies to a *superannuation benefit that you receive, paid in relation to a release authority given in relation to you in accordance with:

(a) section 292-410; or

(b) section 292-80B of the Income Tax (Transitional Provisions) Act 1997.

(2) The *superannuation benefit is not assessable income and is not *exempt income to the extent that it does not exceed the amount mentioned in subsection (3).

(3) The amount is the amount of *excess contributions tax stated in the release authority, reduced (but not below zero) by the amount of any *superannuation benefit that was not assessable income and not *exempt income under a previous operation of subsection (2) in relation to the release authority.

(4) The *superannuation benefit is assessable income to the extent (if any) that it exceeds the amount mentioned in subsection (3).

Division 305 - Superannuation benefits paid from non-complying superannuation plans

Table of Subdivisions

Guide to Division 305

305-A Superannuation benefits from Australian non-complying superannuation funds

305-B Superannuation benefits from foreign superannuation funds

Guide to Division 305

305-1 What this Division is about

This Division sets out the tax treatment of superannuation benefits received by members of non-complying plans (including foreign superannuation funds).

Subdivision 305-A - Superannuation benefits from Australian non-complying superannuation funds

Table of sections

305-5 Tax treatment of superannuation benefits from certain Australian non-complying superannuation funds

305-5 Tax treatment of superannuation benefits from certain Australian non-complying superannuation funds

A *superannuation benefit that you receive from a *non-complying superannuation fund that is an *Australian superannuation fund (for the income year in which the benefit is paid) is *exempt income, unless:

(a) if the *superannuation fund has ever been a *complying superannuation fund - it last stopped being one for the income year in which 1 July 1995 occurred or a later income year; and

(b) if it has ever been a *foreign superannuation fund - it last stopped being one for the income year in which 1 July 1995 occurred or a later income year.

Subdivision 305-B - Superannuation benefits from foreign superannuation funds

Table of sections

Application of Subdivision

305-55 Restriction to lump sums received from certain foreign superannuation funds

Lump sums received within 6 months after Australian residency or termination of foreign employment etc.

305-60 Lump sums tax free - foreign resident period

305-65 Lump sums tax free - Australian resident period

Lump sums to which sections 305-60 and 305-65 do not apply

305-70 Lump sums received more than 6 months after Australian residency or termination of foreign employment etc.

305-75 Lump sums - applicable fund earnings

305-80 Lump sums paid into complying superannuation plans - choice

Application of Subdivision

305-55 Restriction to lump sums received from certain foreign superannuation funds

This Subdivision applies if:

(a) you receive a *superannuation lump sum from a *foreign superannuation fund; and

(b) the fund is an entity mentioned in item 4 of the table in subsection 295-490(1) (which deals with deductions for superannuation entities).

Lump sums received within 6 months after Australian residency or termination of foreign employment etc.

305-60 Lump sums tax free - foreign resident period

A *superannuation lump sum you receive from a *foreign superannuation fund is not assessable income and is not *exempt income if:

(a) you receive it within 6 months after you become an Australian resident; and

(b) it relates only to a period:

(i) when you were not an Australian resident; or

(ii) starting after you became an Australian resident and ending before you receive the payment; and

(c) it does not exceed the amount in the fund that was vested in you when you received the payment.

Note: If you received the lump sum after that period of 6 months, or the lump sum exceeds the vested amount, the payment will fall within section 305-70.

305-65 Lump sums tax free - Australian resident period

(1) A *superannuation lump sum you receive is not assessable income and is not *exempt income if:

(a) you receive it in consequence of:

(i) the termination of your employment as an employee, or as the holder of an office, in a foreign country; or

(ii) the termination of your engagement on qualifying service on an approved project (within the meaning of section 23AF of the Income Tax Assessment Act 1936), in relation to a foreign country; and

(b) it relates only to the period of that employment, holding of office, or engagement; and

(c) you were an Australian resident during the period of the employment, holding of office or engagement; and

(d) you receive the lump sum within 6 months after the termination; and

(e) the lump sum is not exempt from taxation under the law of the foreign country; and

(f) for a period of employment or holding an office - your foreign earnings from the employment or office are exempt from income tax under section 23AG of the Income Tax Assessment Act 1936; and

(g) for a period of engagement on qualifying service on an approved project - your eligible foreign remuneration from the service is exempt from income tax under section 23AF of that Act.

