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

Schedule 1   Main superannuation amendments

Part 3   Main transitional amendments

Income Tax (Transitional Provisions) Act 1997

25   After Part 3-6

Insert:

Part 3-30 - Superannuation

Division 290 - Contributions

Table of sections

290-10 Directed termination payments not deductible etc.

290-10 Directed termination payments not deductible etc.

Division 290 of the Income Tax Assessment Act 1997 does not apply to a contribution that is a directed termination payment (within the meaning of section 82-10F).

Division 292 - Excess contributions tax

Table of sections

292-20 Concessional contributions cap for a financial year

292-25 Excess directed termination payments included in concessional contributions

292-80 Application of excess non-concessional contributions tax from 10 May 2006 to 1 July 2007

292-80A Transitional release authority

292-80B Giving a transitional release authority to a superannuation provider

292-80C Superannuation provider given transitional release authority must pay amount

292-20 Concessional contributions cap for a financial year

(1) This section applies if:

(a) you have excess concessional contributions for a financial year that:

(i) begins on or after 1 July 2007; and

(ii) ends before 1 July 2012; and

(b) you are 50 years or over on the last day of that financial year.

(2) Despite section 292-20 of the Income Tax Assessment Act 1997, your concessional contributions cap for that financial year is $100,000.

Note: This amount is not indexed.

(3) Subsection (2) does not apply for the purposes of subsection 292-85(2) of that Act.

292-25 Excess directed termination payments included in concessional contributions

(1) A directed termination payment (within the meaning of section 82-10F) made in a financial year on behalf of you is not included in your concessional contributions (see section 292-25 of the Income Tax Assessment Act 1997) for the financial year, to the extent that it does not exceed the amount mentioned in subsection (2).

(2) The amount is $1,000,000, reduced by every transitional termination payment (within the meaning of section 82-10) made to you during the period:

(a) starting on 1 July 2007; and

(b) ending just before the directed termination payment was made.

292-80 Application of excess non-concessional contributions tax from 10 May 2006 to 1 July 2007

(1) The object of this section is to apply (with modifications) provisions relating to excess non-concessional contributions tax in respect of certain contributions made during the period that:

(a) begins on 10 May 2006; and

(b) ends just before 1 July 2007.

(2) The provisions are as follows:

(a) Subdivision 292-C of the Income Tax Assessment Act 1997 (excess non-concessional contributions tax);

(b) any other provision of that Act, or of any instrument made under that Act, to the extent that it relates to the operation of that Subdivision;

(c) any other provision of any other Act, or of any instrument made under any other Act, to the extent that it relates to the operation of that Subdivision.

Example: Section 390-65 in Schedule 1 to the Taxation Administration Act 1953.

(3) Those provisions apply in relation to that period, and do so as if:

(a) that period were the 2006-2007 financial year; and

(b) the amount of a person’s non-concessional contributions for that financial year:

(i) did not include the amount of the person’s excess concessional contributions for that financial year; and

(ii) if subsection (6) applies - included the amount mentioned in that subsection; and

(c) the person’s non-concessional contributions cap for that financial year were $1,000,000; and

(d) subsections 292-85(3) and (4) of the Income Tax Assessment Act 1997 were omitted; and

(e) the person’s CGT cap amount at the start of that financial year were $1,000,000; and

(f) paragraph 292-95(1)(d) of that Act allowed the notification mentioned in that paragraph to be made on or before 31 July 2007; and

(g) paragraph 292-100(9)(b) of that Act allowed the choice mentioned in that paragraph to be given on or before 31 July 2007; and

(h) contributions made during that period that are covered under section 292-100 of that Act reduce the person’s CGT cap amount for the 2007-2008 financial year in accordance with subsection 292-105(2) of that Act (and despite subsection (1) of that section); and

(i) if the conditions in subsection (4) are satisfied - the person’s excess non-concessional contributions for that financial year were reduced by the amount paid as mentioned in paragraph (4)(d); and

(j) the reference in subsection 307-220(1) of that Act to 30 June 2007 were a reference to 9 May 2006.

(4) For the purposes of paragraph (3)(i), the conditions are:

(a) the person gives the Commissioner an application under subsection 292-80A(1) before 1 July 2007; and

(b) the Commissioner gives the person a transitional release authority under subsection 292-80A(2) in response to the application; and

(c) the person gives the transitional release authority to a superannuation provider that holds a superannuation interest for the person (other than a defined benefit interest) in accordance with section 292-80B within 21 days after the date of the release authority; and

(d) the superannuation provider pays the person the amount required under section 292-80C in relation to the transitional release authority.

