Commonwealth Numbered Regulations

INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 2007 (NO. 2) (SLI NO 90 OF 2007) - SCHEDULE 2

(regulation 4)

[1]           Part 2, after Division 292

insert

Division 306           Roll‑overs etc

306‑10.01       Roll‑over superannuation benefit

                For paragraph 306‑10 (b) of the Act, a kind of superannuation benefit is a benefit to which the following requirements exist:

                (a)    the benefit arises from the commutation of a superannuation income stream paid to a person ( person 1 ) because of the death of another person ( person 2 ); and

               (b)    person 1 was not the spouse of person 2 at the time of person 2's death.

Note    Under section 306‑10 of the Act, a superannuation benefit is a roll‑over superannuation benefit if it meets the requirements specified in the section. One of the requirements is that the benefit is not a superannuation benefit of a kind specified in the Regulations.

Division 307           Key concepts relating to superannuation benefits

Subdivision 307‑D      Superannuation interests

307‑200.01     Application of Subdivision 307‑D to Subdivision 292‑D of the Act

                For the purposes of calculating an amount of contributions under Subdivision 292‑D of the Act, this Subdivision does not apply.

307‑200.02     Meaning of superannuation interests

                For subsection 307‑200 (2) of the Act, every amount, benefit or entitlement that a member holds in a superannuation plan is to be treated as 1 superannuation interest in the relevant superannuation fund unless the amount, benefit or entitlement is to be treated as 2 or more superannuation interests in accordance with 1 of the other arrangements in this Subdivision.

307‑200.03     Meaning of superannuation interests -- treating a superannuation interest as 2 or more superannuation interests (public sector schemes)

         (1)   For subsection 307‑200 (1) of the Act, this regulation explains how to treat a superannuation interest in a public sector superannuation scheme as 2 or more superannuation interests.

         (2)   The interest is to be treated as 2 interests if:

                (a)    the superannuation benefit that is to be paid from the scheme is sourced:

                          (i)    partly from contributions made into the scheme or earnings on those contributions; and

                         (ii)    partly from 1 or more other sources; or

               (b)    the superannuation benefits that are to be paid from the scheme are sourced:

                          (i)    partly from contributions made into the scheme or earnings on those contributions; and

                         (ii)    partly from 1 or more other sources.

         (3)   For subregulation (2), the interests are:

                (a)    an interest that consists of the contributions made into the scheme and the earnings on those contributions; and

               (b)    an interest that consists of the remainder of the amount sourced from the other source or sources.

         (4)   In addition to the interests identified in accordance with paragraphs (3) (a) and (b), if:

                (a)    the superannuation provider offers an income stream; and

               (b)    the rules of the fund do not allow the transfer of amounts between different categories of lump‑sum amounts and amounts that form part of, or can be used to purchase, a superannuation income stream; and

                (c)    the rules of the fund (as in effect on 5 September 2006) did not allow a specified amount held in the plan:

                          (i)    to form part of that superannuation income stream; or

                         (ii)    to be used for the purpose of purchasing a superannuation income stream offered by the provider;

the superannuation interest is also to be treated as the further interests described in subregulation (5).

         (5)   For subregulation (4), the following separate interests are created:

                (a)    the amount transferred or rolled into the plan from another plan is to be treated as 1 superannuation interest;

               (b)    each other amount to which subregulation (4) relates is to be treated as 1 superannuation interest to the extent to which the amount is subject to different requirements regarding the rules, terms or conditions relating to the way it can be cashed or paid as compared to the amounts mentioned in paragraphs (3) (a) and (b);

                (c)    if:

                          (i)    paragraph (b) applies to more than 1 amount; and

                         (ii)    each of those amounts is subject to different requirements regarding the rules, terms or conditions relating to the way it can be cashed or paid as compared to the amount mentioned in paragraph (a);

                        each of those amounts is to be treated as a separate superannuation interest.

307‑200.04     Meaning of superannuation interests -- treating a superannuation interest as 2 or more superannuation interests (constitutionally protected funds)

         (1)   For subsection 307‑200 (1) of the Act, this regulation explains how to treat a superannuation interest in a constitutionally protected fund as 2 or more superannuation interests.

