Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 3) 1995 No. 170 of 1995 - SCHEDULE 3

                            SCHEDULE 3             Section 3

SUPERANNUATION GUARANTEE CHARGE PART 1-AMENDMENT OF THE
SUPERANNUATION GUARANTEE (ADMINISTRATION) 
ACT 1992 RELATING TO NOTIONAL EARNINGS BASE 1. Subsection 13(1): Omit the
subsection, substitute:

"(1) This section deals with the meaning of the expression notional earnings
base in relation to an employee (the current employee) at a particular time
(the current time) if at the current time:
  (a)   the current employee is a member of a superannuation fund
(the current fund); and
  (b)   the current employee's employer (the current employer) is
contributing to the current fund, in accordance with an applicable authority
(see subsection (5)), for the benefit of the current employee in relation to a
contribution period; and
  (c)   subsection (1A) applies.


"(1A) This subsection applies at the current time if the current employer, or
an employer who is, at the current time, a predecessor employer (see
subsection (4A)) of the current employee, was, immediately before 21 August
1991, contributing to:
  (a)   the current fund; or

  (b)   another fund that, at the current time, is a predecessor
fund (see subsection (4D)) in relation to the current employer or the
predecessor employer, as the case may be; in accordance with the applicable
authority, for the benefit of the current employee or another employee.

"(1B) The simplest case to which subsection (1) applies is the following:
Diagram 13.1-the simplest case
(DIAGRAM OMITTED) The meaning of the expression notional earnings base, in
relation to the current employee at the current time, is determined under this
section because: - Immediately before 21 August 1991, the current employer
was: - employing the current employee; and - contributing to the current fund,
in accordance with the applicable authority, for the benefit of the current
employee in relation to a contribution period. - This situation has continued
until the current time.

"(1C) An example of a typical case to which subsection (1) might apply is the
following:
Diagram 13.2-a typical case
(DIAGRAM OMITTED) The meaning of the expression notional earnings base, in
relation to the current employee at the current time, is determined under this
section because: - Immediately before 21 August 1991, the current employer
was: - employing an employee other than the current employee; and -
contributing to a fund in accordance with an applicable award, for the benefit
of that other employee, in relation to a contribution period. - After 3.55p.m.
on 28 June 1994, an employee's benefits were transferred to the current fund,
meeting the requirements of subsection (4E), and causing the fund, under
subsection (4D), to be a predecessor fund at the current time in relation to
the current employer. - At the current time, the current employer is: -
employing the current employee; and - contributing to the current fund, in
accordance with an applicable authority, for the benefit of the current
employee, in relation to a contribution period.".
Note:     The heading to section 13 is replaced by the heading
"Interpretation: notional earnings base where superannuation contributions
made for benefit of certain employees immediately before 21 August 1991". 2.
Subsection 13(2): Before "employee" (wherever occurring) insert "current". 3.
Subsections 13(2) and (4): Omit "award, arrangement, law or scheme",
substitute "applicable authority". 4. After subsection 13(4): Insert:

"(4A) For the purposes of this section, an employer (the test employer) is a
predecessor employer of another employer (the primary employer) in relation to
an employee of the primary employer at a particular time (the test time), if
subsection (4B) or (4C) applies at that time.

"(4B) This subsection applies at the test time if, after 3.55p.m., by legal
time in the Australian Capital Territory, on 28 June 1994 and before the test
time:
  (a)   the test employer transferred to the primary employer, for
market value consideration, the whole of the business or other undertaking, or
an asset of the business or other undertaking, in which the employee was
employed by the test employer immediately before the transfer; and
  (b)   immediately after the transfer, the employee was employed by
the primary employer solely or principally in the transferred business or
other undertaking, or in utilising the asset in the business or other
undertaking of the primary employer.

"(4C) This subsection applies at the test time if, because of subsection (4B),
the test employer is at that time, in relation to the employee, a predecessor
employer of another employer who, because of an application of subsection (4B)
or this subsection, is at that time, in relation to the employee, a
predecessor employer of the primary employer.

"(4D) For the purposes of this section, a fund (the test fund) is a
predecessor fund of another fund (the primary fund) in relation to an employer
at a particular time (the test time) if subsection (4E) or (4F) applies at
that time.

