Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (81 of 2016)

Schedule 1   Transfer balance cap

Part 1   Transfer balance cap

Taxation Administration Act 1953

15   At the end of Part 3-20 in Schedule 1

Add:

Division 136 - Transfer balance cap

Table of Subdivisions

Guide to Division 136

136-A Excess transfer balance determinations

136-B Commutation authorities

Guide to Division 136

136-1 What this Division is about

If you have excess transfer balance in your transfer balance account, the Commissioner may require you and your superannuation income stream provider to reduce the total amount of your superannuation income streams that are in the retirement phase.

Subdivision 136-A - Excess transfer balance determinations

Guide to Subdivision 136-A

136-5 What this Subdivision is about

If your transfer balance account exceeds the transfer balance cap, the excess must be reduced by commuting in full or in part your superannuation income streams that are in the retirement phase.

If you have more than one superannuation income stream, you may choose which one to commute.

Table of sections

Operative provisions

136-10 Excess transfer balance determination

136-15 Review

136-20 Electing to commute a different superannuation income stream

136-25 Notifying Commissioner of transfer balance debits

Operative provisions

136-10 Excess transfer balance determination

(1) If you have *excess transfer balance in your *transfer balance account at the end of a day, the Commissioner may make a written determination stating the amount of that excess transfer balance.

Note: It is not necessary for the Commissioner to issue a determination under this subsection if the Commissioner becomes aware that you no longer have an excess transfer balance. You are still liable to pay excess transfer balance tax if no determination is issued: see Subdivision 294-F of the Income Tax Assessment Act 1997.

(2) A determination under this section is an excess transfer balance determination .

(3) The amount of *excess transfer balance stated in an *excess transfer balance determination is a crystallised reduction amount .

(4) The Commissioner may amend or revoke an *excess transfer balance determination at any time before a commutation authority relating to the determination is issued under section 136-55.

(5) Notice of a determination given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.

Determination to include default commutation notice

(6) A determination made under subsection (1) must include a notice:

(a) stating that, if you do not make an election under section 136-20 within the period specified in that section, the Commissioner will issue one or more commutation authorities; and

(b) specifying:

(i) the *superannuation income stream provider or providers to whom a commutation authority will be issued; and

(ii) the *superannuation income stream or streams that the providers will be obliged to commute in full or in part; and

(iii) if more than one commutation authority will be issued - the amount to be stated in each commutation authority, or the method the Commissioner will use to work out the amount to be stated in each commutation authority.

(7) A notice included with an *excess transfer balance determination in accordance with subsection (6) is a default commutation notice .

136-15 Review

(1) If you are dissatisfied with an *excess transfer balance determination made in relation to you, you may object against the determination in the manner set out in Part IVC.

(2) However, for the purposes of Part IVC, the *default commutation noticedoes not form part of the taxation decision.

136-20 Electing to commute a different superannuation income stream

(1) This section applies to you if:

(a) you receive an *excess transfer balance determination under section 136-10; and

(b) you are the *retirement phase recipient of 2 or more *superannuation income streams.

(2) You may elect which of those *superannuation income streams is to be fully or partially commuted for the purpose of reducing the *transfer balance in your *transfer balance account by the *crystallised reduction amount.

Requirements for election

(3) You make an election under subsection (2) by:

(a) identifying the *superannuation income stream or streams to be commuted in full or in part and the *superannuation income stream provider for each such stream; and

(b) if you identify more than one superannuation income stream - stating the amount to be commuted from each such income stream.

(4) The election must:

(a) be in the *approved form; and

(b) be given to the Commissioner within:

(i) 60 days after the *excess transfer balance determination or amended excess transfer balance determination is issued; or

(ii) a further period allowed by the Commissioner.

Election is irrevocable

(5) An election under this section is irrevocable.

136-25 Notifying Commissioner of transfer balance debits

(1) This section applies to you if you have received an *excess transfer balance determination.

(2) You may notify the Commissioner in the *approved form of the amount of a *transfer balance debit that arises in your *transfer balance account if the debit arises in the period:

(a) beginning when the determination is made; and

(b) ending at the earlier of:

(i) the time you made an election under section 136-20; and

(ii) the end of the period within which an election under section 136-20 may be made.

Subdivision 136-B - Commutation authorities

Guide to Subdivision 136-B

136-50 What this Subdivision is about

The Commissioner must issue a commutation authority to a superannuation income stream provider, unless you have notified the Commissioner that you have already reduced your excess transfer balance by the crystallised reduction amount.

A superannuation income stream provider will usually be required to commute the superannuation income stream stated in the authority.

Table of sections

Obligations of Commissioner

136-55 Issuing of commutation authorities

136-60 Varying and revoking a commutation authority

136-65 Issuing further commutation authorities

136-70 Notifying of non-commutable excess transfer balance

Obligations of superannuation income stream providers

136-80 Obligations on superannuation income stream providers

136-85 Notifying the Commissioner

136-90 Notifying you

Obligations of Commissioner

136-55 Issuing of commutation authorities

Commutation authority must be issued if there is a commutable amount

(1) The Commissioner must issue a commutation authority under this section to one or more *superannuation income stream providers if:

(a) an *excess transfer balance determination has been issued to you; and

(b) the excess transfer balance determination has not been revoked; and

(c) the period mentioned in subsection 136-20(4) has ended; and

(d) an amount (the commutable amount ) greater than nil remains after reducing the *crystallised reduction amount by the sum of any *transfer balance debits notified to the Commissioner under section 136-25.

