Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013 (82 of 2013)

Schedule 3   Sustaining the superannuation contribution concession

Part 1   Main amendments

Income Tax Assessment Act 1997

1   After Division 292

Insert:

Division 293 - Sustaining the superannuation contribution concession

Table of Subdivisions

Guide to Division 293

293-A Object of this Division

293-B Sustaining the superannuation contribution concession

293-C When tax is payable

293-D Modifications for defined benefit interests

293-E Modifications for constitutionally protected State higher level office holders

293-F Modifications for Commonwealth justices

293-G Modifications for temporary residents who depart Australia

Guide to Division 293

293-1 What this Division is about

This Division reduces the concessional tax treatment of certain superannuation contributions made for very high income individuals.

The high income threshold is $300,000.

There are special rules for defined benefit interests, constitutionally protected State higher level office holders, certain Commonwealth justices and temporary residents who depart Australia.

Note: Part 3-20 in Schedule 1 to the Taxation Administration Act 1953 contains rules about the administration of the Division 293 tax.

Subdivision 293-A - Object of this Division

Table of sections

Operative provisions

293-5 Object of this Division

Operative provisions

293-5 Object of this Division

The object of this Division is to reduce the concessional tax treatment of superannuation contributions for very high income individuals.

Subdivision 293-B - Sustaining the superannuation contribution concession

Guide to Subdivision 293-B

293-10 What this Subdivision is about

This Subdivision reduces the superannuation tax concession for very high income earners.

An individual's income is added to certain superannuation contributions and compared to the high income threshold of $300,000. A tax is payable on the excess, or on the superannuation contributions (whichever is less).

The tax is not payable in respect of excess concessional contributions that have been taxed under Division 292 (or refunded under section 292-467).

Table of sections

Liability for tax

293-15 Liability for tax

293-20 Your taxable contributions

Low tax contributions

293-25 Your low tax contributions

293-30 Low tax contributed amounts

293-35 Effect of determination relating to refunded excess concessional contributions

Liability for tax

293-15 Liability for tax

You are liable to pay *Division 293 tax if you have *taxable contributions for an income year.

Note: The amount of the tax is set out in the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013.

293-20 Your taxable contributions

(1) If the sum of:

(a) your *income for surcharge purposes for an income year (disregarding your *reportable superannuation contributions); and

(b) your *low tax contributions for the corresponding *financial year;

exceeds $300,000, you have taxable contributions for the income year equal to the lesser of the low tax contributions and the amount of the excess.

(2) However, you do not have taxable contributions for an income year if the amount of your *low tax contributions is nil.

Low tax contributions

293-25 Your low tax contributions

The amount of your low tax contributions for a *financial year is:

(a) the low tax contributed amounts covered by section 293-30 for the financial year; less

(b) your *excess concessional contributions for the financial year (if any).

Note 1: Low tax contributions are modified for defined benefit interests (see Subdivision 293-D).

Note 2: Modifications in Subdivision 293-E (about constitutionally protected State higher level office holders) and Subdivision 293-F (about Commonwealth justices) affect the amount of low tax contributions.

293-30 Low tax contributed amounts

(1) The low tax contributed amounts covered by this section for a *financial year are the sum of the contributions covered by subsection (2) and the amounts covered by subsection (5) for the financial year.

Note: Low tax contributed amounts covered by this section are modified for State higher level office holders (see Subdivision 293-E).

Contributions to complying superannuation plans

(2) A contribution is covered under this section for a *financial year if:

(a) it is made in the financial year to a *complying superannuation plan in respect of you; and

(b) it is included:

(i) in the assessable income of the *superannuation provider in relation to the plan; or

(ii) by way of a *roll-over superannuation benefit, in the assessable income of a *complying superannuation fund or *RSA provider in the circumstances mentioned in subsection 290-170(5) (about successor funds).

(3) For the purposes of paragraph (2)(b), disregard:

(a) table item 5.3 in section 50-25 (about income tax exemption for constitutionally protected funds); and

(b) Subdivision 295-D (about excluded contributions).

Exceptions

(4) Despite subsection (2), a contribution is not covered under this section if it is any of the following:

(a) an amount mentioned in subsection 295-200(2) (about amounts transferred from foreign superannuation funds);

(b) an amount mentioned in item 2 of the table in subsection 295-190(1) (about certain roll-over superannuation benefits).

Amounts allocated in relation to a complying superannuation plan

(5) An amount in a *complying superannuation plan is covered under this section if it is allocated by the *superannuation provider in relation to the plan for you for the *financial year in accordance with conditions specified by a regulation made for the purposes of subsection 292-25(3).

293-35 Effect of determination relating to refunded excess concessional contributions

Disregard any determination made by the Commissioner under section 292-467 (about refunded excess concessional contributions) in working out, for the purposes of section 293-25, the amount of your *excess concessional contributions for a *financial year.

Note: Disregarding a section 292-467 determination stops refunded excess concessional contributions from being taxed under this Division.

