Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to amend the law relating to taxation and superannuation, and for related purposes
Administered by: Treasury
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 04 Jun 2013
Introduced HR 29 May 2013
Table of contents.

2010‑2011‑2012‑2013

 

The Parliament of the

Commonwealth of Australia

 

HOUSE OF REPRESENTATIVES

 

 

 

 

Presented and read a first time

 

 

 

 

 

 

 

 

 

Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013

 

No.      , 2013

 

(Treasury)

 

 

 

A Bill for an Act to amend the law relating to taxation and superannuation, and for related purposes

  

  


Contents

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 1

3............ Schedule(s)......................................................................................... 3

Schedule 1—Loss relief and asset roll‑over for transfer of amounts to a MySuper product      4

Part 1—Main amendment                                                                                           4

Income Tax Assessment Act 1997                                                                              4

Part 2—Other amendments                                                                                      14

Income Tax Assessment Act 1997                                                                            14

Part 3—Repeals and related amendments                                                        18

Income Tax Assessment Act 1997                                                                            18

Schedule 2—Sustaining the superannuation contribution concession: consequential amendments for Defence Force superannuation                                                      21

Defence Force Retirement and Death Benefits Act 1973                                   21

 


A Bill for an Act to amend the law relating to taxation and superannuation, and for related purposes

The Parliament of Australia enacts:

1  Short title

                   This Act may be cited as the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013.

2  Commencement

             (1)  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1.  Sections 1 to 3 and anything in this Act not elsewhere covered by this table

The day this Act receives the Royal Assent.

 

2.  Schedule 1, Part 1

The day this Act receives the Royal Assent.

 

3.  Schedule 1, items 3 to 8

The day this Act receives the Royal Assent.

 

4.  Schedule 1, item 9

The later of:

(a) the start of the day this Act receives the Royal Assent; and

(b) immediately after the commencement of item 1 of Schedule 3 to the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013.

However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur.

 

5.  Schedule 1, items 10 to 13

The day this Act receives the Royal Assent.

 

6.  Schedule 1, items 14 to 19

2 July 2019.

2 July 2019

7.  Schedule 1, item 20

The later of:

(a) the start of 2 July 2019; and

(b) immediately after the commencement of item 1 of Schedule 3 to the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013.

However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur.

 

8.  Schedule 1, items 21 to 25

2 July 2019.

2 July 2019

9.  Schedule 2

The later of:

(a) the start of the day this Act receives the Royal Assent; and

(b) immediately after the commencement of the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013.

However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur.

 

Note:          This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

             (2)  Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Schedule(s)

                   Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1Loss relief and asset roll‑over for transfer of amounts to a MySuper product

Part 1Main amendment

Income Tax Assessment Act 1997

1  After Division 310

Insert:

Division 311Loss relief and asset roll‑over for transfer of amounts to a MySuper product

Table of Subdivisions

             Guide to Division 311

311‑A   Object of this Division

311‑B    Choosing loss transfers and asset roll‑overs

311‑C    Consequences of choosing to transfer losses

311‑D   Consequences of choosing asset roll‑over

311‑E    Choices

Guide to Division 311

311‑1  What this Division is about

This Division provides tax relief for certain entities if a member’s accrued default amount is required to be transferred to a MySuper product in another complying superannuation fund.

A trustee of a complying superannuation fund, a life insurance company or a trustee of a pooled superannuation trust that satisfies certain conditions can:

               (a)     choose to transfer a loss; or

              (b)     choose an asset roll‑over; or

               (c)     choose to transfer a loss and choose an asset roll‑over.

Note 1:       This Division and associated provisions will be repealed on 2 July 2019: see Part 3 of Schedule 1 to the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013.

Note 2:       Part 2C of the Superannuation Industry (Supervision) Act 1993 provides rules about MySuper products.

Operative provisions

Subdivision 311‑AObject of this Division

Table of sections

311‑5        Object

311‑5  Object

                   The object of this Division is to ensure that default members of *complying superannuation funds are not adversely affected if their *accrued default amounts are compulsorily transferred to MySuper products in other complying superannuation funds.

