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TAX AND SUPERANNUATION LAWS AMENDMENT (2014 MEASURES NO. 7) ACT 2015 - SCHEDULE 1

Excess non-concessional superannuation contributions tax reforms

 

Income Tax Assessment Act 1997

1   Section   10 - 5 (table item headed "superannuation")

Before:

benefits generally ..........................

Divisions   301 to 306

insert:

associated earnings on non - concessional contributions  

Subdivision   292 - B

2   Section   11 - 55 (table item headed "superannuation")

Omit:

release authorities, payments from ...............

303 - 15

303 - 20

304 - 15

substitute:

release authorities, payments from ...............

303 - 15

303 - 17

303 - 20

304 - 15

3   Section   13 - 1 (table item headed "superannuation")

After:

generally ................................

Divisions   301 and 302

insert:

associated earnings on non - concessional contributions  

Subdivision   292 - B

4   Subsection   280 - 15(3)

Repeal the subsection, substitute:

  (3)   If non - concessional contributions exceed an indexed cap, the individual can:

  (a)   elect to release an amount corresponding to that excess, and 85% of the associated earnings on that excess, from the individual's superannuation interests; or

  (b)   elect not to release such an amount if the value of the individual's superannuation interests is nil.

An amount corresponding to those associated earnings is then included in the individual's assessable income and gives rise to a tax offset.

  (4)   The individual is taxed:

  (a)   if the amount released as described in paragraph   ( 3)(a) fell short of that excess--on that shortfall; or

  (b)   on that excess, if the individual did not make either of those elections.

An amount equal to this tax liability must be released from the individual's superannuation interests.

5   Division   292 (heading)

Repeal the heading, substitute:

Division   292 -- Excess non - concessional contributions

6   Section   292 - 1

Repeal the section, substitute:

292 - 1   What this Division is about

This Division limits the superannuation contributions made in a financial year that receive concessional tax treatment.

You become liable for tax if:

  (a)   your non - concessional contributions exceed an indexed cap; and

  (b)   you do not release a corresponding amount from your superannuation interests;

unless the value of your superannuation interests is nil.

An amount will be included in your assessable income, and you will become entitled to a tax offset, if you release such an amount or if the value of your superannuation interests is nil.

7   After Subdivision   292 - A

Insert:

Subdivision   292 - B -- Assessable income and tax offset

292 - 15   What this Subdivision is about

An amount is included in your assessable income, and you are entitled to a tax offset, if your non - concessional contributions exceed an indexed cap and:

  (a)   as a result, you release an amount from your superannuation interests; or

  (b)   the value of your superannuation interests is nil.

This amount included in your assessable income corresponds to your associated earnings on those excess contributions.

Table of sections

292 - 20   Amount in assessable income, and tax offset, relating to your non - concessional contributions

292 - 25   Amount included in assessable income

292 - 30   Amount of the tax offset

292 - 20   Amount in assessable income, and tax offset, relating to your non - concessional contributions

    Your assessable income for an income year includes an amount, and you are entitled to a * tax offset for the income year, if:

  (a)   you receive one or more * excess non - concessional contributions determinations for a * financial year that corresponds to the income year; and

  (b)   you make one or more elections under paragraph   96 - 7(1)(a) or (b) in Schedule   1 to the Taxation Administration Act 1953 in relation to those determinations.

292 - 25   Amount included in assessable income

  (1)   The amount included in your assessable income for the income year is equal to the amount of associated earnings stated in the most recent of those determinations.

  (2)   However, if:

  (a)   the sum of any amounts paid to you in response to release authorities issued in relation to those determinations (the total amount ) is less than the amount of the excess stated in the most recent of those determinations; and

  (b)   section   292 - 467 does not apply to you for the * financial year;

the amount included in your assessable income for the income year is equal to the amount of associated earnings that would have been stated in that most recent determination if the total amount had been the amount of the excess stated in that determination.

Note 1:   The amount included in your assessable income may be nil.

Note 2:   Any amounts paid to you in response to those release authorities are non - assessable non - exempt income (see section   303 - 17).