Note: If you received the lump sum after that period of 6 months, or the lump sum exceeds the vested amount, the lump sum will fall within section 305-70.

(2) For the purposes of subsection (1), treat the termination of employment, holding of office, or engagement as including:

(a) retirement from the employment, office or engagement; and

(b) cessation of the employment, office or engagement because of death.

Lump sums to which sections 305-60 and 305-65 do not apply

305-70 Lump sums received more than 6 months after Australian residency or termination of foreign employment etc.

Superannuation lump sums to which section applies

(1) This section applies to a *superannuation lump sum you receive from a *foreign superannuation fund if:

(a) you are an Australian resident when you receive the lump sum; and

(b) sections 305-60 and 305-65 do not apply to the lump sum.

Assessable part

(2) Include in your assessable income so much of the lump sum (excluding any amount mentioned in subsection (4)) as equals:

(a) your *applicable fund earnings (worked out under section 305-75); or

(b) if you have made a choice under section 305-80 - your applicable fund earnings, less the amount covered by the choice.

Note: Under section 305-80, if your lump sum is paid into a complying superannuation plan, you can choose to have some or all of the applicable fund earnings excluded from your assessable income. The amount you choose is included in the assessable income of the plan: see section 295-200.

Non-assessable, non-exempt part

(3) The remainder of the lump sum is not assessable income and is not *exempt income.

Amount paid into another foreign superannuation fund

(4) Any part of the lump sum that is paid into another *foreign superannuation fund is not assessable income and is not *exempt income.

Note: However, your applicable fund earnings under section 305-75 in relation to a later lump sum payment out of the other foreign superannuation fund may include an amount ( previously exempt fund earnings ) attributable to the lump sum.

305-75 Lump sums - applicable fund earnings

(1) This section applies if you need to work out an amount (your applicable fund earnings ) in relation to a *superannuation lump sum to which section 305-70 applies that you receive from a *foreign superannuation fund.

If you were an Australian resident at all times

(2) If you were an Australian resident at all times during the period to which the lump sum relates, the amount of your applicable fund earnings is the amount (not less than zero) worked out as follows:

(a) work out the total of the following amounts:

(i) the part of the lump sum that is attributable to contributions made by or in respect of you on or after the day when you became a member of the fund (the start day );

(ii) the part of the lump sum (if any) that is attributable to amounts transferred into the fund from any other *foreign superannuation fund during the period;

(b) subtract that total amount from the amount in the fund that was vested in you when the lump sum was paid (before any deduction for *foreign tax);

(c) add the total of all your previously exempt fund earnings (if any) covered by subsections (5) and (6).

If you were not an Australian resident at all times

(3) If you become an Australian resident after the start of the period to which the lump sum relates (but before you received it) the amount of your applicable fund earnings is the amount (not less than zero) worked out as follows:

(a) work out the total of the following amounts:

(i) the amount in the fund that was vested in you just before the day (the start day ) you first became an Australian resident during the period;

(ii) the part of the payment that is attributable to contributions to the fund made by or in respect of you during the remainder of the period;

(iii) the part of the payment (if any) that is attributable to amounts transferred into the fund from any other *foreign superannuation fund during the remainder of the period;

(b) subtract that total amount from the amount in the fund that was vested in you when the lump sum was paid (before any deduction for *foreign tax);

(c) multiply the resulting amount by the proportion of the total days during the period when you were an Australian resident;

(d) add the total of all previously exempt fund earnings (if any) covered by subsections (5) and (6).

Previous lump sums from the fund

(4) If the lump sum is not the first lump sum from the fund you have received to which this section applies, for subsections (2) and (3) the start day is the day after you received the most recent such lump sum.

Previously exempt fund earnings

(5) You have an amount of previously exempt fund earnings in respect of the lump sum if:

(a) part or all of the amount in the fund that was vested in you when the lump sum was paid (before any deduction for *foreign tax) is attributable to the amount; and

(b) the amount is attributable to a payment received from a *foreign superannuation fund; and

(c) the amount would have been included in your assessable income under subsection 305-70(2) by the application of this section, but for the payment having been received by another foreign superannuation fund.

