Commonwealth Consolidated Regulations

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INCOME TAX ASSESSMENT (1997 ACT) REGULATIONS 2021 - REG 1000.4.03

Modified continuing application of old regulations

    (1)   This section applies for the purposes of the continuing application of the old regulations, in relation to superannuation income streams that commenced before the 2021 commencement time.

  (2)   This section applies despite subsection   1000 - 1.06(1).

  (3)   For the purposes mentioned in subsection   (1), treat a superannuation income stream as being prescribed by the old regulations for the purposes of subsection   294 - 130(2) of the Act (as a capped defined benefit income stream) if the superannuation income stream:

  (a)   would not be so prescribed under that continuing application (apart from this subsection); but

  (b)   would be so prescribed under subsection   294 - 130.01(7) (as inserted by Part   2 of Schedule   1 to the amending instrument), on the assumption that the superannuation income stream commenced on or after the 2021 commencement time.

Method statement

Step 1:   Apply the following formula. The result is the calculation percentage .

    Start formula start fraction market value on the particular day of the share that is the subject of the right over amount or lowest amount that must be paid to exercise the right end fraction times 100 percent end formula

Step 2:   If the calculation percentage is less than 50%, the value of the right is nil.

  If the calculation percentage is equal to, or greater than, 50% but less than 110%, the value of the right is the value worked out under section   83A - 315.08.

  If the calculation percentage is equal to, or greater than, 110%, the value of the right is the value worked out under section   83A - 315.09.

Method statement

Step 1:   For an income year for which a superannuation provider chooses to reduce the amount of contributions that would otherwise be included in a superannuation fund's assessable income, calculate, in accordance with section   295 - 265.03, the discounted present value of liabilities as at the start of that income year that relates to membership completed.

  The discounted present value of liabilities for all members apportioned to pre - 1   July 88 membership is the value of pre - 1   July 88 liabilities for the income year.

Step 2:   Calculate, in accordance with section   295 - 265.04, the total amount of superannuation fund assets at their market value at the start of the income year, on the basis on which the superannuation provider's actuary would consider appropriate for a valuation under Part   9 of the SIS Regulations.

  The result is the assets available to fund pre - 1   July 88 liabilities for the income year.

Step 3:   Deduct the assets available to fund pre - 1   July 88 liabilities for the income year from the value of pre - 1   July 88 liabilities for the income year.

  The result is the value of unfunded pre - 1   July 88 liabilities for the income year.

Step 4:   The amount of taxable contributions that are allocated to fund that value of unfunded pre - 1   July 88 liabilities, as notified by the superannuation provider to the actuary, are the pre - 1   July 88 taxable contributions for the income year.

Method statement

Step 1:   For an income year (the current income year ), the superannuation provider's actuary must notionally adjust the value of pre - 1   July 88 liabilities of the superannuation fund for the previous income year from the start of the previous income year to the start of the current income year, taking into account any factors likely to affect that value.

  In making a calculation the actuary must have regard to the valuation basis that would be used by the fund if method 1 were being used for the current income year.

  In making a calculation the actuary must have regard to actual experience gained from the operation of the fund if the experience is materially different from valuation assumptions used in the calculation of the value of pre - 1   July 88 liabilities for the previous income year.

  The result is the value of pre - 1   July 88 liabilities for the current income year.

Step 2:   The actuary must notionally adjust the assets available to fund pre - 1   July 88 liabilities of the superannuation fund for the previous income year from the start of the previous income year to the start of the current income year, taking into account any factors likely to affect those assets, including by:

  (a)   adding taxable contributions allocated to fund pre - 1   July 88 taxed liabilities in the previous income year; and

  (b)   deducting the employer - financed component of pre - 1   July 88 taxed benefits paid out during the previous income year; and

  (c)   adding actual investment earnings net of the tax and expenses relating to investment income for the previous income year using a basis that is consistent with the underlying investment earnings achieved and normal practices of the superannuation fund.

  The result is the assets available to fund pre - 1   July 88 liabilities for the current income year.

Step 3:   Deduct the assets available to fund pre - 1   July 88 liabilities for the current income year from the value of pre - 1   July 88 liabilities for the current income year.

  The result is the value of unfunded pre - 1   July 88 liabilities for the current income year.

Step 4:   The amount of taxable contributions that are allocated to fund that value of unfunded pre - 1   July 88 liabilities, as notified by the superannuation provider to the actuary, are the pre - 1   July 88 taxable contributions for the current income year.

Method statement

Step 1.   Reduce the amount of the benefit by the extent, if any, to which the benefit is attributable to any of the following:

  (a)   an amount paid on or after the death of the deceased under a policy of insurance on the life of the deceased;

  (b)   an amount arising on or after the death of the deceased from self - insurance.

Step 2.   The tax free component of the benefit is the amount that represents the same proportion of the amount resulting from step 1 as the tax free component of the relevant superannuation interest bore to the value of the relevant superannuation interest when the original superannuation income stream commenced.

Step 3.   The taxable component of the benefit is the amount of the benefit less the tax free component of the benefit worked out under step 2.

Method statement

Step 1.   Calculate, in accordance with section   307 - 205.01A, the value of the retirement benefit that would have been payable if the member:

  (a)   had been eligible to retire immediately before 1   July 2007; and

  (b)   had elected to do so.

  Note:   If the member is no longer in the employment which gave rise to the interest, but the interest is preserved in the scheme, retirement is taken to be the point at which the benefit is payable without penalty to the member.

Step 2.   If a superannuation lump sum benefit, including a roll - over superannuation benefit, would have been payable had the member resigned, or withdrawn the benefit, immediately before 1   July 2007, calculate the value of that benefit.

Step 3.   The value of the superannuation interest is the greater of the values worked out using steps 1 and 2.

  If no value can be determined under step 2, the value of the superannuation interest is the value determined under step 1.

Method statement

Step 1.   Assume that the member was eligible to retire immediately before 1   July 2007, and work out the total amount of all the superannuation lump sums that could be payable from the interest at that time. The value of the superannuation interest is the total amount, unless step 2 applies.

Step 2.   If the total amount worked out under step 1 is less than the total amount actually or notionally allocated to the member (other than because of superannuation contributions surcharge liabilities, insurance costs or other fees, taxes and charges), the value of the superannuation interest is the amount actually or notionally allocated to the member.

    For the purposes of paragraph   418 - 103(1)(g) of the Act, the amount of $2.15 million is prescribed.

    For the purposes of paragraph   418 - 103(1)(h) of the Act, the amount of $4.77   million is prescribed.


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