292 - 30   Amount of the tax offset

    The * tax offset is equal to 15% of the amount included in your assessable income for the income year under section   292 - 25.

Note 1:   This tax offset compensates for any tax liability of the superannuation provider on earnings from investments made with the contributions making up the excess amount stated in the most recent determination.

Note 2:   This offset cannot be refunded, transferred or carried forward (see item   20 of the table in subsection   63 - 10(1)).

8   Subsection   292 - 85(1)

Repeal the subsection, substitute:

  (1)   You have excess non - concessional contributions for a * financial year if:

  (a)   you receive one or more * excess non - concessional contributions determinations for the financial year; and

  (b)   the excess amount stated in the most recent of those determinations exceeds the sum of any amounts paid to you in response to release authorities issued, in relation to those determinations, under section   96 - 12 in Schedule   1 to the Taxation Administration Act 1953 ; and

  (c)   section   292 - 467 of this Act does not apply to you for the financial year.

  (1A)   The amount of your excess non - concessional contributions is:

  (a)   if no amounts were paid to you as described in paragraph   ( 1)(b)--the excess amount stated in that most recent determination; or

  (b)   otherwise--the amount of the excess worked out under paragraph   ( 1)(b).

Note:   Any excess non - concessional contributions determination you receive after the first one for a financial year is an amended determination.

9   Subsection   292 - 465(1)

After "for the purposes of this Division", insert "and Subdivision   97 - B in Schedule   1 to the Taxation Administration Act 1953 ".

10   Paragraph 292 - 465(2)(b)

Repeal the paragraph, substitute:

  (b)   if you receive one or more * excess non - concessional contributions determinations for the * financial year--before the end of:

  (i)   the period of 60 days starting on the day you receive the most recent of those determinations; or

  (ii)   a longer period allowed by the Commissioner.

11   Subsections   292 - 465(3) and (4)

Omit "the determination" (first occurring), substitute "a determination under subsection   ( 1)".

12   Subsection   292 - 465(7)

Omit "the determination", substitute "a determination made under subsection   ( 1)".

13   Subsection   292 - 465(8)

Omit "under this section", substitute "made under subsection   ( 1)".

14   Paragraph 292 - 465(9)(b)

Omit "this section", substitute " subsection   ( 1)".

15   After section   292 - 465

Insert:

292 - 467   Direction that the value of superannuation interests is nil

  (1)   The Commissioner must, by writing, direct that this section applies to you for a * financial year if:

  (a)   you receive one or more * excess non - concessional contributions determinations for the financial year; and

  (b)   as a result of those determinations, you make one or more elections under paragraph   96 - 7(1)(a) or (b) in Schedule   1 to the Taxation Administration Act 1953 ; and

  (c)   in the case of elections under paragraph   96 - 7(1)(a) in that Schedule--the sum of any amounts paid to you in response to any release authorities issued in relation to those elections is less than the excess amount stated in the most recent of those determinations; and

  (d)   the Commissioner is satisfied that the * value of all of your remaining * superannuation interests is nil.

Note 1:   The direction means you have no excess non - concessional contributions for the financial year (see paragraph   292 - 85(1)(c)), even though not all of the excess amount has been released to you.

Note 2:   The direction does not prevent an amount from being included in your assessable income (see Subdivision   292 - B).

Note 3:   Any excess non - concessional contributions determination you receive after the first one for a financial year is an amended determination.

  (2)   The Commissioner must give you a copy of the direction.

  (3)   A direction under this section may be included in a notice of assessment.

  (4)   To avoid doubt:

  (a)   you may object under section   292 - 245 against an * excess non - concessional contributions tax assessment made in relation to you on the ground that a direction was not made under this section; and

  (b)   for the purposes of paragraph   ( e) of Schedule   1 to the Administrative Decisions (Judicial Review) Act 1977 , not making a direction under this section is a decision forming part of the process of making an assessment of tax under this Act.

