EVENT minutes	NTLG Superannuation technical subcommittee	4 September 2007	UNCLASSIFIED
format	EVENT TYPE	ISSUE Date	[ClassificationPage1]Classification
NTLG Superannuation technical subcommittee Minutes
	Title:	NTLG Superannuation Technical Subcommittee
	Venue:	The Hotel Windsor– Melbourne
	Event Date:	4 September 2007	Start:	2:00pm	Finish:	5:00pm
	Chair:	Cheryl-lea Field	Facilitator:
	Contact:	Cindy Baker	Contact Phone:	02 6216 2762
	Attendees: Names/Section	ATO Cheryl-Lea Field (Chair) Andrew England Emma Haines Tracey Nicholson Andrew Lee Andrew Allan Gwen Miller Jonathan Woodger Chris Bailey Nolan Nott (Secretariat) SISFA Robert Jeremiah Lorisa Moran TIA Martin Heffron TA Michael Perry ASFA Robert Hodge LCA Jennifer Batrouney SC APRA Kevin Dent IFSA Sam Wall ATMA David Kettlestring ICAA Susan Orchard SPAA Andrea Slattery FPA Shaun Yudeiken Paul Sarkis. Invited Guest Andrew Bloore
	Apologies: Name/Section	ATO Mat Hanscombe Cindy Baker (Secretariat) NTAA Darren Wynen CPA Michael Davison IFSA David Shirlow Helen Brady NIA Reece Agland IFPA Jason Duarte Anne-Marie Esler SISFA Graeme McDougal John McIlroy ASFA Tony Keir APRA Merrie Hennessy
next Meeting:	Date to be advised - December 2007

Please note: NTLG agendas, minutes and related papers are not binding on the Tax Office or any of the other bodies referred to in these papers. The Commissioner of Taxation has instilled a more open philosophy and process with the National Tax Liaison Group. As such, minutes of NTLG meetings are published well before the meeting date on which members accept or modify the minutes under normal meeting protocols. This version of the minutes is available for member associations to share more widely on the understanding that formal endorsement is yet to occur.

Agenda item:	1
Topic:	Open and Introductions

Cheryl-Lea Field opened the meeting, welcomed members and gave a brief overview of the work that she has been involved with during her absence as the chair and outlined the agenda for today’s meeting.

Agenda item:	2
Topic:	Review of Forum

· Membership

· Charter

o To be tabled and discussed and updated out of session

· Template

o For submitting questions for meetings

Deputy Chief Tax Counsel Andrew England outlined the role and purpose of the forum. The forum is a discussion group for superannuation professionals to discuss strategic technical issues which have a system wide impact and which the subcommittee members believe it is important for the Tax Office to explain its view on how the law operates.

To enable the Tax Office to adequately address these issues with a considered view Andrew England walked members through the steps for submitting an issue as outlined in page nine of the charter for the NTLG Superannuation Technical Sub-Committee (charter). These steps include:

- Submitting items with a strategic focus for discussion enabling a reasonable amount of time prior to the next meeting. The Tax Office will send submission template and call for agenda items two (2) months prior to the meeting.

- Members have three (3) weeks to submitting items on the required template

- Including all relevant background information and the Members view on how the issue should be resolved

Members discussed the reasons for their difficulty with following this procedure in the past primarily caused by the rapid changes to legislation caused by Super Simplification. Members raised issues with the timeliness of responses given the meetings are only held quarterly when a matter may require immediate attention or feedback is sort.

The Tax Office agreed that this is an issue and will work collaboratively with members to hold out-of-session phone hook-ups on specific issues or to discuss a new Tax Office product. It was agreed that the option of video conferencing will be explored as an option for extraordinary meetings of the committee.

Members discussed the addition of an agenda item where issues can be raised at the end of the meeting not for discussion but for follow-up with the member and response by the Tax Office out of session. It was agreed that this will be included in future meetings.

The Tax Office will also ensure the technical issue template for the Sub-committee will be available on the ATO website to be submitted at any time for consideration.

Reference	Action Item	Status
NTLGSPR040907/01	Issue: The Tax Office to circulate procedures for escalation of an issue to the committee. This is to be included with the minutes	Project line to be distributed with minutes. Action Item: Closed

The Tax Office outlined the requirements of all Tax Office committees to conduct a review of membership as part of the committees annual review requirements. Andrew England outlined the section titled standing membership on page 6 of the charter.

