Commonwealth Numbered Regulations Commonwealth Numbered Regulations(1) This section sets out how to calculate the discounted present value of liabilities for step 1 of method 1 in section 295-265.02.
(2) The basis for the calculation in step 1 of method 1 must be the actuarial valuation basis relevant to the income year in question which the superannuation provider's actuary would consider appropriate for a valuation under Part 9 of the SIS Regulations.
(3) In making the calculation, exclude the following liabilities that are not provided from taxable contributions:
(a) liabilities representing benefits financed by undeducted contributions (within the meaning of subsection 27A(1) of the Income Tax Assessment Act 1936 as in force just before 15 March 2007);
(b) liabilities representing benefits or components that are expected to be treated as paid from an untaxed source;
Example: Pensions provided on an emerging cost or pay as you go basis, with corresponding elections being made under subsection 295-180(1) of the Act.
(c) liabilities for entitlements relating to membership and for which corresponding assets can be identified;
Example: Fully funded productivity, superannuation guarantee or salary sacrifice account balances.
(d) liabilities representing death and disability benefits for which costs are claimed as deductible under section 295-465 or 295-470 of the Act.
(4) Apportion the discounted present value of the liabilities, between:
(a) the period of superannuation fund membership completed before 1 July 1988; and
(b) the period of superannuation fund membership completed on and after 1 July 1988;
for each superannuation fund member or former member for whom a liability is being valued .
(5) The apportionment must be made having regard to the following requirements and principles:
(a) superannuation fund membership must be consistent with the definition used by the fund to determine the benefit being valued;
(b) an alternative method for apportioning the discounted present value of liabilities may be used only if the superannuation provider's actuary certifies that the method will provide a reasonable approximation of the apportionment;
(c) a linear apportionment method will generally be used, but an apportionment method that reflects non-linear accrual of entitlements may be used if the superannuation provider's actuary considers that such a method achieves an outcome that is consistent with the principle that funding credits can only be used against contributions intended to provide for entitlements relating to membership completed before 1 July 1988.