(5) Subsection (6) applies if:

(a) contributions are made in respect of a person (the first person ) in either or both of the following periods:

(i) 10 May 2006 to 30 June 2006;

(ii) 1 July 2006 to 30 June 2007; and

(b) those contributions are allowable as a deduction for another person under subsection 82AAC(1) of the Income Tax Assessment Act 1936 (apart from subsection 82AAC(2) of that Act).

(6) The amount to be included in the first person’s amount of non-concessional contributions under subparagraph (3)(b)(ii) is the sum of:

(a) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(i), to the extent that they exceed the first person’s deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936) for the income year of the other person in which the contributions were made; and

(b) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(ii), to the extent that they exceed the first person’s deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936) for the income year of the other person in which the contributions were made.

292-80A Transitional release authority

(1) A person may apply to the Commissioner in the approved form for a transitional release authority under subsection (2). The application can only be made before 1 July 2007.

(2) The Commissioner must give the person a transitional release authority if the Commissioner considers that, apart from subparagraph 292-80(3)(b)(i), the person would have excess non-concessional contributions for the financial year mentioned in paragraph 292-80(3)(a).

(3) The transitional release authority must:

(a) state the amount of excess non-concessional contributions mentioned in subsection (2); and

(b) be dated; and

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

(4) For the purposes of this section, disregard contributions made in respect of the person after 6 December 2006 in working out:

(a) whether the person has excess non-concessional contributions as mentioned in subsection (2); and

(b) the amount of those excess non-concessional contributions.

292-80B Giving a transitional release authority to a superannuation provider

The person may give the transitional release authority to a superannuation provider that holds a superannuation interest (other than a defined benefit interest) for the person within 21 days after the date of the release authority.

292-80C Superannuation provider given transitional release authority must pay amount

(1) A superannuation provider that has been given a transitional release authority in accordance with section 292-80B must pay to the person within 30 days after receiving the release authority the least of the following amounts:

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

(b) the amount of excess non-concessional contributions 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 of the Income Tax Assessment Act 1997.

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

(3) Section 307-125 of the Income Tax Assessment Act 1997 (the proportioning rule) does not apply to a payment made as required under this section.

Division 295 - Taxation of superannuation entities

Table of Subdivisions

295-I No-TFN contributions income

Subdivision 295-I - No-TFN contributions income

Table of sections

295-610 No-TFN contributions income

295-610 No-TFN contributions income

Subdivisions 295-I (no-TFN contributions) and 295-J (Tax offset for no-TFN contributions income (TFN quoted within 4 years)) of the Income Tax Assessment Act 1997 apply to an entity whose 2006-2007 income year ends on a day (the end day ) after 1 July 2007 as if:

(a) the period starting on 1 July 2007 and ending on the end day were part of the entity’s 2007-2008 income year; and

(b) the entity’s no-TFN contributions income for the entity’s 2007-2008 income year included contributions made during that period that would have been income of that kind for the entity’s 2007-2008 income year if the contributions concerned had been made in the entity’s 2007-2008 income year.

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

Table of sections

301-85 Extended meaning of disability superannuation benefit for superannuation income stream

301-85 Extended meaning of disability superannuation benefit for superannuation income stream

For the purposes of the Income Tax Assessment Act 1997, a superannuation income stream benefit is taken to be a disability superannuation benefit if, just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (b) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936.

Division 302 - Superannuation death benefits paid from complying plans etc.

Table of sections

302-195 Extended meaning of death benefits dependant for superannuation income stream

302-195 Extended meaning of death benefits dependant for superannuation income stream

For the purposes of Division 302 of the Income Tax Assessment Act 1997, treat a person who receives a superannuation income stream benefit as a death benefits dependant in relation to the benefit if:

(a) the benefit is a superannuation death benefit; and

(b) just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (a) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936.

Division 307 - Key concepts relating to superannuation benefits

Table of sections

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

307-345 Low rate component - Effect of rebate under the Income Tax Assessment Act 1936

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a) first, assume that:

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

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

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

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

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

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

Commutation of superannuation income stream

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

(a) the time just before the commutation; or

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

307-345 Low rate component - Effect of rebate under the Income Tax Assessment Act 1936

If you have become entitled to a rebate under section 159SA of the Income Tax Assessment Act 1936, your low rate cap amount for the 2007-2008 income year is, despite subsection 307-345(1), the total of:

(a) your closing balance for the 2006-2007 income year (worked out under subsection 159SF(2) of that Act); and

(b) the amount by which $140,000 exceeds the upper limit for the 2006-2007 income year (worked out under section 159SG of that Act).