Subdivision 311‑BChoosing loss transfers and asset roll‑overs

Table of sections

311‑10      Certain entities can choose transfer of losses, asset roll‑overs, or both

311‑10  Certain entities can choose transfer of losses, asset roll‑overs, or both

             (1)  If an *arrangement is made for which the conditions in this section are satisfied, a trustee of a *complying superannuation fund, a *life insurance company or a trustee of a *pooled superannuation trust (the transferring entity) can:

                     (a)  choose to transfer a loss; or

                     (b)  choose an asset roll‑over; or

                     (c)  choose to transfer a loss and choose an asset roll‑over.

Entity must hold certain assets

             (2)  The first condition is satisfied if, just before the *arrangement was made:

                     (a)  for an entity that is a trustee of a *complying superannuation fund (the original fund)—its assets included assets other than:

                              (i)  a *complying superannuation/FHSA life insurance policy; or

                             (ii)  units in a *pooled superannuation trust; or

                     (b)  for an entity that is a *life insurance company—a complying superannuation/FHSA life insurance policy issued by the entity was held by a complying superannuation fund (the original fund); or

                     (c)  for an entity that is a trustee of a *pooled superannuation trust—units in the entity were held by a complying superannuation fund (the original fund).

Transfer of accrued default amount and membership of continuing fund

             (3)  The second condition is satisfied if:

                     (a)  under the *arrangement, the original fund transfers, to a *complying superannuation fund (the continuing fund), an *accrued default amount of a person who is a member (within the meaning of the Superannuation Industry (Supervision) Act 1993); and

                     (b)  the amount is transferred to the continuing fund:

                              (i)  as a result of an election made under paragraph 29SAA(1)(b) of that Act; or

                             (ii)  under section 388 of that Act; and

                     (c)  the member is a member of the continuing fund immediately after the time that the transfer occurs (the completion time).

Choice relates to period from 1 July 2013 to 1 July 2017

             (4)  The third condition is satisfied if the completion time occurs during the period beginning on 1 July 2013 and ending on 1 July 2017.

Subdivision 311‑CConsequences of choosing to transfer losses

Table of sections

311‑15      Who losses can be transferred to

311‑20      Losses that can be transferred

311‑25      Effect of transferring a net capital loss

311‑30      Effect of transferring a tax loss

311‑35      Realisation of certain assets after completion time

311‑15  Who losses can be transferred to

                   The transferring entity can choose to transfer any or all of the transferring entity’s losses set out in section 311‑20, in whole or in part, to one or more of the following entities (a receiving entity):

                     (a)  the continuing fund for the choice;

                     (b)  a *pooled superannuation trust in which units are held by the continuing fund for the choice just after the completion time;

                     (c)  a *life insurance company with which a *complying superannuation/FHSA life insurance policy is held by the continuing fund for the choice just after the completion time.

311‑20  Losses that can be transferred

             (1)  The transferring entity’s losses that can be transferred are:

                     (a)  any of its *net capital losses for income years earlier than the income year that includes the completion time (the transfer year), to the extent that they were not *utilised before the completion time; and

                     (b)  any net capital loss it would have made for the transfer year were the transfer year to have ended at the completion time; and

                     (c)  any of its *tax losses for income years earlier than the transfer year, to the extent that they were not utilised before the completion time; and

                     (d)  any tax loss it would have incurred for the transfer year were the transfer year to have ended at the completion time;

worked out subject to the modifications set out in this section.

Note:          If the entity choosing to transfer losses also chooses an asset roll‑over for the same arrangement, none of the CGT events for the roll‑over will contribute towards a loss transferred under this Subdivision (see section 311‑45 and subsections 311‑50(1) and 311‑55(1)).

Modifications for transferred losses

             (2)  For a choice under Subdivision 311‑B by an entity that is a trustee of a *complying superannuation fund, work out those losses by only considering *capital gains, *capital losses, assessable income and deductions to the extent that they are reasonably attributable to the *accrued default amount of the member.

             (3)  For a choice under Subdivision 311‑B by an entity that is a *life insurance company, work out those losses by only considering the following to the extent that they are reasonably attributable to the *accrued default amount of the member, and to a *complying superannuation/FHSA life insurance policy issued by the transferring entity and held by the original fund:

                     (a)  *capital gains from *complying superannuation/FHSA assets;

                     (b)  *capital losses from complying superannuation/FHSA assets;

                     (c)  assessable income covered by subsection 320‑137(2) (about complying superannuation/FHSA assets);

                     (d)  deductions covered by subsection 320‑137(4) (about complying superannuation/FHSA assets).