(6) The amount of your previously exempt fund earnings is the amount mentioned in paragraph (5)(c) (disregarding the addition of previously exempt fund earnings under subsection (2) or (3) of this section).

305-80 Lump sums paid into complying superannuation plans - choice

(1) This section applies if:

(a) section 305-70 applies to a *superannuation lump sum that is paid from a *foreign superannuation fund; and

(b) you are taken to receive the lump sum under section 307-15; and

(c) all of the lump sum is paid into a *complying superannuation fund; and

(d) immediately after the lump sum is paid into the complying superannuation fund, you no longer have a *superannuation interest in the foreign superannuation fund.

(2) You may choose for all or part of your *applicable fund earnings worked out under section 305-75 (but not exceeding the amount of the lump sum) to be included in the assessable income of the *complying superannuation plan.

Note: Section 295-200 provides for the amount specified in the choice to be included in the assessable income of the complying superannuation plan.

(3) Your choice:

(a) must be in writing; and

(b) must comply with the requirements (if any) specified in the regulations.

Division 306 - Roll-overs etc.

Guide to Division 306

306-1 What this Division is about

This Division sets out the tax treatment of payments made from one superannuation plan to another superannuation plan, and of similar payments.

Table of sections

Operative provisions

306-5 Effect of a roll-over superannuation benefit

306-10 Roll-over superannuation benefit

306-15 Tax on excess untaxed roll-over amounts

306-20 Effect of payment to government of unclaimed superannuation money

Operative provisions

306-5 Effect of a roll-over superannuation benefit

A *roll-over superannuation benefit that you are taken to receive under section 307-15 is not assessable income and is not *exempt income.

Note: Roll-over superannuation benefits are paid into a complying superannuation plan or are used to purchase a superannuation annuity on your behalf. However, you are taken to receive the benefit under subsection 307-15(1).

306-10 Roll-over superannuation benefit

A *superannuation benefit is a roll-over superannuation benefit if:

(a) the benefit is a *superannuation lump sum and a *superannuation member benefit; and

(b) the benefit is not a superannuation benefit of a kind specified in the regulations; and

(c) the benefit satisfies any of the following conditions:

(i) it is paid from a *complying superannuation plan;

(ii) it is an *unclaimed money payment;

(iii) it arises from the commutation of a *superannuation annuity; and

(d) the benefit satisfies any of the following conditions:

(i) it is paid to a complying superannuation plan;

(ii) it is paid to an entity to purchase a superannuation annuity from the entity.

Note 1: A superannuation benefit may be paid from one superannuation plan of a superannuation provider to another superannuation plan of the same provider.

Note 2: For the treatment of amounts transferred within a superannuation plan, see subsection 307-5(8).

306-15 Tax on excess untaxed roll-over amounts

(1) This section applies to a *superannuation benefit if:

(a) it is a *roll-over superannuation benefit that is paid into a *superannuation plan; and

(b) you are taken to receive the benefit under section 307-15; and

(c) the benefit consists of, or includes, an amount that is an *element untaxed in the fund; and

(d) the amount mentioned in paragraph (c) exceeds your *untaxed plan cap amount (see section 307-350) for the *superannuation plan just before you are taken to receive the benefit.

(2) The excess untaxed roll-over amount is the amount of the excess mentioned in paragraph (1)(d).

(3) You are liable to pay income tax on the *excess untaxed roll-over amount at the rate declared by the Parliament in respect of such amounts.

Note 1: The tax is imposed in the Superannuation (Excess Untaxed Roll-over Amounts Tax) Act 2007, and the amount of tax is set out in that Act.

Note 2: See the Taxation Administration Act 1953 for provisions dealing with the payment of the tax.

306-20 Effect of payment to government of unclaimed superannuation money

An *unclaimed money payment that you are taken to receive under section 307-15 because it is paid in accordance with the Superannuation (Unclaimed Money and Lost Members) Act 1999 to the Commissioner or a State or Territory authority (within the meaning of that Act) is not assessable income and is not *exempt income.