Membership of the committee was discussed with topics including membership numbers and conflict of interest explored.

The Tax Office proposes regular membership to include one member from a member organisation plus one alternate from the same organisation. An extra member from an organisation can also be invited on a meeting by meeting basis in consultation with the chair. This may occur in situations where there is need for an expert view or opinion.

Reference	Action Item	Status
NTLGSPR040907/01	Issue: ATO to update charter and circulate to members for comments	Charter amended to reflect membership and circulated to members, with draft minutes. Action item: Closed

It was noted that to ensure a range of substantive issues to be discussed and to ensure sufficient time is available, the time allocated to future meetings should be reviewed.

The timing and location of meetings was also discussed. It was agreed that meetings would continue to be aligned with the Superannuation Consultative Committee (SCC) on a Sydney – Melbourne rotation. If the agenda requires more than an afternoon, a full day will be scheduled. In this event the meeting is to be held the day before or immediately after the SCC.

Reference	Action Item	Status
NTLGSPR040907/02	Issue: ATO to review the agenda’s of future meetings and will advise members when additional time is required and a whole day aligned with the SCC will be scheduled. Advice will be provided on timing of meeting, once agenda items are received.	NTLG Superannuation Technical Subcommittee secretariat liaising with SCC secretariat to schedule dates for 2008. Currently awaiting for the release of the ATO corporate calendar to schedule dates. Dates are expected to be available for December 2007 meeting.

Agenda item:	3
Topic:	Acceptance of Previous Minutes

Minutes from the previous meeting were accepted.

Agenda item:	4
Topic:	Status of Action Items

Reference	Action Item	Status
NTLGSCC0605/08	Issue: Reversionary pensions, current pension liability. The Tax Office is considering the need to explain the meaning of reversionary pension in light of the proposed measures to Simplify and Streamline Superannuation.	This action items has been addressed and finalised at Agenda Item 6 under Priority Interpretive/Administrative Issues. See extract below. Action item closed

Interpretative / administrative issue	Proposed timing	Current Status
1. 5 June: Does the new definition of segregated current pension assets have the same meaning as in the former section 273A? 4 Sep: UPDATED TOPIC Exempt income of a super fund [B-4]	Draft to be circulated to members in late 2007.	In progress

** extract from “List of Priority Interpretive / Administrative Issues”

Agenda item:	5
Topic:	Super Interest

The Tax Office circulated two documents for discussion. A draft guidance paper titled ‘How many interests does a member of a super fund have?” (see attachment). And the document titled “A compendium of responses to the issues raised by external parties to the draft ATO guidance paper on superannuation interests”.

The difference between a guidance paper and a ruling was discussed and the need for both to be created. The Tax Office outlined that the lead time for a formal ruling is relatively lengthy even if expedited, where a guidance paper can be published relatively quickly.

The extent to which a guidance paper can bind the Commissioner was discussed. The Tax Office outlined the Commissioner’s charter standard that if you follow our advice or information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, you are entitled to certain levels of protection under the law.

The Tax Office outlined that the original legislation stated that all interests in a fund would be treated as a single interest (with some prescribed exemptions). There was concern that this would have caused administrative issues for the superannuation industry. The Government changed the relevant regulations such that now only SMSFs are prescribed as having one interest.

SmartSuper raised an issue relating to SMSFs administering a single interest rule. They indicated that there would be difficulty in relation to having money moving from pension phase to accumulation phase and back again. They put forward the view that all new pensions payable by a self-managed superannuation fund should be treated as one to avoid the administrative problems otherwise funds could become non-compliant by, in effect doing the right thing.

ASFA suggested that the small funds regulated by APRA should also be subject to the single superannuation interest rule.

ASFA asked whether the Commissioner would be likely to apply Part IVA of the Income Tax Assessment Act 1936 in relation to a members benefits paid by an APRA regulated fund. They suggested the following example to consider. A member has an account in a fund. The account comprises contributions from all sources, including employer contributions and the member’s personal undeducted contributions. Could a member then establish a separate account that would receive only the personal undeducted contributions? If such an account were able to be treated as a separate superannuation interest from the original account, a benefit payable from it would consist only of tax free component and therefore could be withdrawn tax free before a member reached 60. As the arrangement appears to result in avoidance of the proportioning rule, the superannuation industry needed to know whether the Commissioner would apply the anti-avoidance provisions.

