Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 2) 1989No. 97, 1989 - SECT 9

9. After section 266 of the Principal Act the following Part is inserted:

"PART IX-TAXATION OF SUPERANNUATION BUSINESS AND RELATED BUSINESS
                            "Division 1-Preliminary
Interpretation

"267. (1) In this Part, unless the contrary intention appears:
'actuary' has the same meaning as in the Life Insurance Act 1945;
'approved person' means a person included in a class of persons for the time
being approved by the Commissioner in writing for the purposes of this
definition;
'arm's length premium', in relation to an insurance policy, means the amount
that the insured could reasonably be expected to be required to pay to obtain
the insurance policy under a transaction where the parties to the transaction
are dealing with each other at arm's length in relation to the transaction;
'complying ADF', in relation to a year of income, means a fund in respect of
which:

   (a)  the Insurance and Superannuation Commissioner has given a notice under
        section 14 of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the fund satisfied the
        approved deposit fund conditions in relation to the year of income; or

   (b)  the Insurance and Superannuation Commissioner has given a notice under
        section 15 of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the fund should be
        treated as if it had satisfied the approved deposit fund conditions in
        relation to the year of income;
'complying superannuation fund', in relation to a year of income, means a fund
in respect of which:

   (a)  the Insurance and Superannuation Commissioner has given a notice under
        section 12 of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the fund satisfied the
        superannuation fund conditions in relation to the year of income; or

   (b)  the Insurance and Superannuation Commissioner has given a notice under
        section 13 of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the fund should be
        treated as if it had satisfied the superannuation fund conditions in
        relation to the year of income;
'constitutionally protected fund' has the meaning given by subsection 271 (2);
'death or disability benefit', in relation to a member of a complying
superannuation fund, means:

   (a)  a benefit provided to a dependant of the member in the event of the
        death of the member;

   (b)  a benefit provided to the member in the event of the permanent
        disability of the member; or

   (c)  a benefit provided to the member, by way of income, during a period
        when the member is unable to perform the normal duties of the member's
        employment, being a period not exceeding 2 years or, if the
        Commissioner approves in writing a longer period in relation to the
        fund, that period;
'dependant' has the same meaning as in the OSS Act;
'eligible ADF', in relation to a year of income, means a fund that is a
complying ADF, or a non-complying ADF, in relation to the year of income;
'eligible entity', in relation to a year of income, means:

   (a)  a fund that is an eligible ADF in relation to the year of income;

   (b)  a fund that is an eligible superannuation fund in relation to the year
        of income; or

   (c)  a unit trust that is a PST in relation to the year of income;
'eligible superannuation fund', in relation to a year of income, means a fund
that is a complying superannuation fund, or a non-complying superannuation
fund, in relation to the year of income;
'eligible termination payment' has the same meaning as in Subdivision AA of
Division 2 of Part III;
'life assurance company' has the same meaning as in Division 8 of Part III;
'non-complying ADF', in relation to a year of income, means a fund that, at
all times during the year of income when the fund is in existence, is an
approved deposit fund within the meaning of the OSS Act, but does not include
a fund that is a complying ADF in relation to the year of income;
'non-complying superannuation fund', in relation to a year of income, means a
fund that, at all times during the year of income when the fund is in
existence, is:

   (a)  a provident, benefit, superannuation or retirement fund; or

   (b)  a superannuation fund within the meaning of the OSS Act;
but does not include a fund that is a complying superannuation fund in
relation to the year of income;
'normal assessable income' means assessable income other than:

   (a)  special income; or

   (b)  taxable contributions;
'OSS Act' means the Occupational Superannuation Standards Act 1987;
'OSS notice' means a notice under the OSS Act;
'pooled superannuation trust' or 'PST', in relation to a year of income, means
a unit trust in respect of which:

   (a)  the Insurance and Superannuation Commissioner has given a notice under
        section 15B of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the unit trust satisfied
        the pooled superannuation trust conditions in relation to the year of
        income; or

   (b)  the Insurance and Superannuation Commissioner has given a notice under
        section 15C of the OSS Act stating that the Insurance and
        Superannuation Commissioner is satisfied that the unit trust should be
        treated as if it had satisfied the pooled superannuation trust
        conditions in relation to the year of income;
'registered organization' has the same meaning as in Division 8A of Part III;
'special component':

   (a)  in relation to a complying ADF-has the meaning given by section 292;