Division 307 - Key concepts relating to superannuation benefits

Table of Subdivisions

Guide to Division 307

307-A Superannuation benefits generally

307-B Superannuation lump sums and superannuation income stream benefits

307-C Components of a superannuation benefit

307-D Superannuation interests

307-E Elements taxed and untaxed in the fund of the taxable component of superannuation benefit

307-F Low rate cap and untaxed plan cap amounts

307-G Other concepts

Guide to Division 307

307-1 What this Division is about

This Division defines concepts used in Divisions 301 to 306, such as superannuation benefit , and the tax free component and taxable component of such benefits. To work out those components, it is often necessary to work out the corresponding components of the superannuation interest from which the benefit is paid (see Subdivision 307-D).

This Division also defines the element taxed in the fund and the element untaxed in the fund of superannuation benefits, which are relevant to superannuation benefits paid from untaxed funds etc. (see Subdivision 307-D).

Subdivision 307-F defines the concessional limits used in Division 301 known as the low rate cap amount and untaxed plan cap amount.

Subdivision 307-A - Superannuation benefits generally

Table of sections

307-5 What is a superannuation benefit ?

307-10 Payments that are not superannuation benefits

307-15 Payments for your benefit or at your direction or request

307-5 What is a superannuation benefit ?

(1) A superannuation benefit is a payment described in the table.

(2) A superannuation member benefit is a payment described in column 2 of the table.

(3) A *superannuation benefit is also a superannuation member benefit if:

(a) the superannuation benefit arises from the commutation of a *superannuation income stream; and

(b) it would be a *superannuation death benefit apart from this subsection; and

(c) the benefit is paid after the later of:

(i) 6 months after the death of the deceased person; or

(ii) 3 months after the grant of probate of that deceased person’s will or letters of administration of that deceased person’s estate.

(4) A superannuation death benefit is a payment described in column 3 of the table.

(5) Subsection (6) applies if a *contributions-splitting superannuation benefit or a *family law superannuation payment is paid to you because another person is a member of a *superannuation fund, holder of an *RSA or depositor with an *approved deposit fund, or the annuitant under a *superannuation annuity.

(6) For the purposes of this section (and despite section 307-15):

(a) treat yourself as a member of the fund, holder of the *RSA, depositor with the fund or annuitant under the *superannuation annuity; and

(b) do not treat the other person as a member of the fund, holder of the RSA, depositor with the fund or annuitant under the superannuation annuity.

Note: This means that the benefit is a superannuation benefit for you but not for the other person.

(7) A family law superannuation payment is a payment that:

(a) is a payment of any of the following kinds:

(i) a payment in accordance with Part VIIIB of the Family Law Act 1975;

(ii) a payment in accordance with the Family Law (Superannuation) Regulations 2001;

(iii) a payment in accordance with Part 7A of the Superannuation Industry (Supervision) Regulations 1994;

(iv) a payment in accordance with Part 4A of the Retirement Savings Accounts Regulations 1997;

(v) a payment specified in the regulations; and

(b) satisfies the requirements (if any) specified in the regulations.

Treatment of amounts transferred within a superannuation plan

(8) If an amount is transferred from one *superannuation interest in a *superannuation plan to another superannuation interest in the same plan, treat the transfer as a payment in determining whether the transfer of the amount is a superannuation benefit or a roll-over superannuation benefit.

307-10 Payments that are not superannuation benefits

A payment of any of the following kinds is not a superannuation benefit :

(a) an amount payable to a person under an income stream because of the person’s temporary inability to perform normal employment duties;

(b) an amount:

(i) received by you, or to which you are entitled, as the result of the commutation of a pension payable from a *constitutionally protected fund; and

(ii) wholly applied in paying any superannuation contributions surcharge (as defined in section 38 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997);

(c) an amount:

(i) received by you, or to which you are entitled, as the result of the commutation of a pension payable by a superannuation provider (within the meaning of the Superannuation Contributions Tax (Assessment and Collection) Act 1997); and

(ii) wholly applied in paying any superannuation contributions surcharge (as defined in section 43 of that Act).