             (4)  For a choice under Subdivision 311‑B by an entity that is a trustee of a *pooled superannuation trust, work out those losses by only considering *capital gains, *capital losses, assessable income and deductions to the extent that they are reasonably attributable:

                     (a)  to the *accrued default amount of the member; and

                     (b)  to units in the transferring entity held by the original fund.

311‑25  Effect of transferring a net capital loss

                   To the extent that a loss of a kind referred to in paragraph 311‑20(1)(a) or (b) is transferred to a receiving entity:

                     (a)  if the loss is for an income year earlier than the transfer year—the transferring entity is taken not to have made the loss for that earlier income year; and

                     (b)  if the loss is for the transfer year—the following is reduced by an amount equal to the transferred amount:

                              (i)  if the transferring entity is a *life insurance company—the sum of the transferring entity’s *capital losses from *complying superannuation/FHSA assets for the transfer year;

                             (ii)  otherwise—the sum of the transferring entity’s capital losses for the transfer year; and

                     (c)  if the receiving entity is a life insurance company—an amount equal to the transferred amount is taken to be a capital loss from complying superannuation/FHSA assets made by the receiving entity on the day of the completion time; and

                     (d)  if the receiving entity is not a life insurance company—an amount equal to the transferred amount is taken to be a capital loss made by the receiving entity on the day of the completion time.

311‑30  Effect of transferring a tax loss

                   To the extent that a loss of a kind referred to in paragraph 311‑20(1)(c) or (d) is transferred to a receiving entity:

                     (a)  if the loss is for an income year earlier than the transfer year—the transferring entity is taken not to have made the loss for that earlier income year; and

                     (b)  if the loss is for the transfer year—the following is reduced by an amount equal to the transferred amount:

                              (i)  if the transferring entity is a *life insurance company—the sum of the transferring entity’s deductions covered by subsection 320‑137(4) (about complying superannuation/FHSA assets) for the transfer year;

                             (ii)  otherwise—the sum of the transferring entity’s deductions for the transfer year; and

                     (c)  for the purposes of sections 36‑15 and 36‑17, an amount equal to the transferred amount is taken to be:

                              (i)  if the receiving entity is a life insurance company—a *tax loss of the *complying superannuation/FHSA class that the receiving entity incurred for the income year of the receiving entity immediately prior to the income year in which the completion time occurs; or

                             (ii)  otherwise—a tax loss that the receiving entity incurred for the income year of the receiving entity immediately prior to the income year in which the completion time occurs; and

                     (d)  for all other purposes of this Act, an amount equal to the transferred amount is taken to be:

                              (i)  if the receiving entity is a life insurance company—a tax loss of the *complying superannuation/FHSA class that the receiving entity incurred on the day of the completion time; or

                             (ii)  otherwise—a tax loss that the receiving entity incurred on the day of the completion time.

311‑35  Realisation of certain assets after completion time

             (1)  In working out the *net capital loss referred to in paragraph 311‑20(1)(b), or the sum of the transferring entity’s *capital losses referred to in paragraph 311‑25(b), treat any amount:

                     (a)  that is a *capital loss or *capital gain that the transferring entity makes after the completion time; and

                     (b)  that arises as a result of realisation of assets for the purpose of enabling payment to the receiving entity in connection with the transfer of the *accrued default amount of the member;

as if the loss or gain were made during the transfer year but before the completion time.

             (2)  In working out the *tax loss referred to in paragraph 311‑20(1)(d), or the sum of the transferring entity’s deductions referred to in paragraph 311‑30(b), treat any amount:

                     (a)  that is an amount of a deduction for the transferring entity, or an amount of assessable income by the transferring entity, arising after the completion time; and

                     (b)  that arises as a result of realisation of assets for the purpose of enabling payment to the receiving entity in connection with the transfer of the *accrued default amount of the member;

as if the amount of the deduction, or the amount of income, arose during the transfer year but before the completion time.