16   After section   303 - 15

Insert:

303 - 17   Payments from release authorities etc.--released non - concessional contributions and associated earnings

    A * superannuation benefit is not assessable income and is not * exempt income if it is paid to you in response to a release authority issued under section   96 - 12 in Schedule   1 to the Taxation Administration Act 1953 .

Note:   A related amount may still be included in your assessable income (see Subdivision   292 - B).

17   Subsection   995 - 1(1)

Insert:

"excess non-concessional contributions determination" has the meaning given by subsection   97 - 25(2) in Schedule   1 to the Taxation Administration Act 1953 .

"total release amount" , in relation to an * excess non - concessional contributions determination, has the meaning:

  (a)   given by paragraph   97 - 25(1)(c) in Schedule   1 to the Taxation Administration Act 1953 ; and

  (b)   affected by subsection   96 - 7(2) in that Schedule.

Taxation Administration Act 1953

18   After section   14ZVB

Insert:

14ZVC   Objections relating to non - concessional contributions

Taxation decisions to which section applies

  (1)   T his section applies to the following taxation decisions:

  (a)   an assessment against which a taxation objection may be made under section   175A of the Income Tax Assessment Act 1936 ;

  (b)   an excess non - concessional contributions determination (within the meaning of the Income Tax Assessment Act 1997 );

  (c)   an assessment against which a taxation objection may be made under section   292 - 245 of the Income Tax Assessment Act 1997 ;

  (d)   a determination under section   292 - 465 of the Income Tax Assessment Act 1997 , or a decision not to make a determination under that section;

  (e)   a direction under section   292 - 467 of the Income Tax Assessment Act 1997 , or a decision not to make a direction under that section;

  (f)   2 or more taxation decisions that are taken to be a single taxation decision under subsection   ( 2).

Decisions treated as single decision for common objection ground

  (2)   If:

  (a)   a person makes a taxation objection at a particular time, on a particular ground, against a taxation decision to which this section applies; and

  (b)   at that time, the person also objects, or could also object, on that ground, against another taxation decision to which this section applies;

then, for the purposes of this Part, those taxation decisions are taken to be a single taxation decision.

Limited objection rights because of earlier objection

  (3)   A person cannot object under this Part against a taxation decision to which this section applies on a particular ground if:

  (a)   the ground was a ground for an objection the person has made against another decision to which this section applies; or

  (b)   the ground could have been a ground for an objection the person has made against another decision to which this section applies.

19   After paragraph   14ZW(1)(aac)

Insert:

  (aaca)   if the taxation objection is made on a particular ground under any of the following provisions:

  (i)   section   175A of the Income Tax Assessment Act 1936 ;

  (ii)   section   97 - 35 in Schedule   1 to this Act;

  (iii)   section   292 - 245, 292 - 465 or 292 - 467 of the Income Tax Assessment Act 1997 ;

    within the same period that the person must lodge a taxation objection on that ground under section   292 - 245 of the Income Tax Assessment Act 1997 ; or

20   Part   2 - 35 in Schedule   1 (heading)

Repeal the heading, substitute:

Part   2 - 35 -- Excess superannuation contributions

21   Section   96 - 1 in Schedule   1

Repeal the section, substitute:

96 - 1   What this Subdivision is about

You may elect to release from your superannuation interests:

  (a)   up to 85% of your excess concessional contributions for a financial year; and

  (b)   your non - concessional contributions that exceed your non - concessional contributions cap for the financial year, and 85% of any associated earnings.

Superannuation providers will usually be required to pay an amount from the superannuation interests. However, for certain interests the provider may choose whether or not to pay.

Released concessional contributions are paid to the Commissioner. You get a credit for the released amount. Surplus credits are refunded to you under Division   3A of Part   IIB.

Released non - concessional contributions and associated earnings are paid to you.

22   Section   96 - 5 in Schedule   1 (heading)

Repeal the heading, substitute:

96 - 5   Electing to release excess concessional contributions

23   Subsection   96 - 5(1) in Schedule   1

After " * excess concessional contributions determination", insert "for a * financial year".

24   Subsection   96 - 5(1) in Schedule   1 (note 1)

Omit "Division   97", substitute "Subdivision   97 - A".