307-15 Payments for your benefit or at your direction or request

(1) This section applies for the purposes of:

(a) determining whether a payment is a superannuation benefit ; and

(b) determining whether a *superannuation benefit is made to you, or received by you.

(2) A payment is treated as being made to you, or received by you, if it is made:

(a) for your benefit; or

(b) to another person or to an entity at your direction or request.

Note: Paragraph (b) would cover, for example, a direction by you that a payment be rolled over from your original superannuation fund into another superannuation fund.

Subdivision 307-B - Superannuation lump sums and superannuation income stream benefits

Table of sections

307-65 Meaning of superannuation lump sum

307-70 Meaning of superannuation income stream and superannuation income stream benefit

307-65 Meaning of superannuation lump sum

A superannuation lump sum is a *superannuation benefit that is not a *superannuation income stream benefit (see section 307-70).

307-70 Meaning of superannuation income stream and superannuation income stream benefit

(1) A superannuation income stream benefit is a *superannuation benefit specified in the regulations that is paid from a *superannuation income stream.

(2) A superannuation income stream has the meaning given by the regulations.

Subdivision 307-C - Components of a superannuation benefit

Table of sections

307-120 Components of superannuation benefit

307-125 Proportioning rule

307-130 Superannuation guarantee payment consists entirely of taxable component

307-135 Superannuation co-contribution benefit payment consists entirely of tax free component

307-140 Contributions-splitting superannuation benefit consists entirely of taxable component

307-145 Modification for disability benefits

307-150 Modification in respect of superannuation lump sum with element untaxed in fund

307-120 Components of superannuation benefit

(1) Work out the following components of a *superannuation benefit under this Subdivision:

(a) the tax free component ;

(b) the taxable component .

(2) Work out those components under:

(a) if the benefit is not mentioned in paragraph (b), (c) or (d) - section 307-125; or

(b) if the benefit is a *superannuation guarantee payment - section 307-130; or

(c) if the benefit is a *superannuation co-contribution benefit payment - section 307-135; or

(d) if the benefit is a *contributions-splitting superannuation benefit - section 307-140.

(3) Those components may be modified under sections 307-145 (which deals with certain disability benefits) and 307-150 (which deals with certain *elements untaxed in fund).

307-125 Proportioning rule

(1) The 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.

(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.

(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 - when the relevant *superannuation income stream commenced.

(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.

(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.

(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.

307-130 Superannuation guarantee payment consists entirely of taxable component

The components of a *superannuation benefit that is a *superannuation guarantee payment are as follows:

(a) the *tax free component is nil;

(b) the *taxable component is the amount of the benefit.

307-135 Superannuation co-contribution benefit payment consists entirely of tax free component

The components of a *superannuation benefit that is a *superannuation co-contribution benefit payment are as follows:

(a) the *tax free component is the amount of the benefit;

(b) the *taxable component is nil.

307-140 Contributions-splitting superannuation benefit consists entirely of taxable component

The components of a *superannuation benefit that is a *contributions-splitting superannuation benefit are as follows:

(a) the *tax free component is nil;

(b) the *taxable component is the amount of the benefit.

307-145 Modification for disability benefits

(1) Work out the tax free component of the *superannuation benefit under subsection (2) if the benefit is a *superannuation lump sum and a *disability superannuation benefit.

(2) The tax free component is the sum of:

(a) the *tax free component of the benefit worked out apart from this section; and

(b) the amount worked out under subsection (3).

However, the tax free component cannot exceed the amount of the benefit.

(3) Work out the amount by applying the following formula:

Amount of benefit x (Days to retirement / (Service days + Days to retirement))

where:

days to retirement is the number of days from the day on which the person stopped being capable of being *gainfully employed to his or her *last retirement day.

service days is the number of days in the *service period for the lump sum.

(4) The balance of the *superannuation benefit is the taxable component of the benefit.

307-150 Modification in respect of superannuation lump sum with element untaxed in fund

(1) This section applies to a *superannuation lump sum if:

(a) it is not a *roll-over superannuation benefit; or

(b) it is a roll-over superannuation benefit that includes an *element untaxed in the fund, all or part of which will be included in the assessable income of the *superannuation provider in relation to the *superannuation fund into which the benefit is paid.