Subdivision 311‑DConsequences of choosing asset roll‑over

Table of sections

311‑40      Assets roll‑over

311‑45      CGT assets

311‑50      Revenue assets

311‑55      Further consequences for roll‑overs involving life insurance companies

311‑40  Assets roll‑over

             (1)  The transferring entity can choose an asset roll‑over for an asset in relation to which, under the *arrangement, a *CGT event happens if:

                     (a)  subsection (2) applies to the asset; and

                     (b)  an asset (the received asset) becomes an asset of one of the following (the receiving entity) as a result of the event:

                              (i)  the continuing fund for the choice;

                             (ii)  a *pooled superannuation trust in which units are held by the continuing fund for the choice just after the completion time;

                            (iii)  a *life insurance company with which a *complying superannuation/FHSA life insurance policy is held by the continuing fund for the choice just after the completion time.

             (2)  The asset is an asset to which this subsection applies (an original asset) if:

                     (a)  in a case where the entity choosing under Subdivision 311‑B is a trustee of a *complying superannuation fund—the asset is reasonably attributable to the *accrued default amount of the member; or

                     (b)  in a case where the entity choosing under Subdivision 311‑B is a *life insurance company—the asset is reasonably attributable to:

                              (i)  the accrued default amount of the member; and

                             (ii)  a *complying superannuation/FHSA life insurance policy issued by the transferring entity and held by the original fund; or

                     (c)  in a case where the entity choosing under Subdivision 311‑B is a trustee of a *pooled superannuation trust—the asset is reasonably attributable to:

                              (i)  the accrued default amount of the member; and

                             (ii)  units in a pooled superannuation trust issued by the transferring entity and held by the original fund.

311‑45  CGT assets

                   If the roll‑over is chosen:

                     (a)  disregard any *capital gain or *capital loss the transferring entity makes from transferring an original asset to the receiving entity; and

                     (b)  the first element of the received asset’s *cost base, in the hands of the receiving entity, is the transferring entity’s cost base just before the time of the *CGT event; and

                     (c)  the first element of the received asset’s *reduced cost base, in the hands of the receiving entity is worked out similarly.

311‑50  Revenue assets

Consequences for transferring entity

             (1)  For each of the original assets that are *revenue assets, the transferring entity’s gross proceeds for the relevant *CGT event are taken, for the purposes of this Act, to be the amount (the deemed proceeds) the transferring entity would need to have received in order to have a nil profit and nil loss for the event.

Consequences for receiving entity

             (2)  For each of the received assets that are *revenue assets, the receiving entity is taken, for the purposes of this Act, to have incurred an amount for that asset at the time of the *CGT event that is equal to the deemed proceeds for the corresponding original asset.

311‑55  Further consequences for roll‑overs involving life insurance companies

             (1)  Section 320‑200 does not apply for a *CGT event for the roll‑over if either the transferring entity or the receiving entity is a *life insurance company.

Note:          Section 320 is about the consequences of transferring assets to or from a complying superannuation/FHSA asset pool.

             (2)  If the receiving entity for the roll‑over is a *life insurance company, each received asset of that entity is taken:

                     (a)  to be a *complying superannuation/FHSA asset of that entity; and

                     (b)  not to be, in whole or in part, a *life insurance premium.

Subdivision 311‑EChoices

Table of sections

311‑60      Choices

311‑60  Choices

             (1)  A choice under this Division must be made:

                     (a)  by the day the transferring entity’s *income tax return is lodged for the transfer year for the entity; or

                     (b)  within a further time allowed by the Commissioner.

             (2)  The way the transferring entity’s *income tax return is prepared is sufficient evidence of the making of the choice.

2  Application

The amendments made by this Part apply to income years that include 1 July 2013, and to later income years.

Part 2Other amendments

Income Tax Assessment Act 1997

3  Subsection 40‑340(1) (at the end of the table)

Add:

7

Disposal of asset as part of transfer to a MySuper product

The transferor chooses a roll‑over under Subdivision 311‑B in relation to the disposal.

