Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT (SUPERANNUATION) ACT 1989No. 105, 1989 - SECT 6

6. Sections 27B and 27C of the Principal Act are repealed and the following
sections are substituted: Components of an ETP

"27AA. (1) An ETP consists of one or more of the following components:

   (a)  the concessional component;

   (b)  the undeducted contributions;

   (c)  in the case of an immediate annuity eligible termination payment - the
        non-qualifying component;

   (d)  the pre-July 83 component, which is the lesser of the following
        amounts:

        (i)    the amount calculated using the formula:
Pre-July 83
(ETP - C - NQ) x -----------
Total period
where:
ETP is the amount of the ETP;
C is the concessional component;
NQ is the non-qualifying component;
Pre-July 83 is the number of whole days (if any) in the eligible service
period that occurred before 1 July 1983; and
Total period is the number of whole days in the eligible service period;

        (ii)   the amount represented by the component (ETP-C-NQ) in
               subparagraph (i), reduced by the undeducted contributions;

   (e)  the post-June 83 component, which is the ETP reduced by the other
        components.

"(2) The Commissioner may increase the amount calculated under subparagraph
(1) (d) (i) if the Commissioner considers it appropriate to do so having
regard to the following matters:

   (a)  if the ETP relates to employment in which the taxpayer was engaged on
        30 June 1983 - the amount of an ETP that could, in the opinion of the
        Commissioner, reasonably be expected to have been made in relation to
        the taxpayer in consequence of the termination of that employment if
        that employment had been terminated on that date;

   (b)  if the ETP relates to membership of the taxpayer of a superannuation
        fund on 30 June 1983 - the amount of an ETP that could, in the opinion
        of the Commissioner, reasonably be expected to have been made in
        relation to the taxpayer from the fund in consequence of the
        termination of the taxpayer's membership of the fund if that
        membership had terminated on that date;

   (c)  any previous application in relation to the taxpayer of this
        subsection or of subsection 27B (2) as in force at any time before the
        commencement of section 1 of the
        Taxation Laws Amendment (Superannuation) Act 1989;

   (d)  such other matters as the Commissioner considers relevant. Taxed and
        untaxed elements of post-June 83 component

"27AB. (1) Subject to this section, the extent to which the post-June 83
component of an ETP consists of taxed and untaxed elements is determined as
follows:

   (a)  the extent to which it consists of a taxed element is determined in
        accordance with the table below;

   (b)  to the extent to which it does not consist of a taxed element, it
        consists of an untaxed element.
TABLE OF TAXED ELEMENTS
------------------------------------------------------------------------------
-- Taxed
Item    ETP type                                                element

------------------------------------------------------------------------------
-- 1       (a) or (aa)  . . . . . . . . . . . . . . . . . . . . .  none

2       (b), if paid from taxed superannuation fund during the  whole

life of the taxpayer
3       (b), if paid from taxed superannuation fund after the   amount

        death of the taxpayer                                   calculated
under subsection (3)
4       (ba), if paid from taxed superannuation fund  . . . . . amount

calculated under subsection (3)
5       (c), (ca), (g), (h) or (j)  . . . . . . . . . . . . . . whole

6       (d), (e) or (f), if pension concerned payable from      amount

        taxed superannuation fund and entitlement to pension    calculated

under arose because of the death of a member of the fund      subsection (3)

7       (d), (e) or (f), if pension concerned paid from taxed   whole

superannuation fund and ETP not covered by item 6
8       (da), (db), (ga) or (gb), if paid from taxed            amount

        superannuation fund                                     calculated
under subsection (3)
9       ETP not covered by items 1 to 8, where no part is       none

attributable to taxed element of earlier ETP
10      ETP not covered by items 1 to 8, but to some extent     so much of
that
        attributable to taxed element of earlier ETP            component as
is
attributable to
the taxed
element of the
post-June 83
component of the earlier ETP

"(2) For the purposes of the table above:

   (a)  paragraph references indicate an ETP that is covered by the paragraph
        concerned of the definition of 'eligible termination payment' in
        subsection 27A (1); and

   (b)  an ETP is attributable to a taxed element if, and only if, the ETP is
        (in whole or in part) attributable to the taxed element of the
        post-June 1983 component of an earlier ETP.

"(3) The taxed element of the post-June 83 component of an ETP covered by item
3, 4, 6 or 8 in the table in subsection (1) is determined as follows:

   (a)  if both of the following subparagraphs apply in relation to the
        post-June 83 component:

        (i)    no deduction is or was allowable under section 279 to the
               trustee of the taxed superannuation fund concerned in any year
               of income in relation to a current or contingent liability to
               provide death or disability benefits (within the meaning of
               Part IX) for the deceased person concerned;

        (ii)   no deduction is or was allowable under section 279B to the
               trustee of the taxed superannuation fund concerned in any year
               of income in relation to a death or disability ETP (within the
               meaning of that section) paid in relation to the deceased
               person concerned; the taxed element is the whole of the
               component;

   (b)  if paragraph (a) does not apply:

        (i)    in the case of an ETP covered by item 6 or 8 in the table in
               subsection (1) that was calculated by taking into account the
               amount, or the amount that would have been the amount, of the
               unused undeducted purchase price in relation to a pension or
               annuity (which amount is in this subsection called the 'UUPP
               amount'), the taxed element of the post-June 83 component of
               the ETP is the amount that would have been the amount of the
               post-June 83 component if the ETP had been equal to the amount
               calculated using the following formula and had been reduced by
               the UUPP amount:
Days in eligible service period
Grossed-up ETP x -------------------------------
Days in total service period
where:
Grossed-up ETP is the amount of the ETP increased by
Days in eligible service period is the number of whole
Days in total service period is the sum of: the UUPP amount; days in the
eligible service period in relation to the ETP;

                (A)  Days in eligible service period; and

                (B)  the number of whole days in the period commencing on the
                     date of the death of the member of the fund and ending on
                     the last retirement date; or

        (ii)   in any other case - the amount that would have been the amount
               of the post-June 83 component if the ETP had been equal to the
               amount calculated using the following formula:
Days in eligible service period
ETP x -------------------------------
Days in total service period
where:
ETP is the amount of the ETP;
Days in eligible service period has the same meaning as in subparagraph (i);
Days in total service period has the same meaning as in subparagraph (i).