(2) However, this section applies to the *superannuation lump sum only to the extent that it is attributable to a *superannuation interest that existed just before 1 July 2007.

(3) If the *superannuation lump sum includes an *element untaxed in the fund:

(a) increase the *tax free component of the benefit by the amount that is the lesser of these amounts:

(i) the amount worked out under subsection (4); and

(ii) the amount of the element untaxed in the fund (apart from this section); and

(b) reduce the element untaxed in the fund by the lesser of those amounts.

(4) Work out the amount by applying the following formula:

Original tax free component and untaxed element x (Number of days in the service period for the lump sum that occurred before 1 July 1983 / Number of days in the service period for the lunp sum)

where:

original tax free component and untaxed element is the sum of:

(a) the *tax free component of the *superannuation benefit (apart from this section); and

(b) the *element untaxed in the fund of the superannuation benefit (apart from this section).

(5) If the benefit is in part attributable to a *crystallised pre-July 83 amount, in working out the *tax free component of the *superannuation benefit (apart from this section) for the purposes of subsection (4), disregard the amount of the benefit that is attributable to the *crystallised segment of the *superannuation interest from which the benefit is paid.

Subdivision 307-D - Superannuation interests

Table of sections

307-200 Regulations relating to meaning of superannuation interests

307-205 Value of superannuation interest

307-210 Tax free component of superannuation interest

307-215 Taxable component of superannuation interest

307-220 What is the contributions segment ?

307-225 What is the crystallised segment ?

307-200 Regulations relating to meaning of superannuation interests

(1) In the circumstances specified in the regulations, treat a superannuation interest as two or more superannuation interests in the way specified in the regulations.

(2) In the circumstances specified in the regulations, treat 2 or more superannuation interests as one superannuation interest in the way specified in the regulations.

(3) Regulations for the purposes of this section may specify a way of treating a *superannuation interest in relation to one or more of the following aspects of the interest:

(a) the *tax free component (and the *contributions segment and *crystallised segment relating to that component);

(b) the *taxable component;

(c) the *element taxed in the fund of the taxable component;

(d) the *element untaxed in the fund of the taxable component.

(4) Regulations for the purposes of subsection (1) may specify a way of allocating an amount relating to a *superannuation interest treated as two or more superannuation interests in accordance with those regulations to those interests.

(5) Subsections (3) and (4) do not limit the regulations that may be made for the purposes of this section.

307-205 Value of superannuation interest

The value of a *superannuation interest at a particular time is:

(a) if the regulations specify a method for determining the value of the superannuation interest - that value; or

(b) otherwise - the total amount of all the *superannuation lump sums that could be payable from the interest at that time.

307-210 Tax free component of superannuation interest

The tax free component of a *superannuation interest is so much of the *value of the interest as consists of:

(a) the *contributions segment of the interest; and

(b) the *crystallised segment of the interest.

Note: If superannuation benefits have been paid from the superannuation interest, the amount of the tax free component of the interest will be reduced by the tax free components of those superannuation benefits: see section 307-125.

307-215 Taxable component of superannuation interest

The taxable component of a *superannuation interest is the *value of the interest less the *tax free component of the interest.

307-220 What is the contributions segment ?

(1) The contributions segment of a *superannuation interest is so much of the *value of the interest as consists of contributions made after 30 June 2007, to the extent that they have not been and will not be included in the assessable income of the *superannuation provider in relation to the *superannuation plan in which the interest is held.

(2) For the purposes of this section:

(a) in determining whether contributions are included in the contributions segment under subsection (1):

(i) disregard the *taxable component of a *roll-over superannuation benefit paid into the interest; and

(ii) for a *superannuation plan that is a *constitutionally protected fund - treat the superannuation plan as if it were not a constitutionally protected fund; and

(b) disregard section 295-180 and Subdivision 295-D.

(3) For the purposes of subparagraph (2)(a)(i), treat the *excess untaxed roll-over amount (if any) of the *roll-over superannuation benefit as part of the *tax free component of the benefit instead of the *taxable component of the benefit.

307-225 What is the crystallised segment ?

