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PARLIAMENTARY SUPERANNUATION (SCHEME FOR NEW MEMBERS) AMENDMENT ACT 2005 (NO 43 OF 2005) - SECT 29

29—Insertion of sections 23AAB, 23AAC and 23AAD

After section 23 (as substituted by section 28) and section 23AA (as relocated by section 23) insert:

23AAB—Commutation to pay deferred superannuation contributions surcharge—lump sum entitlements

        (1)         In this section—

"prescribed member" means—

            (a)         a former PSS 2 member who has an amount preserved under this Part by virtue of his or her membership of PSS 2; or

            (b)         a PSS 3 member, or a former PSS 3 member.

        (2)         A prescribed member who is liable for a deferred superannuation contributions surcharge as a result of a benefit becoming payable to the prescribed member may apply to the Board, in accordance with this section—

            (a)         to receive part of the benefit in the form of a commutable pension; and

            (b)         to fully commute the pension.

        (3)         A prescribed member who has become entitled to a benefit, or will shortly become entitled to a benefit, may—

            (a)         estimate the amount of the surcharge the prescribed member will become liable to pay (the "estimated surcharge amount"); and

            (b)         request the Board, in the approved form, to—

                  (i)         withhold from the prescribed member's benefit an amount equal to the estimated surcharge amount (the "withheld amount"); and

                  (ii)         pay the balance of the benefit to the prescribed member (being, in the case of a benefit to which the prescribed member is yet to become entitled, a payment after the entitlement arises),

and the Board must, subject to subsection (5), comply with the prescribed member's request.

        (4)         If a prescribed member has made a request under subsection (3)(b), the prescribed member must, before the expiration of 2 months following the issue of a surcharge notice in respect of the prescribed member, advise the Board in the approved form that the notice has been issued and the Board must, within 7 days of receiving that advice—

            (a)         convert into a pension—

                  (i)         if the amount of the surcharge payable by the prescribed member is less than the withheld amount—a portion of the withheld amount equal to the amount payable; or

                  (ii)         in any other case—the whole of the withheld amount; and

            (b)         immediately after converting the withheld amount, or a portion of the withheld amount, into a pension under paragraph (a)—commute the pension; and

            (c)         pay to the prescribed member

                  (i)         the lump sum resulting from the commutation of the pension; and

                  (ii)         the balance (if any) of the withheld amount.

        (5)         The Board may reject an application under subsection (2) if—

            (a)         it is not satisfied that, if the application were accepted, the resulting lump sum will be applied in payment of the surcharge; or

            (b)         the prescribed member fails to satisfy the Board that the prescribed member has, or will have, a surcharge liability to the Commissioner of Taxation.

        (6)         The factors to be applied in—

            (a)         the conversion of a withheld amount (or part of a withheld amount) into a pension; and

            (b)         the commutation of a pension,

will be determined by the Treasurer on the recommendation of an actuary.

23AAC—Commutation to pay deferred superannuation contributions surcharge following death of member

        (1)         In this section—

"prescribed member" has the same meaning as in section 23AAB.

        (2)         If a prescribed member who is liable for a deferred superannuation contributions surcharge dies—

            (a)         having made a request of the Board under section 23AAB for part of his or her benefit to be withheld but before receiving a surcharge notice; or

            (b)         having received a surcharge notice but before requesting commutation of his or her pension under section 23AAB,

the prescribed member's spouse or, if the prescribed member is not survived by a spouse, the prescribed member's legal representative, may, before the expiration of the period of 2 months immediately following the prescribed member's death or the issue of the surcharge notice (whichever is the later), apply to the Board—

            (c)         to receive the amount withheld by the Board on behalf of the deceased prescribed member under section 23AAB in the form of a commutable pension; and

            (d)         to fully commute the pension.

        (3)         The Board must, on receipt of an application under subsection (2)—

            (a)         convert into a pension—

                  (i)         if the amount of the surcharge payable by the spouse or estate is less than the withheld amount—a portion of the withheld amount equal to the amount payable; or

                  (ii)         in any other case—the whole of the withheld amount; and

            (b)         immediately after converting the withheld amount, or a portion of the withheld amount, into a pension under paragraph (a)—commute the pension; and

            (c)         pay to the spouse or estate—

                  (i)         the lump sum resulting from the commutation of the pension; and

                  (ii)         the balance (if any) of the withheld amount.

        (4)         If a prescribed member dies without having made a request under section 23AAB, the prescribed member's spouse or, if the prescribed member is not survived by a spouse, the prescribed member's legal representative, may—

            (a)         estimate the amount of the surcharge the spouse or estate will become liable to pay (the "estimated surcharge amount"); and

            (b)         request the Board, in the approved form, to—

                  (i)         withhold from the spouse's benefit or the benefit payable to the estate an amount equal to the estimated surcharge amount (the "withheld amount ); and

                  (ii)         pay the balance of the benefit to the spouse or estate,

and the Board must, subject to subsection (7), comply with the request.

        (5)         An application under subsection (4) must be made in writing to the Board before payment of the benefit to the spouse or legal representative.

        (6)         The spouse or legal representative must, before the expiration of 2 months following the issue of a surcharge notice in respect of the member, advise the Board in the approved form that the notice has been issued and the Board must, within 7 days of receiving that advice—

            (a)         convert into a pension—

                  (i)         if the amount of the surcharge payable by the spouse or estate is less than the withheld amount—a portion of the withheld amount equal to the amount payable; or

                  (ii)         in any other case—the whole of the withheld amount; and

            (b)         immediately after converting the withheld amount, or a portion of the withheld amount, into a pension under paragraph (a)—commute the pension; and

            (c)         pay to the spouse or estate—

                  (i)         the lump sum resulting from the commutation of the pension; and

                  (ii)         the balance (if any) of the withheld amount.

        (7)         The Board may reject an application under subsection (2) or (4) if it is not satisfied that, if the application were accepted, the resulting lump sum will be applied in payment of the surcharge or be used to reimburse the deceased prescribed member's estate, or the spouse or other person who has paid the surcharge on behalf of the estate.

        (8)         The factors to be applied in—

            (a)         the conversion of a withheld amount (or part of a withheld amount) into a pension; and

            (b)         the commutation of a pension,

will be determined by the Treasurer on the recommendation of an actuary.

        (9)         In this section—

"legal representative", in relation to a deceased prescribed member, means a person—

            (a)         holding office as executor of the will of the deceased prescribed member where probate of the will has been granted or resealed in South Australia or any other State or a Territory; or

            (b)         holding office in South Australia or any other State or a Territory as administrator of the estate of the deceased prescribed member.

23AAD—Withheld amount

An amount withheld under section 23AAB or 23AAC—

            (a)         must be retained in the PSS 3—Government Contributions Division of the Fund; and

            (b)         will be credited with interest at the rate of return determined by the Board under section 14D(3); and

            (c)         may be paid to the prescribed member (or the prescribed member's spouse or legal representative)—

                  (i)         in accordance with section 23AAB or 23AAC; or

                  (ii)         at the direction of the Board if the Board—

                        (A)         has not, within 2 years of withholding the amount, received advice that a surcharge notice has been issued in respect of the prescribed member; or

                        (B)         considers, at any time, there is other good reason for doing so.



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