         (2)   An interest is to be treated as more than 1 interest if:

                (a)    the superannuation provider offers an income stream; and

               (b)    the rules of the fund do not allow the transfer of amounts between different categories of lump‑sum amounts and amounts that form part of, or can be used to purchase, a superannuation income stream; and

                (c)    the rules of the fund (as in effect on 5 September 2006) did not allow a specified amount held in the plan:

                          (i)    to form part of that superannuation income stream; or

                         (ii)    to be used for the purpose of purchasing a superannuation income stream offered by the provider.

         (3)   For subregulation (2), the interest is to be treated as more than 1 interest as follows:

                (a)    the amount transferred or rolled into the plan from another plan is to be treated as 1 superannuation interest;

               (b)    each other amount to which subregulation (2) relates is to be treated as 1 superannuation interest to the extent to which the amount is subject to different requirements regarding the rules, terms or conditions relating to the way it can be cashed or paid as compared to the amount mentioned in paragraph (a);

                (c)    if:

                          (i)    paragraph (b) applies to more than 1 amount; and

                         (ii)    each of those amounts is subject to different requirements regarding the rules, terms or conditions relating to the way it can be cashed or paid as compared to the amount mentioned in subregulation (2);

                        each of those amounts is to be treated as a separate superannuation interest.

307‑200.05     Meaning of superannuation interests -- treating a superannuation interest as 2 or more superannuation interests (superannuation income streams)

                If a superannuation income stream commences, an amount that supports the superannuation income stream is always to be treated as a separate superannuation interest.

307‑205.01     Value of superannuation interest for calculating pre‑July 1983 amount for members in the contributions and investment phase

         (1)   For paragraph 307‑205 (a) of the Act, this regulation specifies methods for determining the value of a superannuation interest at a particular time for the purposes of calculating the pre‑July 1983 amount of the crystallised segment of a tax‑free component under section 307‑225 of the Act.

Note    Calculating the pre‑July 1983 amount of the crystallised segment of the tax‑free component will require the superannuation interest to be valued before 1 July 2007. This calculation will only be performed for a superannuation interest in the accumulation phase, and only for a superannuation interest in which part of the taxable component is comprised of an element taxed in the fund.

Defined benefit interest

         (2)   For a defined benefit interest, the method is as follows.

Interest other than defined benefit interest

         (3)   For a superannuation interest that is not a defined benefit interest , the method is as follows.

307‑205.02     Value of superannuation interest

         (1)   For paragraph 307‑205 (a) of the Act, this regulation:

                (a)    applies to a superannuation income stream (other than a superannuation income stream of a type prescribed by regulation 295‑385.01); and

               (b)    specifies a method for determining the value of a superannuation interest at a particular time if the interest supports a superannuation income stream to which this regulation applies.

Note    The proportioning rule requires the tax‑free and taxable components of superannuation to be paid out as benefits in the same proportion as they make up of the underlying interest. A value of a superannuation interest is required to ensure that the proportioning rule operates appropriately.

         (2)   The value of the interest at a particular time is the sum of:

                (a)    the product of:

                          (i)    the annual amount of the superannuation income stream payable in respect of the superannuation interest at that time; and

                         (ii)    the applicable factor set out in clause 1 of Schedule 1B; and

               (b)    the product of:

                          (i)    the nominal value of the superannuation lump sum, if any, which is payable in respect of the interest at a time in the future, other than a future lump sum which is a commutation of the income stream included in subparagraph (a) (i); and

                         (ii)    the applicable factor set out in clause 2 of Schedule 1B.

[2]           Part 6, regulation 995‑1.01, after definition of Act

insert

RSA Act means the Retirement Savings Accounts Act 1997 .

RSA Regulations means the Retirement Savings Accounts Regulations 1997 .

SIS Act means the Superannuation Industry (Supervision) Act 1993 .