(1) To work out the crystallised segment of a *superannuation interest, first assume that:

(a) an eligible termination payment had been made in respect of the holder of the interest just before 1 July 2007; and

(b) the amount of the eligible termination payment had been equal to the *value of the interest at that time.

(2) The crystallised segment of the *superannuation interest is so much of the *value of the interest as consists of the total of the following components of the eligible termination payment:

(a) the concessional component;

(b) the post-June 1994 invalidity component;

(c) the undeducted contributions;

(d) the CGT exempt component;

(e) the pre-July 83 component.

(3) For the purposes of paragraph (2)(e), disregard the *value of the interest just before 1 July 2007 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.

(4) In this section, the following terms have the same meaning as in subsection 27A(1) of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007):

(a) concessional component ;

(b) post-June 1994 invalidity component ;

(c) undeducted contributions ;

(d) CGT exempt component ;

(e) pre-July 83 component ;

(f) eligible termination payment .

Subdivision 307-E - Elements taxed and untaxed in the fund of the taxable component of superannuation benefit

Table of sections

307-275 Element taxed in the fund and element untaxed in the fund of superannuation benefits

307-280 Superannuation benefits from constitutionally protected funds etc.

307-285 Trustee can choose to convert element taxed in the fund to element untaxed in the fund

307-290 Taxed and untaxed elements of death benefit superannuation lump sums

307-295 Superannuation benefits from public sector superannuation schemes may include untaxed element

307-275 Element taxed in the fund and element untaxed in the fund of superannuation benefits

(1) The *taxable component of a *superannuation benefit consists of an element taxed in the fund or an element untaxed in the fund , or both.

(2) The *taxable component of a *superannuation benefit consists wholly of an element taxed in the fund except as provided in a later section of this Subdivision.

(3) Despite subsection (2), the *taxable component of any of the following kinds of *superannuation benefit consists wholly of an element untaxed in the fund :

(a) a *small superannuation account payment;

(b) a *superannuation guarantee payment.

307-280 Superannuation benefits from constitutionally protected funds etc.

(1) The *taxable component of a *superannuation benefit paid from a *superannuation fund that is a *constitutionally protected fund consists wholly of an element untaxed in the fund .

(2) Despite subsection (1), if:

(a) the benefit is a *superannuation lump sum; and

(b) the benefit is attributable to one or more *roll-over superannuation benefits that consisted of, or included, an *element taxed in the fund;

the *taxable component of the benefit has an element taxed in the fund equal to the total of those elements taxed in the fund.

(3) The *taxable component of a *superannuation income stream benefit consists wholly of an element untaxed in the fund if it is paid from a *superannuation fund that was a *constitutionally protected fund on the first day of the period to which the *superannuation income stream relates.

307-285 Trustee can choose to convert element taxed in the fund to element untaxed in the fund

(1) If:

(a) you receive a *superannuation benefit from a *superannuation fund; and

(b) the trustee of the fund gives you written notice specifying an amount as the *element untaxed in the fund of the *taxable component of the benefit; and

(c) the notice is given within the time and in the manner approved by the Commissioner in writing; and

(d) the superannuation fund came into operation on or before 5 September 2006;

the taxable component consists of an element untaxed in the fund equal to the specified amount.

(2) The trustee of the fund can give only one notice under subsection (1) in relation to a particular *superannuation lump sum.

307-290 Taxed and untaxed elements of death benefit superannuation lump sums

(1) This section applies to a *superannuation death benefit that is a *superannuation lump sum, in relation to which a deduction has been, or is to be, claimed under section 295-465 or 295-470.

Note: Those sections allow deductions for insurance premiums that have been paid, and for liability for future benefits.

(2) The *taxable component of the *superannuation lump sum includes an element taxed in the fund worked out as follows:

(a) first, work out the amount under the formula in subsection (3);

(b) next, reduce that amount (but not below zero) by the *tax free component (if any) of the superannuation lump sum.

(3) For the purposes of paragraph (2)(a), the formula is:

Amount of superannuation lump sum x (Service days / (Service days + Days to retirement))

days to retirement is the number of days from the day on which the deceased died to the deceased’s *last retirement day.

service days is the number of days in the *service period for the lump sum.