25   Paragraph 96 - 5(5)(b) in Schedule   1

Omit "section   96 - 40", substitute "subsection   96 - 40(1)".

26   After section   96 - 5 in Schedule   1

Insert:

96 - 7   Electing to release non - concessional contributions etc.

Original determinations

  (1)   If you receive an * excess non - concessional contributions determination for a * financial year, you may:

  (a)   elect to release the * total release amount stated in the determination from your * superannuation interests; or

  (b)   elect not to release that total release amount if the value of your superannuation interests is nil; or

  (c)   elect not to release that total release amount for some other reason.

Note 1:   For excess non - concessional contributions determinations, see Subdivision   97 - B.

Note 2:   The released amount will be non - assessable non - exempt income (see section   303 - 17 of the Income Tax Assessment Act 1997 ), but an amount corresponding to your associated earnings on those excess contributions will be included in your assessable income (see Subdivision   292 - B of that Act).

Note 3:   If the value of your superannuation interests is between nil and that total release amount, you could first make an election under paragraph   ( a) and then a further election under paragraph   ( b) (see subsection   ( 6)).

Note 4:   An election purportedly made under paragraph   ( b) will be invalid if the value of your superannuation interests was not nil.

Amended determinations

  (2)   However, if that determination is an amended determination that increased the * total release amount, any election under subsection   ( 1) relating to the amended determination is to be made as if that new total release amount were reduced by:

  (a)   if you made an election under paragraph   ( 1)(a) for each earlier * excess non - concessional contributions determination you received for the * financial year--the sum of any amounts paid to you in response to release authorities issued in relation to those determinations; or

  (b)   otherwise--the total release amount stated in the most recent of those earlier determinations.

  (3)   Receiving an amended determination does not prevent you from making an election under subsection   ( 1) in relation to an earlier determination.

Requirements for election

  (4)   You make an election under paragraph   ( 1)(a) by identifying:

  (a)   one or more superannuation providers who hold one or more * superannuation interests for you; and

  (b)   the amount each superannuation provider is to release.

  (5)   An election under paragraph   ( 1)(a), (b) or (c) relating to an * excess non - concessional contributions determination must:

  (a)   be in the * approved form; and

  (b)   be given to the Commissioner within:

  (i)   60 days after the Commissioner issued notice of that determination; or

  (ii)   a further period allowed by the Commissioner.

Unsuccessful release--making a further election

  (6)   If:

  (a)   you make a valid election under paragraph   ( 1)(a); and

  (b)   the Commissioner gives you a notice under subsection   96 - 40(2) stating an amount (the unpaid amount ) that a * superannuation provider did not pay in relation to the release authority issued in relation to that election;

you may make a further election under paragraph   ( 1)(a) or (b) for the release, or non - release, of the unpaid amount.

Note:   That further election would be under paragraph   ( 1)(b) if the value of your superannuation interests is now nil.

  (7)   The further election must comply with subsection   ( 4) and paragraph   ( 5)(a), and must be given to the Commissioner within:

  (a)   60 days after the Commissioner issued the notice mentioned in paragraph   ( 6)(b); or

  (b)   a further period allowed by the Commissioner.

Election is irrevocable

  (8)   An election under this section is irrevocable.

27   Section   96 - 10 in Schedule   1 (heading)

Repeal the heading, substitute:

96 - 10   Release authorities for elections under section   96 - 5

28   Subsection   96 - 10(1) in Schedule   1

Omit "in relation to * excess concessional contributions you have for a * financial year".

29   After section   96 - 10 in Schedule   1

Insert:

96 - 12   Release authorities for elections under section   96 - 7

  (1)   The Commissioner must issue one or more release authorities under this section if you make a valid election under paragraph   96 - 7(1)(a).

  (2)   A release authority may be issued to:

  (a)   a * superannuation provider identified in the election; or

  (b)   any other superannuation provider who holds one or more * superannuation interests for you.

  (3)   Each release authority must:

  (a)   state the total amount to be released by the * superannuation provider from * superannuation interests held by the provider for you; and

  (b)   be dated; and

  (c)   contain any other information that the Commissioner considers relevant.