4  Section 112‑97 (at the end of the table)

Add:

36

An entity chooses an asset roll‑over, or chooses to transfer a loss and chooses an asset roll‑over, under Subdivision 311‑B

First element of cost base and reduced cost base

Section 311‑45

5  Subsection 115‑30(1) (at the end of the table)

Add:

11

A *CGT asset that the acquirer *acquired as a received asset for a roll‑over under Subdivision 311‑D

When the transferring entity for the roll‑over acquired the corresponding original asset for the roll‑over

6  At the end of section 290‑170

Add:

Amounts transferred to a MySuper product in another complying superannuation fund

             (6)  If:

                     (a)  under an *arrangement, the fund (the original fund) transfers an *accrued default amount of a member (within the meaning of the Superannuation Industry (Supervision) Act 1993):

                              (i)  as a result of an election made under paragraph 29SAA(1)(b) of that Act; or

                             (ii)  under section 388 of that Act;

                            to another superannuation fund that is a continuing fund for the purposes of subsection 311‑10(3); and

                     (b)  the arrangement takes effect after the making of your contribution; and

                     (c)  you are a member (within the meaning of that Act) of the continuing fund immediately after the arrangement takes effect; and

                     (d)  you did not give a notice under subsection (1) in relation to the contribution while you were a member (within the meaning of that Act) of the original fund;

then subsections (1) to (4) of this section, and section 290‑180, apply as if references in those provisions to the original fund (or the trustee of the original fund) were references to the continuing fund (or the trustee of the continuing fund).

7  At the end of section 290‑180

Add:

Amounts transferred to a MySuper product in another complying superannuation fund

             (6)  If:

                     (a)  under an *arrangement, the fund (the original fund) transfers an *accrued default amount of a member (within the meaning of the Superannuation Industry (Supervision) Act 1993):

                              (i)  as a result of an election made under paragraph 29SAA(1)(b) of that Act; or

                             (ii)  under section 388 of that Act;

                            to another superannuation fund that is a continuing fund for the purposes of subsection 311‑10(3); and

                     (b)  the arrangement takes effect after a valid notice is given under section 290‑170; and

                     (c)  you are a member (within the meaning of that Act) of the continuing fund immediately after the arrangement takes effect; and

                     (d)  you seek to vary the valid notice after you cease to be a member (within the meaning of that Act) of the original fund;

then subsections (2) and (3A) apply as if references in those subsections to the original fund (or the trustee of the original fund) were references to the continuing fund (or the trustee of the continuing fund).

8  Paragraphs 292‑25(2)(b) and 292‑90(2)(b)

After “subsection 290‑170(5) (about successor funds)”, insert “or subsection 290‑170(6) (about MySuper products)”.

9  At the end of subparagraph 293‑30(2)(b)(ii)

Add “or subsection 290‑170(6) (about MySuper products)”.

10  Subsection 295‑190(1) (table item 2A)

Repeal the item, substitute:

2A

CSF

*RSA provider

A *roll‑over superannuation benefit that an individual is taken to receive under section 307‑15 to the extent that:

(a) the CSF or *RSA is:

(i) a *successor fund; or

(ii) a superannuation fund that is a continuing fund for the purposes of subsection 311‑10(3); and

(b) the benefit relates to a contribution that, before it was transferred to the successor fund or continuing fund, was not covered by a valid and acknowledged notice given to any *superannuation provider under section 290‑170; and

(c) while the benefit is held in the successor fund or continuing fund, the contribution becomes covered by a valid and acknowledged notice given to the superannuation provider of that fund under that section

11  Subsection 295‑490(1) (table item 2A)

Repeal the item, substitute:

2A

CSF

*RSA provider

A *roll‑over superannuation benefit, to the extent that:

(a) the CSF or *RSA is:

(i) a *successor fund; or

(ii) a superannuation fund that is a continuing fund for the purposes of subsection 311‑10(3); and

(b) the benefit relates to a contribution that, before it was transferred to the successor fund or continuing fund, was covered by a valid and acknowledged notice given to any *superannuation provider under section 290‑170; and

(c) the contribution is reduced by a notice under section 290‑180 received by the superannuation provider of the successor fund or continuing fund (whether or not the contribution has previously been reduced by a notice given to any superannuation provider under that section)

The notice mentioned in paragraph (c) is received

12  Subsection 995‑1(1)

accrued default amount has the meaning given by section 20B of the Superannuation Industry (Supervision) Act 1993.

13  Application

The amendments made by this Part apply to income years that include 1 July 2013, and to later income years.

Part 3Repeals and related amendments

Income Tax Assessment Act 1997

14  Subsection 40‑340(1) (table item 7)

Repeal the item.

15  Section 112‑97 (table item 36)

Repeal the item.

16  Subsection 115‑30(1) (table item 11)

Repeal the item.

17  Subsection 290‑170(6)

Repeal the subsection.

18  Subsection 290‑180(6)

Repeal the subsection.