Other examples on single interest were put forward by members and discussed.

Members questioned how the statement in the draft guidance paper which reads “...merely purporting to divide a member’s entitlements into two accounts as a bookkeeping exercise does not create separate interests, particularly if this is explicable only as an effort to obtain a particular tax outcome” is applied? And if it contravenes the general anti avoidance rules under part 4a of the act?

Reference	Action Item	Status
NTLGSPR040907/3	Issue: The chair noted that further discussion on this item is to be carried over to the next meeting and will explore an out-of-session discussion with members prior to that meeting.	Ongoing discussions are occurring with a range of stakeholders .

Agenda item:	6
Topic:	Top 10 Interpretative / Administrative Issues

Paper tabled for discussion.

Priority INTERPRETIVE/ADMINISTRATIVE ISSUES

This list is an up-dated version of the list provided to members at the June 2007 meeting. It is for discussion purposes only. The proposed timing is indicative and is intended to provide members with a sense of its current priority in the Tax Office’s work on hand.

Interpretative/administrative issue	Proposed timing	Current Status
2. When will the Commissioner exercise his discretion to consider a contribution to a superannuation fund to be attributable to a different year for the purposes of the contributions caps? [B-1]	5 June meeting: July/August 2007. 4 Sep meeting: late 2007	In progress
3. Legislative instrument covering the exceptions to the 12 month rule in relation to employment termination payments. [B-2]	5 June meeting: June 2007. 4 Sep meeting: September 2007	In progress
4. Residency of super funds [B-3]	5 June: Draft to be circulated to members in late 2007.	In progress
5. 5 June: Does the new definition of segregated current pension assets have the same meaning as in the former section 273A? 4 Sep: UPDATED TOPIC Exempt income of a super fund [B-4]	Draft to be circulated to members in late 2007.	In progress
6. What are the special cases for the purposes of the proportioning rule and how are the taxable and tax free components of superannuation benefits calculated in these special cases? [B-5]		Removed from Priority list – cases will be dealt with on a case by case basis.

[_Hlk168450325]7. How is the tax free component calculated after 1 July 2007 for a superannuation income stream which commenced prior to 1 July 2007?

Removed from Priority list – questions will be dealt with on a case by case basis.

8. 5 June: How is a superannuation interest valued? 4 Sep: UPDATED TOPIC Issues related to Superannuation interest	Dependant on final product.	Discussion paper released to industry. Issues to be further discussed with industry.
9. How will the Commissioner treat a request for remission of GIC where the member has provided a release authority to the fund within the required time and the fund has (or has not) complied with the 30 days allowed? [B-7]	Issue referred to Operations. Expected that the issue will be addressed in the ATO Receivables Policy after July 2007	NFA required. Will be incorporated into revised ATO Receivables Policy.
10. 5 June: What is a contribution to a superannuation fund and when is it taken to have been made? 4 Sep UPDATED TOPIC: Deductibility of personal superannuation contributions [B-10]	2008	Fact Sheet published on www.ato.gov.au Updated formal ATO view anticipated in 2008
11. What is an ‘employment termination payment’?	Not a priority for a formal ATO view at this stage.	ATOID 2007/163 published 10 August dealing with transitional termination payments. COMPLETE
12. 5 June NEW TOPIC What is income from carrying on a business for co-contributions purposes? [B-13]	September 2007	ATOID in progress
13. 5 June NEW TOPIC Bona fide redundancy and approved early retirement schemes – updating current ATO in TR 94/12 view to reflect new rules [B-9]	Late 2007	In progress

Emma Haines from the Tax Office outlined the list of Priority Interpretive/Administrative Issues and sought feedback from members.

Members agreed on the list and discussed the need for clarification on issue number 4 “Does the new definition of segregated current pension assets have the same meaning as in the former section 273A?”

Reference	Action Item	Status
NTLGSPR040907/4	Issue: The Chair is to ensure this agenda item continues to cover all issues raised by members.	This agenda item will continue under the topic: “Priority Interpretive / Administrative Issues” Action Item: Closed

Agenda item:	7
Topic:	Update on recently published and withdrawn rulings, practice statements and ATOIDs

- Provide members with an update of recently published and withdrawn Rulings, Practice Statements and ATOID’s.