30   Section   96 - 15 in Schedule   1

Omit "payment", substitute "notice under section   96 - 35".

31   Subsection   96 - 20(1) in Schedule   1

Omit "that has been".

32   After subsection   96 - 20(1) in Schedule   1

Insert:

  (1A)   A * superannuation provider issued with a release authority under section   96 - 12 must, within 21 days after the release authority is issued (or a further period allowed by the Commissioner), pay to the individual the lesser of:

  (a)   the amount stated in the release authority; and

  (b)   the sum of the * maximum available release amounts for each * superannuation interest held by the superannuation provider for the individual in * superannuation plans.

Note 1:   Subsection   288 - 95(3) provides for an administrative penalty for failing to comply with this section.

Note 2:   For the taxation treatment of the payment, see section   96 - 60.

33   At the end of section   96 - 20 in Schedule   1

Add:

  (3)   Despite paragraph   ( 1A)(b), the * maximum available release amount for a * defined benefit interest is not to be included in the sum worked out under that paragraph.

34   Section   96 - 25 in Schedule   1 (heading)

Repeal the heading, substitute:

96 - 25   Voluntary compliance with a release authority relating to voluntary release interests and defined benefit interests

35   Subsection   96 - 25(1) in Schedule   1

Omit "that has been".

36   Subsection   96 - 25(2) in Schedule   1

Repeal the subsection, substitute:

  (2)   A * superannuation provider issued with a release authority under section   96 - 12 may, within 21 days after the release authority is issued (or a further period allowed by the Commissioner), pay to the individual the lesser of:

  (a)   the amount stated in the release authority; and

  (b)   the sum of the * maximum available release amounts for each * defined benefit interest held by the superannuation provider for the individual in * superannuation plans.

  (3)   For the purposes of paragraph   ( 1)(a) or (2)(a), reduce the amount mentioned in that paragraph by any amount the provider pays under section   96 - 20 in relation to the release authority.

37   Subsection   96 - 35(1) in Schedule   1

Omit "that has been".

38   Subsection   96 - 35(1) in Schedule   1

After "section   96 - 10", insert "or 96 - 12".

39   Paragraph 96 - 35(2)(a) in Schedule   1

After "section   96 - 10", insert "or 96 - 12".

40   Subsection   96 - 35(3) in Schedule   1

Repeal the subsection, substitute:

  (3)   A notice under this section must be given in the * approved form:

  (a)   within 7 days after the release authority is issued, if the release authority was issued under section   96 - 10; or

  (b)   within 21 days after the release authority is issued (or a further period allowed by the Commissioner), if the release authority was issued under section   96 - 12.

Note:   Subsection   286 - 75(1) provides for an administrative penalty for failing to comply with this section.

41   Section   96 - 40 in Schedule   1

Repeal the section, substitute:

96 - 40   Notifying individual--unsuccessful release attempt

  (1)   The Commissioner must notify an individual if, in relation to the individual's election under section   96 - 5, the Commissioner:

  (a)   receives a notice from a * superannuation provider under subsection   96 - 35(2); or

  (b)   does not receive a payment from a superannuation provider of the full amount stated in a release authority within the time mentioned in subsection   96 - 20(1) or 96 - 25(1).

  (2)   The Commissioner must notify an individual if, in relation to the individual's election under paragraph   96 - 7(1)(a):

  (a)   the Commissioner receives a notice from a * superannuation provider under subsection   96 - 35(2); or

  (b)   the individual does not receive a payment from a superannuation provider of the full amount stated in a release authority within the time mentioned in subsection   96 - 20(1A) or 96 - 25(2).

  (3)   A notice under subsection   ( 1) or (2) must:

  (a)   be in writing; and

  (b)   identify the * superannuation provider; and

  (c)   state how much of the amount stated in the release authority was not paid within the applicable time.

96 - 42   Notifying individual--successful releases under section   96 - 12

  (1)   A * superannuation provider issued with a release authority under section   96 - 12 must notify an individual of a payment made to the individual in accordance with the release authority and this Subdivision.