   (b)  in relation to a complying superannuation fund-has the meaning given
        by section 284; or

   (c)  in relation to a PST-has the meaning given by section 298;
'special income' has the meaning given by section 273;
'specified roll-over amount', in relation to an eligible entity, means so much
of an amount paid to the eligible entity as is required, by the operation of
section 27D in relation to:

   (a)  an eligible termination payment that comes within paragraph (a) or
        (aa) of the definition of 'eligible termination payment' in subsection
        27A (1); or

   (b)  an eligible termination payment made from a fund that is a
        constitutionally protected fund in relation to the year of income of
        the fund in which the payment is made;
to be regarded as being the application of some or all of an amount referred
to in sub-subparagraph 27D (1) (b) (iii) (A);
'standard component':

   (a)  in relation to a complying ADF-has the meaning given by section 293;

   (b)  in relation to a complying superannuation fund-has the meaning given
        by section 285; or

   (c)  in relation to a PST-has the meaning given by section 299;
'superannuation policy' has the same meaning as in Division 8 of Part III;
'taxable contribution' has the meaning given by section 274;
'unit trust' has the same meaning as in Division 6C of Part III.

"(2) The Commissioner, in giving an approval for the purposes of paragraph (c)
of the definition of 'death or disability benefit' in subsection (1), shall
have regard to:

   (a)  any relevant approval given in relation to the fund concerned for the
        purposes of the definition of 'superannuation fund' in subsection 3
        (1) of the OSS Act; and

   (b)  any other relevant circumstances.

"(3) A reference in this Part to a fund or unit trust shall, where
appropriate, be read as a reference to the trustee of the fund or unit trust.
Trustees of funds not constituted as trusts

"268. Where, apart from this section, there is in relation to a fund no person
who is a trustee of the fund for the purposes of this Part, the person, or
each of the persons, who manages the fund shall be taken, for the purposes of
this Part, to be the trustee, or a trustee, as the case requires, of the fund.
Issue, revocation etc. of OSS notices

"269. For the purposes of this Part, where an OSS notice is given in relation
to a fund or unit trust in relation to a year of income:

   (a)  the notice shall be deemed to have been given at the beginning of the
        year of income; and

   (b)  if:

        (i)    the notice is revoked; or

        (ii)   the decision to give the notice is set aside;
the notice shall be deemed never to have been given. Part to apply to
government funds etc.

"270. A reference in this Part to a fund or unit trust includes a reference to
a fund or unit trust established by:

   (a)  a law of the Commonwealth or of a State or Territory; or

   (b)  a public authority constituted by or under a law of the Commonwealth
        or of a State or Territory. Part has effect subject to the
        Constitution

"271. (1) It is the intention of the Parliament that if, but for this section,
this Part would have the effect that a law imposing taxation would impose tax
on property of any kind belonging to a State within the meaning of section 114
of the Constitution, this Part shall not have that effect.

"(2) For the purposes of this Part, a fund is a constitutionally protected
fund in relation to a year of income if subsection (1) applies to the fund in
relation to any tax in relation to the year of income. Assumption to be made
in calculating taxable income

"272. The taxable income of an eligible entity shall be calculated as if the
trustee were a taxpayer and a resident. Special income

"273. (1) This section applies to income derived in a year of income by a fund
or unit trust (in this section called the 'entity') that is a complying
superannuation fund, a complying ADF or a PST in relation to the year of
income.

"(2) A dividend paid to the entity by a company that is a private company in
relation to the year of income of the company in which the dividend was paid
is special income of the entity unless the Commissioner is of the opinion that
it would be reasonable not to treat the dividend as special income of the
entity, having regard to:

   (a)  the paid-up value of the shares in that company that are assets of the
        entity;

   (b)  the cost to the entity of the shares on which the dividend was paid by
        the company;

   (c)  the rate of the dividend paid to the entity by the company on the
        shares in the company that are assets of the entity;

   (d)  whether the company has paid a dividend on other shares in the company
        and, if so, the rate of that dividend;

   (e)  whether any shares have been issued by the company to the entity in
        satisfaction of, or of a part of, a dividend paid by the company and,
        if so, the circumstances of the issue of those shares; and

   (f)  any other matters that the Commissioner considers relevant.

"(3) For the purposes of subsection (2), income that, in the opinion of the
Commissioner, was derived by the entity indirectly from a dividend paid by a
company, being a private company in relation to the year of income of the
company in which the dividend was paid, shall be deemed to have been a
dividend paid to the entity by the company.