New Rulings Regime for Self Managed Super Funds

Rulings program item.	Title (abbreviated)	Status
Ruling (Item 1982)	Giving financial assistance prohibited under paragraph 65 (1)(b) of the SISA	Draft due for publication on the 19 September 2007
Ruling (Item 1983)	The nature of the sole purpose test in section 62 of the SISA and incidental benefits	Draft due for publication on the 5 September 2007
Determination (Item 2226)	When is a dividend or trust distribution received for the purposes of paragraph 71D(1) of the SISA	Draft due for publication on the 5 September 2007
Ruling (Item 1981)	Application of section 66 of the SISA to in specie contributions	Draft discussed at August Rulings Panel. Draft due to be published 12 Dec 2007
Ruling (Item 2225)	Business real property in relation to self managed superannuation funds.	Draft discussed at August Rulings Panel. Draft due to be published 12 Dec 2007
Determination (Item 2310)	Scope of application of sub-regulation 13.22D(3) of the SISR	Draft due for publication 17 October 2007
Determination (Item 2429)	Valuation of units in unit trust related to an SMSF	Draft due for publication 19 December 2007
Rulings (Item – TBA)	Unpaid Trust Distributions	Under development.

Members were provided with advance copies of the new Draft Self Managed Superannuation Fund Determination SMSFD 2007/D1 and Draft Self Managed Superannuation Fund Ruling SMSFR 2007/D1 for comment. These are the first in a new series of a new rulings series for Self Managed Super Funds (SMSFs) on regulatory matters. The Tax Office hope these series provide increased support for the SMSF on a range of matters.

The above mentioned ruling and determination were published the day after the meeting. Members were advised that the format of these documents will follow the structure of content, principles then examples used for the Commissioner’s other administratively binding rulings.

The Law Council of Australia suggested that the level of protection offered by these rulings should be greater than that reflected in the documents. The documents state:

‘Self Managed Superannuation Funds ... (whether draft or final) are not legally binding on the Commissioner. However, if the Commissioner later takes the view that the law applies less favourably to you than the final version of this ruling indicates, the fact that you acted in accordance with the final version of this ruling would be a relevant factor in your favour in the Commissioner's exercise of any discretion as to what action to take in response to a breach of that law. The Commissioner may, having regard to all the circumstances, decide that it is appropriate to take no action in response to the breach.”

An issue was raised in regards to the possible income tax shortfall penalty implications that may result from breaching the sole purpose test as outlined in Draft SMSFR 2007/D1 and if some level of protection can be given in relation to the income tax implications? This issue will be considered during the review of the draft after the consultation period as part of the normal rulings process.

The broader question of a legislative framework for the provision of legally binding advice on SIS matters was discussed and it was agreed that this is a matter that requires legislative change. This has been raised with Treasury and the Board of Taxation. On the question to what extent Industry can rely on rulings and determinations, it reiterated that the Commissioner will stand by information published by the Tax Office. The NTLG members supported the Tax Office providing this series of rulings and determinations. They encouraged the Tax Office to continue in providing certainty on a range of SIS matters.

OUT OF SESSION FOR MEMBERS

Members were invited to provide their feedback on the Tax Office position to melissa.harrison@ato.gov.au for SMSFD 2007/D1 by 5 October 2007 and

SMSFR 2007/D1 to by 19 October 2007. Members were also invited and encouraged to provide feedback to melissa.harrison@ato.gov.au on topics for future rulings and determinations.

Agenda item:	8
Topic:	Technical issues raised by members

Agenda item:	8.1
Topic:	Will “commenced to be paid” have the same meaning as “commenced” under the old regulations?

Background Information:

Treasury and the ATO acknowledge that the policy intent of 1.05(1A) is for “commenced to be paid” to have the same meaning as “commenced” under the old regulations. The implication being that an immediate annuity purchased prior to 20 September 2007 but on which no payment is made until after 20 September 2007 will be accepted as an annuity under the SIS Act.

It should be noted that the ATO have recognised and are comfortable with the fact that this represents a different treatment of commenced as advised by the ATO to the National Tax Liaison Group Superannuation Technical Subcommittee in respect of the transitional arrangements for the proportioning rule.

