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TAX LAWS AMENDMENT (2004 MEASURES NO. 2) ACT 2004 NO. 83, 2004 - SCHEDULE 9

- Overseas superannuation payments

Income Tax Assessment Act 1936

1 Subsection 27A(1) (subparagraph (e)(iv) of the definition of undeducted contributions )

Repeal the subparagraph, substitute:

(iv) no deductions are allowable or have been allowed to the taxpayer or to the other person in respect of the contributions;

but does not include so much of the ETP as is attributable to an amount paid from an eligible non-resident non-complying superannuation fund to a complying superannuation fund, to the extent that the amount has been treated as a taxable contribution under paragraph 274(10)(c) or (d).

2 Section 27CAA

Repeal the section, substitute:

27CAA Assessable income to include component of lump sum payment from an eligible non-resident non-complying superannuation fund

(1)
If:

(a) a payment (the relevant payment ) of a lump sum (including a payment made because a superannuation pension or annuity is commuted) is made from a fund that is an eligible non-resident non-complying superannuation fund (the paying fund ) in relation to a taxpayer; and
(b) the relevant payment is not an exempt resident foreign termination payment or an exempt non-resident foreign termination payment; and
(c) the relevant payment is not made to another eligible non-resident non-complying superannuation fund; and
(d) had the paying fund been a superannuation fund, the relevant payment would, apart from paragraph (ma) of the definition of eligible termination payment , have been an eligible termination payment; and
(e) the amount worked out under the formula in subsection (2) is a positive amount;

then, subject to subsection (4), the taxpayer's assessable income for the year of income includes the amount worked out under that formula.

(2)
For the purposes of subsection (1), the formula is:


where:

"accumulated entitlement" means:

(a) the amount properly payable to the taxpayer out of the paying fund on the day immediately before the relevant day for the relevant payment; or
(b) if the relevant payment is not the first payment from the paying fund in relation to the taxpayer to be covered by this section—the amount properly payable to the taxpayer out of the paying fund immediately after the most recent such payment.

"additional contributions "means so much of the payment day entitlement as represents:

(a) either:
(i) contributions paid by the taxpayer, or an employer of the taxpayer, on or after the relevant day for the relevant payment; or
(ii) if the relevant payment is not the first payment from the paying fund in relation to the taxpayer to be covered by this section—contributions paid by the taxpayer, or an employer of the taxpayer, after the most recent such payment; and
(b) either:
(i) amounts transferred into the paying fund from another eligible non-resident non-complying superannuation fund on or after the relevant day for the relevant payment; or
(ii) if the relevant payment is not the first payment from the paying fund in relation to the taxpayer to be covered by this section—amounts transferred into the paying fund from another eligible non-resident non-complying superannuation fund, after the most recent such payment.

"payment day entitlement "means the amount that is properly payable to the taxpayer out of the paying fund on the day on which the relevant payment is made, before any deduction is made from that amount.

"previously exempt amounts" means the sum of each of the amounts in respect of the relevant payment worked out under section 27CAB.

"relevant day", for a relevant payment, means the later of:

(a) the day on which the taxpayer became a member of the paying fund; and
(b) the first day during the period to which the relevant payment relates on which the taxpayer became a resident of Australia.

"resident days "means the total number of days on which the taxpayer is a resident of Australia in the period from and including the relevant day for the relevant payment, up to and including the day on which the payment was made.

"total days "means the total number of days in the period from and including the relevant day for the relevant payment, up to and including the day on which the payment was made.

(3)
If:

(a) the relevant payment is paid to a complying superannuation fund; and
(b) immediately after it is paid, the taxpayer no longer has an interest in the paying fund;

the taxpayer may elect that the whole or a part of the amount worked out under the formula in subsection (2) (but not exceeding the amount of the relevant payment) is to be treated as a taxable contribution by the complying superannuation fund.

(4)
If the taxpayer makes an election under subsection (3), then the amount included in the taxpayer's assessable income under subsection (1) is reduced by the amount covered by the election.

(5)
An election under subsection (3):

(a) must be in writing; and
(b) must comply with any requirements specified in the regulations.

(6)
Subject to paragraph (1)(c), subsection 27A(3) applies for the purposes of this section in a corresponding way to the way in which it applies for the purposes of the definition of eligible termination payment in subsection 27A(1).

27CAB Working out the previously exempt amounts for the purposes of a relevant payment under section 27CAA

(1)
For the purposes of section 27CAA, an amount is a previously exempt amount in respect of a relevant payment if:

(a) the payment day entitlement in respect of the relevant payment, or part of that payment day entitlement, is attributable to the amount; and
(b) the amount relates to a payment (the previously exempt payment ) made from a fund that is an eligible non-resident non-complying superannuation fund in relation to a taxpayer; and
(c) the amount would have been included in the taxpayer's assessable income under subsection 27CAA(1) but for the payment having been made to another eligible non-resident non-complying superannuation fund.

(2)
The previously exempt amount in respect of a previously exempt payment is the amount of the previously exempt payment that would have been included in the taxpayer's assessable income by the application of the formula in subsection 27CAA(2) (except the part of the formula that requires the addition of previously exempt amounts).

(3)
In this section:

"payment day entitlement "has the same meaning as in subsection 27CAA(2).

"relevant payment" has the same meaning as in subsection 27CAA(2).

3 Subsection 267(1)

Insert:

eligible non-resident non-complying superannuation fund has the same meaning as in Subdivision AA of Division 2 of Part III.

4 At the end of subsection 274(10)

Add:

; (d) if an amount is transferred from an eligible non-resident non-complying superannuation fund to a complying superannuation fund in relation to a taxpayer—so much of the amount as is specified in an election made by the taxpayer under subsection 27CAA(3).
5 After Division 17

Insert:


Division 17A—Deduction for overseas superannuation transfers

533B Deduction for overseas superannuation transfers

(1)
If:

(a) a taxpayer has an interest in a FIF that is an eligible non-resident non-complying superannuation fund (the paying fund ); and
(b) the paying fund transfers an amount to a complying superannuation fund in respect of the taxpayer; and
(c) the taxpayer elects under subsection 27CAA(3) that the amount, or part of the amount, is to be treated as a taxable contribution of the complying superannuation fund; and
(d) immediately before the transfer happens, there is a FIF attribution surplus for the paying fund under section 604 in relation to the taxpayer;

then the taxpayer is entitled to a deduction, for the year of income in which the transfer happened, for the lesser of:

(e) the FIF attribution surplus; and
(f) the amount covered by the taxpayer's election.

(2)
In this section:

"complying superannuation fund "has the same meaning as in Part IX.

eligible non-resident non-complying superannuation fund has the same meaning as in Subdivision AA of Division 2 of Part III.

6 After section 607

Insert:

607AA Additional FIF attribution debit—deduction for overseas superannuation transfers

(1)
If a taxpayer is entitled to a deduction under section 533B, a FIF attribution debit also arises for a FIF attribution account entity (referred to in section 533B as the paying fund) in relation to the taxpayer.

(2)
The amount of the FIF attribution debit is the amount of the deduction.

(3)
The FIF attribution debit arises immediately after the time that the taxpayer becomes entitled to the deduction.

7 Application

The amendments made by this Schedule apply to payments made on or after 1 July 2004.


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