"(4) Income (other than a dividend to which subsection (2) applies) derived by
the entity from a transaction is special income of the entity if the parties
to the transaction were not dealing with each other at arm's length in
relation to the transaction and that income is greater than the income that
might have been expected to have been derived by the entity from the
transaction if those parties had been dealing with each other at arm's length
in relation to the transaction.

"(5) A reference in subsection (4) to a transaction includes a reference to a
series of transactions.
                       "Division 2-Taxable Contributions
Taxable contributions

"274. (1) Subject to this Division, the following amounts paid to an eligible
entity (other than a PST) are taxable contributions:

   (a)  if the eligible entity is an eligible superannuation fund:

        (i)    an amount in respect of which a deduction is allowable, or
               would but for subsection 73B (20) be allowable, under section
               82AAC to the person making the payment;

        (ii)   a contribution made by a person (in this section called the
               'contributor') to obtain superannuation benefits for the
               contributor or, in the event of the death of the contributor,
               for dependants of the contributor, but not including so much of
               such a contribution as is deemed by section 27D to have been
               expended in making a payment as mentioned in paragraph 27A (12)
               (a);

        (iii)  a contribution made by an exempt entity (within the meaning of
               Division 6C of Part III) for the purpose of making provision
               for superannuation benefits for, or for dependants of, a
               person;

        (iv)   a specified roll-over amount;

   (b)  if the eligible entity is an eligible ADF-a specified roll-over
        amount.

"(2) Contributions to which subparagraph (1) (a) (ii) applies that are made to
a complying superannuation fund in a year of income are not taxable
contributions to the extent to which they are contributions covered by a
notice under subsection 82AAT (1A) given to the trustee of the fund before the
date on which the trustee lodges the return of income of the fund of the year
of income.

"(3) Contributions to which subparagraph (1) (a) (ii) applies that are made to
a complying superannuation fund in a year of income are not taxable
contributions if a notice under subsection (4) has been given in relation to
the contributor in relation to the year of income before the date on which the
trustee lodges the return of income of the fund of the year of income.

"(4) An approved person may give a notice to the trustee of a complying
superannuation fund stating that the approved person is satisfied that, apart
from subsection 82AAS (3), a person specified in the notice (who may be the
approved person) would not be an eligible person (within the meaning of
Subdivision AB of Division 3 of Part III) in relation to a year of income
specified in the notice.

"(5) The notice under subsection (4):

   (a)  shall be in the prescribed form;

   (b)  shall be given in the prescribed manner; and

   (c)  is irrevocable. Transfer of taxable contributions

"275. (1) Where:

   (a)  the whole or a part of a taxable contribution made to a complying
        superannuation fund or a complying ADF in a year of income of the fund
        (in this section called the 'fund's year of income'):

        (i)    is applied by the trustee of the fund in the purchase of a
               superannuation policy from a life assurance company or
               registered organization (in this subsection called the
               'transferee'); or

        (ii)   is applied by the trustee of the fund in the purchase of units
               in a PST (in this subsection also called the 'transferee'); and

   (b)  the trustee of the fund, with the consent of the transferee, gives to
        the Commissioner a notice stating that this section is to apply to the
        whole or a specified part of so much of the contribution as was so
        applied; the amount to which the notice relates shall be taken, for
        the purposes of this Act:

   (c)  to be included in the assessable income of the transferee of the year
        of income of the transferee in which the end of the fund's year of
        income occurs; and

   (d)  not to be included in the assessable income of the fund of the fund's
        year of income.

"(2) The notice under paragraph (1) (b):

   (a)  shall be in the prescribed form;

   (b)  shall be given in the prescribed manner;

   (c)  shall be given on or before the date of lodgment of the return of
        income of the fund for the fund's year of income; and

   (d)  is irrevocable. Contribution notices given after return lodgment date

"276. (1) Subject to this section, if:

   (a)  a notice under subsection 82AAT (1A) in relation to a contribution
        made to a fund in a year of income (in this section called the
        'contribution year') is given to the trustee of the fund in a later
        year of income (in this section called the 'notice year') and on or
        after the date specified in subsection 274 (2); and

   (b)  apart from this section, the assessable income of the fund of the
        contribution year would include an amount (in this section called the
        'clawback amount') that would not have been included if the notice had
        been given to the trustee before that date; the clawback amount is
        allowable as a deduction from the assessable income of the fund of the
        notice year.