Industry View / Suggested Treatment:

This issue is capable of being dealt with by the ATO with an interpretative product which is needed urgently to provide certainty to policy holders, life companies and financial advisers.

Impact on Clients:

Not provided

ATO RESPONSE:

We will seek to issue an ATOID on this topic. In the interim, find below previous advice given on this topic.

“The ATO confirms that an annuity that meets the standards of sub-regulation 1.05(1A) of the Superannuation Industry (Supervision) Regulations 1994 (SISR) will be taken to have commenced to be paid for the purposes of sub-regulation 1.05(1A) where it has commenced prior to 20 September 2007 but the first payment from the annuity is not made until on or after 20 September 2007.

The ATO confirms that a pension that meets the standards of sub-regulation 1.06(1A) of the SISR will be taken to have commenced to be paid for the purposes of sub-regulation 1.06(1A) where it has commenced prior to 20 September 2007 but the first payment from the pension is not made until on or after 20 September 2007.”

A discussion paper will be circulated soon on the issue of the “commence / commencement” for the purpose of the new income tax regulations.

MEETING DISCUSSION:

The chair invited members to make further comments on this item. No further comments were made.

Agenda item:	8.2
Topic:	Query progress regarding working party previously established to consider related unit trusts and transitional arrangements which end on 30 June 2009.

Background:

Not provided

Industry View / Suggested Treatment:

Working party established in September 2006 – no subsequent meetings arranged or held. Please provide advice as to further proposed meetings of working party and to consider matter.

Impact on Clients:

Unless issues which arise from the impending date, 30 June 2009 are resolved, depending on circumstances continued existence of unit trusts in which superannuation funds have invested may result in breaches of SISA but to wind up those unit trusts may breach the provisions of s.66 of SISA.

ATO RESPONSE:

For clarification and general discussion.

MEETING DISCUSSION:

The Tax Office noted that a number of in-house asset issues are to be addressed by either a new SMSF product or a proposed fact sheet on the in house asset transitional provisions that is currently being prepared.

The chair invited members to provide particular scenarios relating to this topic to ^{[OLE_LINK1][OLE_LINK2]} NTLGSPRSubcommittee@ato.gov.au to assist the Tax Office in developing these products.

Reference	Action Item	Status
NTLGSPR040907/5	Issue: The Tax Office is to provide a copy of the fact sheet to members for discussion at the December meeting of the NTLG Superannuation Technical Sub-Committee

Agenda item:

8.3

Topic:

Disability Payment and Employment Termination Payment It is unclear from the NTLG minutes at Item 5.7(e) (see below) that a superannuation benefit rolled over satisfies the requirements of disability superannuation benefit as defined in s.995-1(1). Could the ATO please confirm that a superannuation benefit (and employment termination payment) rolled over may be treated as a disability superannuation benefit

Background Information:

The definition of disability superannuation benefit under s.995-1(1) requires, amongst other things, that a superannuation benefit be paid to a person because he or she suffers from ill health.

A superannuation benefit is defined under s.307-5(1) and includes a superannuation member benefit paid to you from a super fund because you are a fund member.

A superannuation benefit is a roll-over superannuation benefit if the payment meets the requirements of s.306-10 (generally, a lump sum superannuation member benefit paid from one complying super plan to another complying super plan).

Under s.307-15, if a member directs a payment to be rolled over, the payment is treated as a superannuation benefit (s.307-15(1)(a)). The payment is treated as “being made to you, or received by you” upon rollover (s.307-15(2)(b)). The note at the end of s.307-15 confirms this treatment.

Therefore, if a fund member rolls over a superannuation benefit that is paid to them due to ill health (and assuming they meet the medical requirements under the disability definition) the benefit is treated as being paid to, or received by, that person by virtue of s.307-15 - which satisfies the requirements of the disability superannuation benefit definition under s.995-1(1).

Note: Similar reasoning applies to Employment Termination Payments that are paid due to ill health and rolled into a complying super fund.

Legislative references 

Under s.995-1(1), definitions

^{[#995-1(1)disabilitysuperannuationbenefit][995-1(1)disabilitysuperannuationbenefit][Content][top]} disability superannuation benefit  means a superannuation benefit if:

(a)  the benefit is paid to a person because he or she suffers from ill-health (whether physical or mental); and

(b)  2 legally qualified medical practitioners have certified that, because of the ill-health, it is unlikely that the person can ever be gainfully employed in a capacity for which he or she is reasonably qualified because of education, experience or training.

roll-over superannuation benefit  has the meaning given by section 306-10.

superannuation benefit  has the meaning given by section 307-5.