"(4E) This subsection applies at the test time if:
  (a)   during the period beginning at 3.55p.m., by legal time in
the Australian Capital Territory, on 28 June 1994 and ending at the test time,
the test fund transferred to the primary fund some or all of the benefits, of
one or more employees of the employer, in the test fund; and
  (b)   the primary fund conferred, on all of the employees whose
benefits were transferred during the period, rights, in respect of all the
benefits, that were substantially the same as, or better than, those conferred
on the employees by the test fund; and
  (c)   before the transfer of each of the benefits, a written
agreement was in force between the trustee of the primary fund and the trustee
of the test fund that the primary fund would confer those rights on the
employees.

"(4F) This subsection applies at the test time if:
  (a)   because of subsection (4E), the test fund is at the test
time a predecessor fund, in relation to the employer, of another fund that is
not the primary fund; and
  (b)   because of an application of subsection (4E) or of this
subsection, that other fund is at the test time a predecessor fund, in
relation to the employer, of the primary fund; and
  (c)   the test fund became a predecessor fund of the other fund
before the other fund became a predecessor fund of the primary fund.

"(4G) The simplest case to which subsection (4F) applies is the following:
Diagram 13.3-the simplest case
(DIAGRAM OMITTED) The test fund is a predecessor fund of the primary fund at
the test time in relation to the employer because: S A transfer of an
employee's benefits occurs between the test fund and the other fund: - meeting
the requirements of subsection (4E); and - causing the test fund, under
subsection (4D), to be a predecessor fund of the other fund at the test time
in relation to the employer. As a result, paragraph (4F)(a) is satisfied. -
Later, a transfer of employee benefits occurs between the other fund and the
primary fund: - meeting the requirements of subsection (4E); and - causing the
other fund to be a predecessor of the primary fund at the test time in
relation to the employer. As a result, paragraph (4F)(b) is satisfied. S As
the transfer of employee benefits from the test fund to the other fund
happened before the transfer from the other fund to the primary fund,
paragraph (4F)(c) is satisfied.". 5. Subsection 13(5) (paragraph (a) of
definition of reference earnings): Omit "kind referred to in paragraph
(1)(ab)", substitute "Commonwealth, a State or a Territory". 6. Subsection
13(5): Insert the following definition:

"applicable authority means any of the following:
  (a)   an industrial award;

  (b)   an occupational superannuation arrangement;

  (c)   a law of the Commonwealth, a State or a Territory;

  (d)   the applicable superannuation scheme.".
7. Subsection 14(1): Omit "This", substitute "Subject to subsection (1A),
this".
Note:     The heading to section 14 is replaced by the heading
"Interpretation: notional earnings base where superannuation contributions not
made for the benefit of certain employees immediately before 21 August 1991".
8. Paragraphs 14(1)(a), (ab) and (b): Omit "but was not so contributing
immediately before 21 August 1991 for the benefit of any employee". 9. After
subsection 14(1): Insert:

"(1A) This section does not apply if the meaning of the expression notional
earnings base in relation to the employee is dealt with in section 13 or
13A.". 10. Application The amendments made by this Part apply for the purpose
of determining the notional earnings base of the current employee in relation
to the current employer and the current fund in relation to any contribution
period that commences after 30 June 1995.
PART 2-EXCESS BENEFITS Division 1-Superannuation Guarantee (Administration)
Act 1992 11. After section 15: Insert in Part 2: Interpretation: Entitlement
amount

"15A.(1) An employee has an entitlement amount in relation to a benefit body
at a particular time (the test time) in accordance with this section. Lump sum
from complying approved deposit fund

"(2) If at the test time:
  (a)   the benefit body is a complying approved deposit fund; and

  (b)   the employee has a benefit in the body in the form of a
present or future entitlement to a lump sum; the employee has an entitlement
amount in relation to the body at the test time equal to the resignation RBL
amount in relation to the benefit at that time. Deferred annuity from life
assurance company or registered organisation

"(3) If at the test time:
  (a)   the benefit body is a life assurance company or a registered
organisation; and
  (b)   the employee has a benefit in the body in the form of a
present or future entitlement to a deferred annuity; the employee has an
entitlement amount in relation to the body at the test time equal to the
resignation RBL amount in relation to the benefit at that time. Lump sum,
pension, or combination of lump sum and pension, from complying superannuation
fund

"(4) If at the test time:
  (a)   the benefit body is a complying superannuation fund; and

  (b)   the employee has a benefit in the body in the form of:

  (i)   a present or future entitlement to a lump sum; or


   (ii) an entitlement to a pension that has not become payable; or

   (iii) any combination of the entitlements covered by subparagraphs (i) and
        (ii); whether or not the applicable entitlement is at the election of
        the employee; the employee has an entitlement amount in relation to
        the body at the test time in accordance with subsection (5).

