Income Tax Assessment (1997 Act) Regulations 2021

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-D - Contributions excluded  

SECTION 295-265.05   METHOD 2 - NOTIONALLY UPDATED FUNDING CREDIT VALUATION PROCESS  

295-265.05(1)    
The following is method 2 for the purposes of section 295-265.01 . Method statement


Step 1:

For an income year (the current income year ), the superannuation provider ' s actuary must notionally adjust the value of pre-1 July 88 liabilities of the superannuation fund for the previous income year from the start of the previous income year to the start of the current income year, taking into account any factors likely to affect that value.

In making a calculation the actuary must have regard to the valuation basis that would be used by the fund if method 1 were being used for the current income year.

In making a calculation the actuary must have regard to actual experience gained from the operation of the fund if the experience is materially different from valuation assumptions used in the calculation of the value of pre-1 July 88 liabilities for the previous income year.

The result is the value of pre-1 July 88 liabilities for the current income year.


Step 2:

The actuary must notionally adjust the assets available to fund pre-1 July 88 liabilities of the superannuation fund for the previous income year from the start of the previous income year to the start of the current income year, taking into account any factors likely to affect those assets, including by:

  • (a) adding taxable contributions allocated to fund pre-1 July 88 taxed liabilities in the previous income year; and
  • (b) deducting the employer-financed component of pre-1 July 88 taxed benefits paid out during the previous income year; and
  • (c) adding actual investment earnings net of the tax and expenses relating to investment income for the previous income year using a basis that is consistent with the underlying investment earnings achieved and normal practices of the superannuation fund.

    • The result is the assets available to fund pre-1 July 88 liabilities for the current income year.


    Step 3:

    Deduct the assets available to fund pre-1 July 88 liabilities for the current income year from the value of pre-1 July 88 liabilities for the current income year.

    The result is the value of unfunded pre-1 July 88 liabilities for the current income year.


    Step 4:

    The amount of taxable contributions that are allocated to fund that value of unfunded pre-1 July 88 liabilities, as notified by the superannuation provider to the actuary, are the pre-1 July 88 taxable contributions for the current income year.


    295-265.05(2)    
    The superannuation provider ' s actuary must retain the following documentation for the income year for not less than 5 years:

    (a)    documentation to support the notional updating of the value of pre-1 July 88 liabilities for step 1 of method 2;

    (b)    documentation to support the notional updating of the assets available to fund pre-1 July 88 liabilities for step 2 of method 2.

    295-265.05(3)    
    The superannuation provider must retain documentation to support calculations of pre-1 July 88 taxable contributions for the income year for not less than 5 years.

     

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