Under s.306-10,

A superannuation benefit is a roll-over superannuation benefit if: ^{[#306-10(a)][306-10(a)]}

(a)  the benefit is a superannuation lump sum and a superannuation member benefit; and ^{[#306-10(b)][306-10(b)]}

(b)  the benefit is not a superannuation benefit of a kind specified in the regulations; and ^{[#306-10(c)][306-10(c)]}

(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

^{[#306-10(d)][306-10(d)]} (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) .

Under s.307-5(1)

A superannuation benefit is a payment described in the table.

307-15(1)

This section applies for the purposes of: ^{[#307-15(1)(a)][307-15(1)(a)]}

(a)  determining whether a payment is a superannuation benefit ; and ^{[#307-15(1)(b)][307-15(1)(b)]}

(b)  determining whether a superannuation benefit is made to you, or received by you.

307-15(2)

A payment is treated as being made to you, or received by you, if it is made: ^{[#307-15(2)(a)][307-15(2)(a)]}

(a)  for your benefit; or ^{[#307-15(2)(b)][307-15(2)(b)]}

(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.

Industry View / Suggested Treatment:

Treatment consistent with pre 1 July 2007 practice and legislation concerning ETP rollovers and disability payments.

Impact on Clients:

Affects the way superannuation funds and employers correctly administer and report payments when instructed to rollover. Affects the tax treatment of such payments.

ATO RESPONSE:

The ATO confirms that section 307-145 of the Income Tax Assessment Act 1997 (ITAA 1997) is used to calculate the tax free component of a lump sum superannuation benefit that meets the requirements for a disability superannuation benefit even if the lump sum is rolled-over to another superannuation provider.

The ATO confirms that an employment termination payment will have an invalidity segment where the payment meets the requirements of section 82-150 of the ITAA 1997. This includes where the payment is a directed termination payment under section 82-10F of the Income Tax (Transitional Provisions) Act 1997 (ITTPA 1997).

MEETING DISCUSSION:

ISFA asked the chair if the title of this agenda item could be renamed Disability Payments and Employment Termination Payment rather than Employment Termination Payment which is less accurate. It was agreed that this change will be reflected in the minutes.

Reference	Action Item	Status
NTLGSPR040907/6	Issue: IFSA suggested that the Tax Office’s factsheet should deal with the roll-over of a disability benefit.	Added to list of products to be considered
NTLGSPR040907/7	Issue: To rename heading from Employment Termination Payment to Disability Payments and Employment Termination Payment	Heading has been amended Action item: Closed

Agenda item:

8.4

Topic:

A client who is 50 or older made contributions to superannuation during the 2006 and 2007 financial year.  The client contributed: · $800,000 before 10 May 2006; · $305,000 between 10 May 2006 and 30 June 2006 (inclusive); and · $905,000 during the 2006/07 financial year In both the 2005/06 and 2006/07 financial years the client is entitled to a by age tax deductible personal superannuation contribution.  They have made an election to the fund that they will claim the age based limit of $105,113 ($105,000 rounded down) relating to both financial years.

Question 1

Is it possible for the client to choose which contributions the deductible amount is taken from?  For example, during the period 10 May 2006 to 30 June 2007 the client has contributed over $1million in non-concessional contributions. 

Question 2

Will the Commissioner treat the contributions made during the period 10 May 2006 to 30 June 2006 as consisting of $200,000 in non-concessional contributions and $105,000 in concessional contributions?  And for the year ending 30 June 2007 will the Commissioner treat $800,000 as non-concessional contributions and $105,000 as concessional contributions?

Question 3

If for any reason the client wishes to have some contributions made prior to 10 May 2006 treated as concessional contributions will this also be acceptable to the Commissioner?

ATO RESPONSE:

Question 1

Is it possible for the client to choose which contributions the deductible amount is taken from?  For example, during the period 10 May 2006 to 30 June 2007 the client has contributed over $1million in non-concessional contributions. 

Answer

Yes. Ther client will be able to choose which contributions the age based deductible amount is taken from. Section 82AAT of the ITAA 1936 and subdivision 290-C of the ITAA 1997 refer to "a contribution" , "the contribution" and "a part of the contribution". Therefore a person may choose which particular contribution(s) and/or a part of a particular contribution that they claim as a deduction.