SIS Regulations means the Superannuation Industry (Supervision) Regulations 1994 .

superannuation annuity means:

                (a)    an income stream:

                          (i)    that is issued by a life insurance company or registered organisation; and

                         (ii)    that commenced before 20 September 2007; and

                         (iii)    that is an annuity within the meaning of:

                                   (A)     subsection 10 (1) of the SIS Act; or

                                   (B)     subregulation 1.07 (1A) of the RSA Regulations; or

               (b)    an income stream that:

                          (i)    is issued by a life insurance company or registered organisation; and

                         (ii)    meets the standards set out in subregulation 1.05 (1) of the SIS Regulations.

superannuation income stream means:

                (a)    an income stream that is taken to be:

                          (i)    an annuity for the purposes of the SIS Act in accordance with subregulation 1.05 (1) of the SIS Regulations; or

                         (ii)    a pension for the purposes of the SIS Act in accordance with subregulation 1.06 (1) of the SIS Regulations; or

                         (iii)    a pension for the purposes of the RSA Act in accordance with regulation 1.07 of the RSA Regulations; or

               (b)    an income stream that:

                          (i)    is an annuity or pension within the meaning of the SIS Act; and

                         (ii)    commenced before 20 September 2007.

superannuation income stream benefit means a payment from an interest that supports a superannuation income stream, other than a payment to which regulation 995-1.02 applies.

[3]           Part 6, after regulation 995‑1.02

insert

995‑1.03                     Payments that are not superannuation income stream benefits

                A payment from an interest that supports a superannuation income stream is not a superannuation income stream benefit if:

                (a)    the conditions to which the superannuation income stream is subject allow for the variation of the amount of the payments of benefit in a year in circumstances other than:

                          (i)    the indexation of the benefit under the rules of the product; or

                         (ii)    the application of the family law splitting provisions; or

                         (iii)    the commutation of the benefit (including commutation to pay a surcharge liability); or

                        (iv)    the payment of an assessment of excess contributions tax; and

               (b)    the person to whom the payment is made elects, before a particular payment is made, that that payment is not to be treated as a superannuation income stream benefit.

995‑1.04                     Constitutionally protected funds

                For the definition of constitutionally protected fund in subsection 995‑1 (1) of the Act, a fund:

                (a)    of the kind to which, in the absence of item 5.3 of section 50‑25 of the Act, Division 295 of the Act would apply; and

               (b)    established by:

                          (i)    a State Act mentioned in Schedule 4; or

                         (ii)    a specified provision of a State Act mentioned in Schedule 4;

is a constitutionally protected fund.

[4]           After Schedule 1

insert

Schedule 1B       Valuation factors

(regulations 307‑205.01 and 307‑205.02)

1              Income stream valuation factors

         (1)   For subregulation 307‑205.01 (2), the applicable factor is the factor given in Table 1 at the age which is the greater of:

                (a)    the minimum age at which a retirement benefit can be taken without requiring the consent of the employer; and

               (b)    the member's actual age as at his or her last birthday before 1 July 2007.

         (2)   For subregulation 307‑205.02 (2), if the superannuation income stream in respect of the interest is payable for the life of the member, the applicable factor is the factor given in Table 1 for the age of the member at his or her last birthday before the day after the date on which the superannuation income stream is to be valued.

         (3)   For subregulation 307‑205.02 (2), if the superannuation income stream in respect of the interest is payable for a fixed term, the applicable factor is the factor given in Table 2 for the number of complete years remaining in the term of the superannuation income stream on the day preceding the date on which the superannuation income stream is to be valued.

Table 1

Table 2

2              Lump sum valuation factors

         (1)   For subregulation 307‑205.02 (2), the applicable factor is the discount valuation factor mentioned in subclause (3) that applies for the minimum deferral period.

         (2)   For the purposes of this clause, the minimum deferral period in relation to a lump sum that is to be paid at a time after the date on which an interest is to be valued is the number of complete years between the day before the date on which the interest is to be valued and the earliest date at which the lump sum can be paid.

         (3)   This subclause sets out the discount valuation factors, in accordance with the following principles:

                (a)    the factors in column 2 of table 3 apply if the lump sum is not indexed;

               (b)    the factors in column 3 of table 3 apply if the lump sum is indexed in accordance with the consumer price index;

                (c)    the factors in column 4 of table 3 apply if the lump sum is indexed in accordance with a general wage index (for example, average weekly earnings, or average weekly ordinary time earnings, published by the Australian Bureau of Statistics);

(d)    if the lump sum is indexed in accordance with a fund crediting rate, the factor is 1.

Table 3

[5]           After Schedule 3

insert

Schedule 4         Constitutionally protected superannuation funds -- State legislation

(regulation 995‑1.04)