(4) The element untaxed in the fund of the *taxable component is the balance of the taxable component.

307-295 Superannuation benefits from public sector superannuation schemes may include untaxed element

(1) This section applies to a *superannuation benefit that is paid from a *public sector superannuation scheme that is not a *constitutionally protected fund.

(2) If the *superannuation benefit paid is not sourced to any extent from contributions made into a *superannuation fund or earnings on such contributions, the *taxable component of the superannuation benefit consists wholly of an element untaxed in the fund .

(3) If the benefit is a *superannuation lump sum that is partly sourced from contributions made into a *superannuation fund or earnings on such contributions, the element taxed in the fund and the element untaxed in the fund of the *taxable component of the benefit are worked out as follows:

Method statement

Step 1. Subdivide the *superannuation lump sum (the original benefit ) into 2 notional superannuation lump sums as follows:

(a) the amount sourced from contributions made into a *superannuation fund or earnings on such contributions (the fund benefit );

(b) the remainder of the lump sum (the non-fund benefit ).

Step 2. The fund benefit consists of an element taxed in the fund , an element untaxed in the fund , or both, as worked out under this Subdivision.

Step 3. The non-fund benefit consists wholly of an element untaxed in the fund .

Step 4. The element taxed in the fund of the original benefit equals the element taxed in the fund of the fund benefit.

Step 5. The element untaxed in the fund of the original benefit is the sum of the elements untaxed in the fund worked out under steps 2 and 3.

Subdivision 307-F - Low rate cap and untaxed plan cap amounts

Table of sections

307-345 Low rate cap amount

307-350 Untaxed plan cap amount

307-345 Low rate cap amount

Starting amount

(1) Your low rate cap amount for the 2007-2008 income year is $140,000.

Note: However, if you became entitled to a rebate under the corresponding provision of the Income Tax Assessment Act 1936, see section 307-345 of the Income Tax (Transitional Provisions) Act 1997.

Reductions and increases

(2) If you receive one or more *superannuation member benefits that are *superannuation lump sums in an income year, reduce your low rate cap amount for the next income year (but not below zero) by the total of the amounts that:

(a) are included in your assessable income for the first year in respect of those lump sums; and

(b) are counted towards your entitlement to a *tax offset under subsection 301-20(2) or 301-105(4) for the first year.

(3) At the start of each income year after the 2007-2008 income year, increase your low rate cap amount by the amount (if any) by which the index amount for that income year exceeds the index amount for the previous income year.

(4) For the purposes of subsection (3), the index amount for the 2007-2008 income year is $140,000. The index amount is then indexed annually.

Note: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the index amount: see section 960-285.

307-350 Untaxed plan cap amount

(1) Your untaxed plan cap amount for a *superannuation plan at the start of the 2007-2008 income year is $1,000,000.

Reductions and increases

(2) If you receive one or more *superannuation member benefits including an *element untaxed in the fund from a *superannuation plan at a time, reduce your untaxed plan cap amount just after that time:

(a) if the total of the elements untaxed in the fund falls short of your *untaxed plan cap amount at that time - by the amount of the benefit or of the total of the benefits; or

(b) otherwise - to nil.

(3) At the start of each income year after the 2007-2008 income year, increase your untaxed plan cap amount for the *superannuation plan by the amount (if any) by which the index amount for that income year exceeds the index amount for the previous income year.

(4) For the purposes of subsection (3), the index amount for the 2007-2008 income year is $1,000,000. The index amount is then indexed annually.

Note: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the index amount: see section 960-285.

Subdivision 307-G - Other concepts

Table of sections

307-400 Meaning of service period for a superannuation lump sum

307-400 Meaning of service period for a superannuation lump sum

(1) The service period for a *superannuation lump sum consists of each day that is in the period worked out under the table or a period covered by subsection (2).

(2) The service period for the *superannuation lump sum (the later lump sum ) also includes each day that is in the *service period for an earlier superannuation lump sum if some or all of the later lump sum is attributable, directly or indirectly, to some or all of the earlier lump sum through the payment of one or more *roll-over superannuation benefits.