"(2) In determining whether paragraph (1) (b) is satisfied, section 275 shall
be disregarded.

"(3) If the Commissioner is satisfied, having regard to the matters specified
in subsection (4), that it would be appropriate for the clawback amount not to
be included in the assessable income of the fund of the contribution year:

   (a)  so much of the contribution referred to in paragraph (1) (a) as is
        equal to the clawback amount shall be taken for the purposes of this
        Part (other than this section) never to have been a taxable
        contribution; and

   (b)  the clawback amount is not allowable as a deduction under subsection
        (1).

"(4) The matters to which the Commissioner is to have regard are:

   (a)  whether the clawback amount exceeds the amount that would be the
        taxable income of the fund of the notice year apart from this section;

   (b)  the amount of the rebates (if any) allowable to the trustee of the
        fund under Part IIIAA in relation to the notice year; and

   (c)  such other matters as the Commissioner considers relevant.

"(5) This section applies only once in respect of a particular contribution or
part of a contribution. Contributions treated as assessable in determining
deductions

"277. In determining the deductions allowable from the assessable income of an
eligible entity (other than a PST), any amount to which subsection 274 (1)
applies shall be treated as if it were assessable income of the eligible
entity (whether or not it is a taxable contribution).
                  "Division 3-Complying Superannuation Funds
Liability to taxation

"278. (1) The trustee of a complying superannuation fund is liable to pay tax
on the taxable income of the fund of the year of income.

"(2) Except as provided by Division 11A of Part III, the income of a complying
superannuation fund of the year of income is not subject to tax except as
provided by this Part. Deduction for premiums for death or disability cover

"279. (1) Where, in a year of income, the trustee of a complying
superannuation fund pays a premium for an insurance policy that is, in whole
or in part, in respect of a current or contingent liability of the fund to
provide death or disability benefits for members of the fund, so much of the
premium as is attributable to the liability is allowable as a deduction in
respect of the year of income.

"(2) Where:

   (a)  during the whole or a part of a year of income, a complying
        superannuation fund is subject to a current or contingent liability to
        provide death or disability benefits for members of the fund; and

   (b)  that liability, to some extent, is not covered by an insurance policy;
        the lowest arm's length premium for an insurance policy in respect of
        that liability, to the extent to which it is not so covered, is an
        allowable deduction in respect of the year of income.

"(3) A deduction is not allowable under this section unless the return of the
fund of the year of income is accompanied by a certificate by an actuary, in
the prescribed form, with respect to the operation of this section. No
deduction in respect of benefits

"280. No deduction is allowable from the assessable income of a complying
superannuation fund in respect of benefits. Assessable income to include
taxable contributions

"281. Subject to section 275, the assessable income of a complying
superannuation fund of a year of income includes taxable contributions made to
the fund in the year of income. Exclusion from assessable income of amounts
that accrued before 1 July 1988

"282. The assessable income of a complying superannuation fund of a year of
income shall not include so much of any amount derived in the year of income
as accrued to the fund before 1 July 1988. Exemption of income attributable to
current pensions

"283. (1) For each amount that, apart from this section, would be normal
assessable income of a complying superannuation fund, the percentage (if any)
calculated under subsection (2) is exempt from tax.

"(2) The percentage is calculated in accordance with the formula:
Current pension liabilities
Total liabilities where:
Current pension liabilities is so much of the average liabilities of the fund
of the year of income as, in the opinion of the Commissioner, represents
liabilities to pay pensions during the year of income; and
Total liabilities is the average liabilities of the fund of the year of
income.

"(3) An amount of income of a fund of a year of income is not exempt from tax
under this section unless the return of the fund of the year of income is
accompanied by a certificate by an actuary, in the prescribed form, with
respect to the operation of this section. Special component of taxable income

"284. The special component of the taxable income of a complying
superannuation fund is the amount (if any) remaining after deducting from the
special income:

   (a)  any allowable deductions that relate exclusively to the special
        income; and

   (b)  so much of any other allowable deductions as, in the opinion of the
        Commissioner, may appropriately be related to the special income.
        Standard component of taxable income

"285. The standard component of the taxable income of a complying
superannuation fund is the amount (if any) remaining after deducting the
special component from the taxable income.

"Division 4-Non-complying Superannuation Funds Liability to taxation

"286. (1) The trustee of a non-complying superannuation fund is liable to pay
tax on the taxable income of the fund of the year of income.

