Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX REGULATIONS (AMENDMENT) 1991 NO. 156

STATUTORY RULES 1991 No. 156

ISSUED BY THE AUTHORITY OF THE TREASURER

These regulations amend the Income Tax Regulations to insert one of two alternative limits on the amount of tax deductible superannuation contributions that may be made by a member of a superannuation fund. The other deduction limit is in subparagraph 82AAT(2)(a)(i) of the Income Tax Assessment Act 1936 (the Act).

The amendment to the regulations is a consequence of an amendment to the Act made by the Taxation Laws Amendment Act (No. 5) 1990 (the amending Act).

The amending Act increased the former, flat $3,000 limit on tax deductible contributions for superannuation fund members who do not get any superannuation support from someone else (for example, from an employer). The new deduction limit is the lesser of

•       $3,000 plus 75% of the amount of contributions exceeding $3,000 (subparagraph 82AAT(2)(a)(i) of the Act); and

•       the amount of contributions, determined under the regulations, needed to fund a benefit equal to the person's reasonable benefit limit (subparagraph 82AAT(2)(a)(ii) of the Act).

Regulation 2 inserts new regulation 12A in the Income Tax Regulations to provide the basis for ascertaining the alternative deduction limit in subparagraph 82AAT(2)(a)(ii) of the Act.

The actual calculation of a person's maximum deductible contributions is to be made using the existing formula in subregulation 18B(9) of the Occupational Superannuation Standards (OSS) Regulations. This formula calculates the maximum contribution that may be made to a superannuation fund without causing a member's accumulated benefits to be such that the member's reasonable benefit limit would be exceeded.

New subregulation 12A(1) therefore links the maximum deductible contributions for the purpose of subparagraph 82AAT(2)(a)(ii) of the Act to the amount determined under subregulation 18B(9) of the OSS Regulations. Paragraph 12A(1)(a) covers cases where people contribute to only one superannuation fund in a year of income. In that case the deduction limit is the amount calculated under subregulation 18B(9) for that fund.

Paragraph 12A(1)(b) deals with those cases where people contribute to more than one fund in a year. In such cases the limit is to be the greatest amount calculated under subregulation 18B(9) for each of the funds. For instance, if the amounts calculated in respect of four different funds were $1,000, $1,500, $1,500 and $800, the limit would be $1,500. This means that the amount of tax deductible contributions that may be made in total to all four funds is limited to $1,500.

By new subregulation 12A(2), regulation 12A first has effect for the year of income that commenced on 1 July 1990. This is because the new deduction limit inserted by the amending Act applies to superannuation contributions made on or after 1 July 1990. Although the 1990-91 income year has already commenced, section 30 of the amending Act provides authority for these regulations to apply for that year of income.