"(5) For the purposes of subsection (4), the entitlement amount is:

   (a)  if the applicable entitlement is at the election of the employee-the
        greatest possible amount, being a resignation RBL amount or the sum of
        2 resignation RBL amounts, in respect of the applicable entitlement at
        the test time; or
  (b)   in any other case:

  (i)   if subparagraph (4)(b)(i) applies-the resignation RBL amount
in relation to the lump sum at the test time; or

   (ii) if subparagraph (4)(b)(ii) applies-the resignation RBL amount in
        relation to the pension at the test time; or

   (iii) if subparagraph (4)(b)(iii) applies-the sum of the resignation RBL
        amount in relation to the lump sum and the resignation RBL amount in
        relation to the pension at the test time.

"(6) In this section: benefit body means a complying superannuation fund, a
complying approved deposit fund, a life assurance company or a registered
organisation. deferred annuity has the meaning given by section 140C of the
Income  Tax Assessment Act 1936 . ETP has the meaning given by section 140C of
the Income Tax  Assessment Act 1936 . life assurance company has the meaning
given by subsection 27A(1) of the Income Tax Assessment Act 1936. pension has
the same meaning as in section 10 of the Superannuation  Industry
(Supervision) Act 1993 . registered organisation has the meaning given by
subsection 27A(1) of the Income Tax Assessment Act 1936. resignation RBL
amount, in relation to a benefit that exists at a particular time in a benefit
body, means:
  (a)   if the benefit is in the form of a present or future
entitlement, of an employee, to a lump sum-the RBL amount (worked out under
section 140ZH of the Income Tax Assessment Act 1936) of the ETP that would be
payable to the employee if he or she resigned at the particular time; or
  (b)   if the benefit is in the form of a present or future
entitlement, of an employee, to a deferred annuity-the RBL amount (worked out
under section 140ZI of the Income Tax Assessment Act  1936 ) of the ETP that
would be payable to the employee if he or she commuted the entitlement at the
particular time; or
  (c)   if the benefit is in the form of an entitlement, of an
employee, to a pension that has not become payable-the RBL amount (worked out
under section 140ZK of the Income Tax Assessment Act  1936 ) of the pension
that would be payable to the employee if he or she resigned at the particular
time.". 12. Subsection 19(2): Omit "An", substitute "Subject to subsection
(4), an". 13. Section 19: Add at the end:

"(4) An employer's quarterly shortfall in respect of an employee for a
quarter, and for all later quarters, is nil if, during the quarter, the
employee gives the employer:
  (a)   a statement in writing by the employee electing that the
employer should not be liable to superannuation guarantee charge in respect of
the employee; and
  (b)   statements for the purposes of this paragraph in relation to
the employee, where:
  (i)   the sum of the amounts specified in all of the statements;
exceeds:

   (ii) the pension RBL, under section 140ZD of the Income Tax  Assessment Act
        1936 , for the year of income (within the meaning of that Act) in
        which the statements are given.

"(5) The election is irrevocable.

"(6) For the purposes of paragraph (4)(b), one statement that may be given is
a statement in writing by the Commissioner specifying the sum of the adjusted
RBL amounts of previous benefits (within the meaning of section 140ZA of the
Income Tax Assessment Act 1936) received by the employee before the time when
the statement is given.

"(7) For the purposes of paragraph (4)(b), another statement that may be given
is a statement in writing, by the trustee or manager of a benefit body (within
the meaning of section 15A) specifying the entitlement amounts (within the
meaning of that section) of the employee in relation to the benefit body at
the time the statement is given.". 14. Application The amendments made by this
Division apply in relation to any quarter commencing after the commencement of
this Division. Division 2-Income Tax Assessment Act 1936 15. After subsection
82AAT(1E): Insert:

"(1F) If a person has given his or her employer statements under
subsection 19(4) of the Superannuation Guarantee (Administration)  Act 1992 ,
the person is not entitled to a deduction under this section, in his or her
assessment for the year of income, in respect of any contribution made to a
complying superannuation fund during:
  (a)   the contribution period (within the meaning of that Act) in
which the statements are given; or
  (b)   any later contribution period.".
16. Application The amendment made by this Division applies in respect of
elections made at any time after the commencement of this Division.