"(2) Except as provided by Division 11A of Part III, the income of a
non-complying superannuation fund of the year of income is not subject to tax
except as provided by this Part. No deduction in respect of benefits

"287. No deduction is allowable from the assessable income of a non-complying
superannuation fund in respect of benefits. Assessable income to include
taxable contributions

"288. The assessable income of a non-complying superannuation fund of a year
of income includes taxable contributions made to the fund in the year of
income.

"Division 5-Complying Approved Deposit Funds Liability to taxation

"289. (1) The trustee of a complying ADF is liable to pay tax on the taxable
income of the fund of the year of income.

"(2) Except as provided by Division 11A of Part III, the income of a complying
ADF of the year of income is not subject to tax except as provided by this
Part. Assessable income to include taxable contributions

"290. Subject to section 275, the assessable income of a complying ADF of a
year of income includes taxable contributions made to the fund in the year of
income. Exclusion from assessable income of amounts that accrued before 1 July
1988

"291. The assessable income of a complying ADF of a year of income shall not
include so much of any amount derived in the year of income as accrued to the
fund before 1 July 1988. Special component of taxable income

"292. The special component of the taxable income of a complying ADF is the
amount (if any) remaining after deducting from the special income:

   (a)  any allowable deductions that relate exclusively to the special
        income; and

   (b)  so much of any other allowable deductions as, in the opinion of the
        Commissioner, may appropriately be related to the special income.
        Standard component of taxable income

"293. The standard component of the taxable income of a complying ADF is the
amount (if any) remaining after deducting the special component from the
taxable income.

"Division 6-Non-complying Approved Deposit Funds Liability to taxation

"294. (1) The trustee of a non-complying ADF is liable to pay tax on the
taxable income of the fund of the year of income.

"(2) Except as provided by Division 11A of Part III, the income of a
non-complying ADF of the year of income is not subject to tax except as
provided by this Part. Assessable income to include taxable contributions

"295. The assessable income of a non-complying ADF of a year of income
includes taxable contributions made to the fund in the year of income.
                   "Division 7-Pooled Superannuation Trusts
Liability to taxation

"296. (1) The trustee of a PST is liable to pay tax on the taxable income of
the trust of the year of income.

"(2) Except as provided by Division 11A of Part III, the income of a PST of
the year of income is not subject to tax except as provided by this Part.

"(3) Subsection (2) does not affect any liability arising under paragraph 26
(b) or under Division 6 of Part III, in relation to a year of income, in
relation to a unitholder that is not a complying ADF, a complying
superannuation fund or a PST in relation to that year of income. Exclusion
from assessable income of amounts that accrued before 1 July 1988

"297. The assessable income of a PST of a year of income shall not include so
much of any amount derived in the year of income as accrued to the trust
before 1 July 1988. Special component of taxable income

"298. The special component of the taxable income of a PST is the amount (if
any) remaining after deducting from the special income:

   (a)  any allowable deductions that relate exclusively to the special
        income; and

   (b)  so much of any other allowable deductions as, in the opinion of the
        Commissioner, may appropriately be related to the special income.
        Standard component of taxable income

"299. The standard component of the taxable income of a PST is the amount (if
any) remaining after deducting the special component from the taxable income.
                           "Division 8-Miscellaneous
Rebates and provisional tax

"300. (1) The trustee of a fund that is an eligible superannuation fund or an
eligible ADF in relation to a year of income:

   (a)  is entitled to a rebate as provided by section 160AB;

   (b)  is not entitled to a rebate as provided by section 46 or 46A; and

   (c)  except where the fund is a non-complying superannuation fund, or a
        non-complying ADF, in relation to the year of income, is not liable to
        pay provisional tax under Division 3 of Part VI in respect of income
        of the fund.

"(2) The trustee of a PST:

   (a)  is entitled to a rebate as provided by section 160AB;

   (b)  is not entitled to a rebate as provided by section 46 or 46A; and

   (c)  is not liable to pay provisional tax under Division 3 of Part VI in
        respect of income of the PST. Amendment of assessments

"301. Where:

   (a)  an assessment has been made in relation to a year of income; and

   (b)  a provision of this Part that is relevant to the assessment is
        dependent on a circumstance that occurs or may occur after the end of
        the year of income; nothing in section 170 prevents the amendment of
        the assessment at any time for the purpose of giving effect to this
        Act in relation to the occurrence of that circumstance after the end
        of the year of income.".