"(4) In spite of anything in subsection (1), where:

   (a)  an ETP is paid from a taxed superannuation fund;

   (b)  apart from this subsection, the post-June 83 component of the ETP
        consists wholly or partly of a taxed element (which taxed element is
        in this subsection called the 'otherwise taxed element'); and

   (c)  the trustee of the fund gives to the person to whom the ETP is paid,
        within the time and in the manner approved by the Commissioner in
        writing, a written notice nominating the whole or a specified part of
        the otherwise taxed element as an untaxed element of the post-June 83
        component of the ETP; so much of the otherwise taxed element of the
        post-June 83 component of the ETP as is covered by the notice shall be
        treated as, or as an additional part of, the untaxed element of the
        post-June 83 component of the ETP.

"(5) The trustee of the fund is not allowed to give more than one notice under
subsection (4) in relation to a particular ETP.

"(6) Where, because of subsection 27A (17):

   (a)  a particular part of an ETP is taken to have been paid from a taxed
        superannuation fund; and

   (b)  the remaining part of the ETP is not taken to have been paid from a
        taxed superannuation fund; the following provisions have effect:

   (c)  the taxed element of the post-June 83 component of the ETP is the
        amount obtained by:

        (i)    treating each of the parts referred to in paragraph (a) and (b)
               of this subsection as separate ETPs;

        (ii)   calculating the taxed element of the post-June 83 component of
               each of those separate ETPs in accordance with the preceding
               provisions of this section; and

        (iii)  adding together those taxed elements;

   (d)  to the extent to which the post-June 83 component of the ETP does not
        consist of a taxed element, it consists of an untaxed element.
        Assessable income to include certain superannuation and kindred
        payments

"27B. (1) Where an ETP is made in relation to a taxpayer in a year of income,
the assessable income of the taxpayer of the year of income includes:

   (a)  the taxed element of the post-June 83 component reduced by so much of
        that element as has been rolled-over; and

   (b)  the untaxed element of the post-June 83 component reduced by so much
        of that element as has been rolled-over.

"(2) Where an ETP is made in relation to a taxpayer in a year of income, the
assessable income of the taxpayer of the year of income includes the
non-qualifying component. Assessable income to include 5% of certain amounts

"27C. (1) Subject to subsection (2), if an ETP made in relation to a taxpayer
in a year of income includes a pre-July 83 component, the assessable income of
the taxpayer of the year of income shall include 5% of so much of that
component as has not been rolled-over.

"(1A) If the Commissioner, having regard to the extent to which the ETP would
have been included in the assessable income of the taxpayer if the amendments
made by the Income Tax Assessment Amendment Act (No. 3) 1984 had not been
made, considers that it is appropriate that a lesser amount be included
instead in the taxpayer's assessable income, that lesser amount shall be
included.

"(2) If an ETP made in relation to a taxpayer in a year of income includes a
concessional component, the assessable income of the taxpayer of the year of
income shall include 5% of so much of that component as has not been
rolled-over. Anti-detriment provision for service mismatch cases

"27CA. (1) This section applies to an ETP (in this section called the 'actual
ETP') if:

   (a)  the ETP is made in relation to the taxpayer on or after the taxpayer's
        55th birthday; and

   (b)  the ETP:

        (i)    is paid by a continuously complying superannuation fund or
               continuously complying ADF; or

        (ii)   is made in relation to the commutation of, or is the residual
               capital value of, a rebatable ETP annuity (within the meaning
               of Subdivision AAB of Division 17).

"(2) If the Commissioner is satisfied in respect of the actual ETP that:

   (a)  the old system net benefit for the equivalent old system ETP would
        have exceeded the actual net benefit for the actual ETP; and

   (b)  the whole or part (which whole or part is in this section called the
        'detriment amount') of the excess referred to in paragraph (a) is
        attributable to the fact that an amount or amounts were included in
        the assessable income of any taxpayer in relation to taxable
        contributions made to a complying superannuation fund; the
        Commissioner shall take such steps as are necessary to compensate the
        taxpayer for the detriment amount.

"(3) The steps that the Commissioner may take include:

   (a)  reducing the amount of tax payable by the taxpayer in respect of the
        year of income in which the actual ETP was received (including a
        reduction by way of a rebate of tax or increased rebate of tax); or

   (b)  granting to the taxpayer an entitlement to a credit of tax.

"(4) Sections 160AI to 160AL (inclusive) apply in relation to a decision of
the Commissioner granting an entitlement to a credit under this section in
like manner as those sections apply to a determination of a credit within the
meaning of those sections.

"(5) The Commissioner shall apply a credit of tax to which the taxpayer is
entitled under this section in payment successively of:

   (a)  any tax payable by the taxpayer in respect of the year of income in
        which the ETP is made (whether or not that tax is due for payment);
        and

   (b)  any other liability of the taxpayer to the Commonwealth arising under,
        or by virtue of, this Act or any other Act of which the Commissioner
        has the general administration; and shall refund to the taxpayer so
        much of the credit as is not so applied.".