  (2)   The notice must be given in the * approved form within:

  (a)   21 days after the release authority is issued; or

  (b)   a further period allowed by the Commissioner.

Note:   Subsection   286 - 75(2AA) provides an administrative penalty for failing to comply with this section.

42   Section   96 - 60 in Schedule   1 (note)

Repeal the note, substitute:

Note:   The income tax treatment of released amounts is also affected by Subdivision   292 - B, and sections   303 - 15 and 303 - 17, of that Act.

43   Division   97 in Schedule   1 (heading)

Repeal the heading, substitute:

Division   97 -- Excess contributions determinations

44   At the end of Division   97 in Schedule   1

Add:

Subdivision   97 - B -- Excess non - concessional contributions determinations

Guide to Subdivision   97 - B

97 - 20   What this Subdivision is about

The Commissioner must give you a determination stating:

  (a)   the amount by which your non - concessional contributions exceed your non - concessional contributions cap; and

  (b)   a proxy amount for your associated earnings on this excess; and

  (c)   the total amount that can be released from your superannuation interests in relation to this excess and those earnings.

Table of sections

Operative provisions

97 - 25   Excess non - concessional contributions determinations

97 - 30   Associated earnings

97 - 35   Review

Operative provisio n s

97 - 25   Excess non - concessional contributions determinations

  (1)   If your * non - concessional contributions for a * financial year (the contributions year ) exceed your * non - concessional contributions cap for the contributions year, the Commissioner must make a written determination stating:

  (a)   the amount of the excess; and

  (b)   the amount of your associated earnings worked out under section   97 - 30; and

  (c)   the following amount (the total release amount ):

   

  (2)   A determination under this section is an excess non - concessional contributions determination .

  (3)   The Commissioner may amend a determination at any time.

  (4)   Notice of the determination may be included in any other notice given to you by the Commissioner.

  (5)   Notice of a determination given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.

97 - 30   Associated earnings

  (1)   You are taken to have associated earnings equal to the sum (rounded down to the nearest dollar) of the amounts worked out under the following formula for each of the days during the period:

  (a)   starting on the first day of the contributions year; and

  (b)   ending on the day the Commissioner makes the first * excess non - concessional contributions determination you receive for the contributions year.

where:

"excess" means the amount of the excess referred to in paragraph   97 - 25(1)(a).

"proxy rate" means the lower of:

  (a)   the rate worked out under subsection   8AAD(1) for the first day of that period as if the base interest rate (within the meaning of subsection   8AAD(2)) for that day were the average of the base interest rates for each of the days of the contributions year; and

  (b)   a rate determined under subsection   ( 2) for the contributions year.

"sum of earlier daily proxy amounts" means the sum of the amounts worked out under the formula for each of the earlier days (if any) during that period.

Note:   Any excess non - concessional contributions determination you receive after the first one for the contributions year is an amended determination.

  (2)   The Minister may, by legislative instrument, determine a rate for a specified * financial year.

97 - 35   Review

    If you are dissatisfied with an * excess non - concessional contributions determination made in relation to you, you may object against the determination in the manner set out in Part   IVC.

45   Subsection   250 - 10(2) in Schedule   1 (table item   135R)

Omit "concessional", substitute "superannuation".

46   After subsection   286 - 75(2) in Schedule   1

Insert:

  (2AA)   You are also liable to an administrative penalty if:

  (a)   you are required under section   96 - 42 (releasing superannuation) to give a notice to an entity (other than the Commissioner) in the * approved form by a particular day; and

  (b)   you do not give the notice in the approved form to the entity by that day.

47   Section   288 - 90 in Schedule   1

Omit "paragraph   292 - 405(1)(b)", substitute "subsection   292 - 405(1)".

48   Subsection   288 - 95(3) in Schedule   1

Omit "concessional", substitute "superannuation".

49   Application of amendments

The amendments made by this Schedule apply in relation to non - concessional contributions for the 2013 - 14 financial year and later financial years.



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