19  Paragraphs 292‑25(2)(b) and 292‑90(2)(b)

Omit “or subsection 290‑170(6) (about MySuper products)”.

20  Subparagraph 293‑30(2)(b)(ii)

Omit “or subsection 290‑170(6) (about MySuper products)”.

21  Subsection 295‑190(1) (table item 2A)

Repeal the item, substitute:

2A

CSF

*RSA provider

A *roll‑over superannuation benefit that an individual is taken to receive under section 307‑15 to the extent that:

(a) the CSF or *RSA is a *successor fund; and

(b) the benefit relates to a contribution that, before it was transferred to the successor fund, was not covered by a valid and acknowledged notice given to any *superannuation provider under section 290‑170; and

(c) while the benefit is held in the successor fund, the contribution becomes covered by a valid and acknowledged notice given to the superannuation provider of the successor fund under that section

22  Subsection 295‑490(1) (table item 2A)

Repeal the item, substitute:

2A

CSF

*RSA provider

A *roll‑over superannuation benefit, to the extent that:

(a) the CSF or *RSA is a *successor fund; and

(b) the benefit relates to a contribution that, before it was transferred to the successor fund, was covered by a valid and acknowledged notice given to any *superannuation provider under section 290‑170; and

(c) the contribution is reduced by a notice under section 290‑180 received by the superannuation provider of the successor fund (whether or not the contribution has previously been reduced by a notice given to any superannuation provider under that section)

The notice mentioned in paragraph (c) is received

23  Division 311

Repeal the Division.

24  Subsection 995‑1(1) (definition of accrued default amount)

Repeal the definition.

25  Application

(1)       The amendments made by items 19, 20, 21 and 22 apply in relation to:

                     (a)  notices given under section 290‑170 of the Income Tax Assessment Act 1997 on or after the commencement of this item; and

                     (b)  notices of variation given under section 290‑180 of that Act on or after the commencement of this item (whether the notices being varied were given before, on or after the commencement of this item).

(2)       If, before the commencement of this item, paragraph 290‑180(6)(a) of the Income Tax Assessment Act 1997 applied to the transfer of an accrued default amount to a superannuation fund:

                     (a)  section 290‑180 of that Act as amended by this Part applies after that commencement to a variation of a valid notice in relation to a contribution related to that accrued default amount as if subsection 290‑180(6) of that Act had not been repealed by this Part; and

                     (b)  table item 2A of subsection 295‑490(1) of that Act as amended by this Part applies after that commencement as if references in that table item to a successor fund included references to that superannuation fund.

Schedule 2Sustaining the superannuation contribution concession: consequential amendments for Defence Force superannuation

  

Defence Force Retirement and Death Benefits Act 1973

1  Subsection 3(1) (definition of benefit)

Repeal the definition, substitute:

benefit means pension benefit, and includes the following:

                     (a)  a lump sum payment under subsection 32(2) or section 48;

                     (b)  a refund of contributions under section 56;

                     (c)  a release authority lump sum paid in relation to a release authority issued to a person under Subdivision 135‑A in Schedule 1 to the Taxation Administration Act 1953.

2  Subsection 3(1)

Insert:

release authority lump sum has the meaning given by section 49K.

3  At the end of subsection 24(2A)

Add:

Note:          This amount is reduced if a release authority lump sum has been paid: see section 49M.

4  At the end of subsection 32A(4)

Add:

Note:          This amount is reduced if a release authority lump sum has been paid: see section 49M.

5  Subsection 48(5)

Repeal the subsection, substitute:

             (5)  In this section, a reference to the amount of retirement pay or invalidity pay paid or payable to a member of the scheme before the member’s death shall be read as including the following:

                     (a)  if an election has been made, by or on behalf of the member, under section 24 or 32A, to commute a portion of the retirement pay or invalidity pay, as the case may be, payable to the member—the amount paid or payable to or in respect of the member under paragraph 24(3)(a) or 32A(5)(a), as the case may be, by virtue of that election;

                     (b)  if the member’s retirement pay or invalidity pay is reduced under section 49N to reflect a release authority lump sum paid in relation to a release authority issued to the member—the amount of the release authority lump sum.