Issuing in response to a valid election

(2) If you have made a valid election under section 136-20, the Commissioner must issue a commutation authority under this section to each *superannuation income stream provider identified in your election.

(3) If the total of the amounts stated in your election under section 136-20 falls short of the commutable amount, the Commissioner must also issue a commutation authority to one or more *superannuation income stream providers specified in the *default commutation notice.

Issuing if you do not make a valid election

(4) If you have not made a valid election under section 136-20, the Commissioner must issue a commutation authority to each *superannuation income stream provider specified in the *default commutation notice.

Requirements for commutation authority

(5) Each commutation authority must:

(a) specify the *superannuation income stream that the *superannuation income stream provider is to commute, in full or in part; and

(b) state the amount (the reduction amount ) by which the superannuation income stream is to be reduced; and

(c) be dated; and

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

(6) The total of all reduction amounts stated in commutation authorities issued under this section relating to an *excess transfer balance determination must not exceed the commutable amount.

136-60 Varying and revoking a commutation authority

The Commissioner may vary or revoke a commutation authority at any time before the Commissioner receives a notice under section 136-85 relating to the commutation authority.

136-65 Issuing further commutation authorities

(1) The Commissioner may issue a commutation authority under this section to one or more *superannuation income stream providers under this section if:

(a) a commutation authority (the original commutation authority ) was issued under section 136-55; and

(b) the *superannuation income stream provider to which the original commutation authority was issued:

(i) paid a *superannuation lump sum that fell short of the reduction amount stated in the original commutation authority; or

(ii) did not comply with the original commutation authority.

(2) A commutation authority issued under this section must include the matters set out in subsection 136-55(5).

(3) The Commissioner may issue a commutation authority under this section to any *superannuation income stream provider of a *superannuation income stream of which you are the *retirement phase recipient.

(4) The total of all reduction amounts stated in commutation authorities issued under this section relating to an *excess transfer balance determination must not exceed the difference between:

(a) the commutable amount mentioned in subsection 136-55(1); and

(b) the sum of:

(i) any *superannuation lump sums notified to the Commissioner under section 136-85 in respect of the determination; and

(ii) any *transfer balance debits arising in your *transfer balance account under item 5 of the table in subsection 294-80(1) of the Income Tax Assessment Act 1997 because of any original commutation authority.

136-70 Notifying of non-commutable excess transfer balance

(1) The Commissioner must notify you in writing if, at the end of a day after the Commissioner has issued an *excess transfer balance determination to you:

(a) the sum of all *transfer balance debits arising in your *transfer balance account since the determination was issued falls short of the *crystallised reduction amount; and

(b) you have *excess transfer balance in your transfer balance account; and

(c) either:

(i) the only *superannuation income streams of which you are a *retirement phase recipient are *capped defined benefit income streams; or

(ii) you are no longer a retirement phase recipient of any superannuation income stream.

Note: A debit arises in your transfer balance account when the Commissioner issues a notice under this section: see item 7 of the table in subsection 294-80(1) of the Income Tax Assessment Act 1997.

(2) A notice under subsection (1) must state the amount of the *excess transfer balance mentioned in paragraph (1)(b).

Obligations of superannuation income stream providers

136-80 Obligations on superannuation income stream providers

(1) A *superannuation income stream provider issued with a commutation authority under this Subdivision must, within 60 days after the commutation authority is issued, pay by way of commutation of the specified *superannuation income stream, a *superannuation lump sum equal to the lesser of:

(a) the reduction amount stated in the commutation authority; and

(b) the *maximum available release amount for the *superannuation interest that supports the specified superannuation income stream.

Exception for capped defined benefit income streams

(2) Despite subsection (1), if the specified *superannuation income stream is a *capped defined benefit income stream, the *superannuation income stream provider may choose not to comply with the commutation authority.

Exception for deceased member

(3) Despite subsection (1), if the *retirement phase recipient has died, the *superannuation income stream provider may choose not to comply with the commutation authority.

136-85 Notifying the Commissioner

(1) A *superannuation income stream provider issued with a commutation authority under this Subdivision must notify the Commissioner of the amount of a *superannuation lump sum paid in accordance with the commutation authority.

(2) If a *superannuation income stream provider chooses under subsection 136-80(2) or (3) not to comply with the commutation authority, the provider must notify the Commissioner of that choice.

(3) A notice under this section must be in the *approved form and must be given within 60 days after the commutation authority is issued.

Note: Section 286-75 provides an administrative penalty for breach of this subsection.

136-90 Notifying you

(1) A *superannuation income stream provider issued with a commutation authority under this Subdivision must notify you if the superannuation income stream provider:

(a) pays a *superannuation lump sum in accordance with the commutation authority; or

(b) chooses under subsection 136-80(2) not to comply with the commutation authority.

(2) A notice under this section must be in the *approved form and must be given within 60 days after the commutation authority is issued.

Note: Section 286-75 provides an administrative penalty for breach of this subsection.