Question 2

Will the Commissioner treat the contributions made during the period 10 May 2006 to 30 June 2006 as consisting of $200,000 in non-concessional contributions and $105,000 in concessional contributions?  And for the year ending 30 June 2007 will the Commissioner treat $800,000 as non-concessional contributions and $105,000 as concessional contributions?

Answer

Yes. During the period 10 May 2006 and 30 June 2007 the client has contributed a total of $1,210,000. The client can choose that $100,587 of the contributions made in the period 10 May 2006 to 30 June 2006 are the contributions which are claimed as an income tax deduction for the 05/06 year.  This will mean that the deductible contributions for the client for the period 10 May 2006 to 30 June 2007 will total $205,700, being $100,587 for the 05/06 year and $105,113 for the 06/07 year.  Therefore the non-concessional contributions for the period 10 May 2006 to 30 June 2007 will be $1,004,300.

Question 3

If for any reason the client wishes to have some contributions made prior to 10 May 2006 treated as concessional contributions will this also be acceptable to the Commissioner?

Answer

Yes. The client may choose which contributions are claimed as an income tax deduction. Of course this may result in the client having excess non-concessional contributions for the period 10 May 2006 to 30 June 2007.

MEETING DISCUSSION:

This item was reviewed by the committee. No further discussion was made.

Agenda item:	8.5
Topic:	Meaning of Contributions

For general discussion.

This item was not discussed at the meeting due to time constraints and will be raised again at a future time.

Reference	Action Item	Status
NTLGSPR040907/8	Issue: Meaning of Contributions – for discussion at December meeting	To be put on agenda for December meeting.

Agenda item:	9
Topic:	Progress of Litigation

· Provide members with an update on recent cases of significance

The Tax Office provided members with a synopsis of three cases; Hamilton v The Commissioner of Taxation [2007] AATA 1667, Falson v The Commissioner of Taxation [2007] AATA 1668 and Craven v The Commissioner of Taxation [2007] AATA 1522.

There was no further discussion.

Agenda item:	10
Topic:	Other Business

· Allocations from reserves of complying superannuation plans. – This information does not apply to defined benefit interest.

o Paper to be tabled

· APRA Licensing Costs

o For general discussion

The Tax Office circulated a draft paper titled Excess Contributions Tax which concerns the allocation of reserves and invited members to provide their feedback by 5 October 2007 to NTLGSPRSubcommittee@ato.gov.au .

SmartSuper raised an issue around the allocation of reserves outlining the issue with the definition of a primary beneficiary if there is not one. It is SmartSupers view that the definition be changed to ‘current recipient’ or ‘member that is currently receiving the pension’ rather than primary beneficiary.

The Chair invited members to review SmartSupers position and will facilitate a discussion on the issue at a future date.

Reference	Action Item	Status
NTLGSPR040907/9	Issue: Date and time for a discussion on allocation of reserves and the definition of primary beneficiary to be decided by the chair and communicated to members.

Members provided information on advertising for superannuation products included in various media publications that may be misleading to the public. The Tax Office is to further investigate this information.

Members raised the issue that they find it difficult to track the progress of issues from one meeting to the next through the Simpler Super Q&A website and the NTLG Superannuation technical subcommittee minutes. Members suggested that the Tax Office should keep a single issues register to prevent the same issue from being raised repeatedly.

The Tax Office outlined that they are in the process of addressing this issue by improving the way issues raised with the NTLG Superannuation technical subcommittee are registered and reported.

Members raised the issue of the deductibility of APRA RSE licensing expenses for superannuation funds. The Tax Office noted that this issue has been escalated and is currently with the Deputy Chief Tax Counsel for consideration.

Reference	Action Item	Status
NTLGSPR040907/10	Issue: The Tax Office will inform members of the outcome of the APRA RSE licensing expenses issue.

Other issues raised for consideration in future meetings included:

· CGT Cap and requirements around lodgement,

· Release Authority when in the pension phase,

· Commutation of child pensions – the difference between ITAA and SISA,

· ATOIDs 2007/144, 2007/145 – The two ATOIDs address particular facts. Would the answer be different if the contribution under consideration were to be made by a company?