6  After Part VIA

Insert:

Part VIBSustaining the superannuation contribution concession: release of benefit to meet deferred tax liability

  

49K  Release of benefits under a release authority

                   A lump sum (the release authority lump sum) may be paid at a time in compliance with a release authority issued to a person under item 3 of the table in subsection 135‑10(1) in Schedule 1 to the Taxation Administration Act 1953 and given to CSC in accordance with Subdivision 135‑B in that Schedule.

Note:          The purpose of the release authority is to allow a lump sum to be paid to the Commissioner to meet a debt the person has under Subdivision 133‑C in Schedule 1 to the Taxation Administration Act 1953.

49L  Limit on amount that may be released

             (1)  In addition to any requirements in Division 135 in Schedule 1 to the Taxation Administration Act 1953, the amount of a release authority lump sum must not have the effect that a benefit of the person under this Act is reduced below zero.

             (2)  For the purpose of subsection (1), the effect of a release authority lump sum on the amount of a person’s benefit is to be worked out after taking account of any reduction under another provision of this Act, apart from the following:

                     (a)  a reduction under section 24 in relation to an amount not yet paid;

                     (b)  a reduction under section 32A in relation to an amount not yet paid.

Note:          Other provisions that reduce a person’s benefit before a release authority lump sum include the following:

(a)    subsections 23(6) and 31(4) (which deal with surcharge elections), if the election under section 124 is made before giving CSC the release authority (see subsection 124(3));

(b)    subsections 75(3A) and (4A) (which deal with surcharge deduction amounts for deferred benefits);

(c)    Part VIA (which deals with family law superannuation splitting).

49M  Priority order in relation to commutation of pension

             (1)  This section applies if:

                     (a)  a person gives CSC a release authority issued to the person under item 3 of the table in subsection 135‑10(1) in Schedule 1 to the Taxation Administration Act 1953; and

                     (b)  an amount has not yet been paid to the person by virtue of a commutation under section 24 or 32A.

             (2)  The release authority lump sum is to be paid before an amount is paid to the person by virtue of a commutation under section 24 or 32A.

             (3)  To avoid doubt, the person’s retirement pay or invalidity pay is to be reduced under this Part to reflect the release authority lump sum, and the following are to be worked out having regard to that reduced amount of retirement pay or invalidity pay:

                     (a)  the amount that may be paid by virtue of the commutation;

                     (b)  the retirement pay or invalidity pay payable after the commutation takes effect.

49N  Calculation of person’s benefits after payment of release authority lump sum

             (1)  If a release authority lump sum is paid in relation to a release authority issued to a person, any benefits to which the person is entitled under this Act must be reduced to reflect the release authority lump sum.

             (2)  If:

                     (a)  a release authority lump sum is paid in relation to a release authority issued to a person; and

                     (b)  the person is entitled to retirement pay or invalidity pay;

the rate at which retirement pay or invalidity pay is payable to the person is to be reduced so that it equals the amount worked out using this formula:

                  

where:

conversion factor means the factor that is applicable to the person under the determination made by CSC under subsection (3).

pre‑reduction rate means the annual rate at which retirement pay or invalidity pay would, apart from this section (but having regard to any other provisions of this Act that affect that rate at the time), be payable to the person at the time that pay becomes payable.

             (3)  CSC may, by legislative instrument, determine the conversion factor, or the method for working out the conversion factor, for the purposes of subsection (2).

49P  Modification for candidates at parliamentary elections

                   For the purposes of paragraph 55(5)(a), disregard a benefit that is a release authority lump sum.

Note:          Subsection 55(5) is about benefits that must be repaid.

49Q  Modification for section 62

             (1)  If:

                     (a)  a person’s retirement pay or invalidity pay, worked out having regard to section 49N, is cancelled under subsection 62(1); and

                     (b)  after that cancellation, the person becomes entitled to retirement pay or invalidity pay;

the rate of the person’s retirement pay or invalidity pay mentioned in paragraph (b) is to be reduced in accordance with section 49N.

             (2)  However, for the purpose of the formula in subsection 49N(2), the amount of the release authority lump sum is reduced by the amount of any reductions made because of the previous application of section 49N to the retirement pay or invalidity pay before it was cancelled.

7  At the end of section 124

Add:

             (3)  However, a person may not make an election under subsection (1) if the person has given CSC a release authority issued to the person under item 3 of the table in subsection 135‑10(1) in Schedule 1 to the Taxation Administration Act 1953.