Subdivision 293-C - When tax is payable

Guide to Subdivision 293-C

293-60 What this Subdivision is about

This Subdivision has rules about payment of Division 293 tax.

Table of sections

Operative provisions

293-65 When tax is payable - original assessments

293-70 When tax is payable - amended assessments

293-75 General interest charge

Operative provisions

293-65 When tax is payable - original assessments

(1) Your *assessed Division 293 tax for an income year is due and payable at the end of 21 days after the Commissioner gives you notice of the assessment of the amount of the *Division 293 tax.

Exception for tax deferred to a debt account

(2) However, subsection (1) does not apply to an amount of *assessed Division 293 tax that is *deferred to a debt account for a *superannuation interest.

Note 1: For assessments of Division 293 tax, see Division 155 in Schedule 1 to the Taxation Administration Act 1953.

Note 2: For deferred to a debt account , see Division 133 in that Schedule.

Note 3: For release of money from a superannuation plan to pay these amounts, see Division 135 in that Schedule.

293-70 When tax is payable - amended assessments

(1) If the Commissioner amends your assessment, any extra *assessed Division 293 tax resulting from the amendment is due and payable 21 days after the day the Commissioner gives you notice of the amended assessment.

Exception for tax deferred to a debt account

(2) However, subsection (1) does not apply to an amount of extra *assessed Division 293 tax that is *deferred to a debt account for a *superannuation interest.

Note 1: For deferred to a debt account , see Division 133 in Schedule 1 to the Taxation Administration Act 1953.

Note 2: For release of money from a superannuation plan to pay these amounts, see Division 135 in that Schedule.

293-75 General interest charge

If an amount of *assessed Division 293 tax or *shortfall interest charge on assessed Division 293 tax that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:

(a) begins on the day on which the amount was due to be paid; and

(b) ends on the last day on which, at the end of the day, any of the following remains unpaid:

(i) the assessed Division 293 tax or the shortfall interest charge;

(ii) general interest charge on any of the assessed Division 293 tax or the shortfall interest charge.

Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.

Note 2: Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.

Note 3: See section 5-10 of this Act for when the amount of shortfall interest charge becomes due and payable.

Subdivision 293-D - Modifications for defined benefit interests

Guide to Subdivision 293-D

293-100 What this Subdivision is about

This Subdivision modifies the meaning of low tax contributions for individuals who have a defined benefit interest or interests in a financial year.

Table of sections

Operative provisions

293-105 Low tax contributions - modification for defined benefit interests

293-110 Effect of determination relating to refunded excess concessional contributions

293-115 Defined benefit contributions

Operative provisions

293-105 Low tax contributions - modification for defined benefit interests

Despite section 293-25, if you have a *defined benefit interest or interests in a *financial year, the amount of your low tax contributions for the financial year is worked out as follows:

Method statement

Step 1. Start with the low tax contributed amounts covered by section 293-30 for the *financial year, to the extent to which they do not relate to the *defined benefit interest or interests.

Step 2. Subtract your *excess concessional contributions for the *financial year (if any).

Note: The result of step 2 could be nil, or a negative amount.

Step 3. Add your *defined benefit contributions for the *financial year in respect of the *defined benefit interest or interests.

The result (but not less than nil) is the amount of your low tax contributions for the financial year.

Note: Modifications in Subdivision 293-E (about constitutionally protected State higher level office holders) and Subdivision 293-F (about Commonwealth justices) affect the amount of low tax contributions.

293-110 Effect of determination relating to refunded excess concessional contributions

Disregard any determination made by the Commissioner under section 292-467 (about refunded excess concessional contributions) in working out, for the purposes of section 293-105, the amount of your *excess concessional contributions for a *financial year.

Note: Disregarding a section 292-467 determination stops refunded excess concessional contributions from being taxed under this Division.

293-115 Defined benefit contributions

(1) Your defined benefit contributions , for a *financial year in respect of a *defined benefit interest, has the meaning given by regulation.

Note: There are modifications in sections 293-150 (about constitutionally protected State higher level office holders) and 293-195 (about Commonwealth justices).

(2) A regulation made for the purposes of subsection (1) may provide for a method of determining the amount of the defined benefit contributions .

(3) A regulation made for the purposes of subsection (1) may define the *defined benefit contributions, and the amount of defined benefit contributions, in different ways depending on any of the following matters:

(a) the person who has the *superannuation interest that is or includes the *defined benefit interest;

(b) the *superannuation plan in which the superannuation interest exists;

(c) the *superannuation provider in relation to the superannuation plan;

(d) any other matter.

(4) A regulation made for the purposes of subsection (1) may specify circumstances in which the amount of *defined benefit contributions for a *financial year is nil.

(5) Subsections (2), (3) and (4) do not limit a regulation that may be made for the purposes of this section.

(6) Despite subsection 12(2) of the Legislative Instruments Act 2003, a regulation made for the purposes of subsection (1) may be expressed to take effect from any time on or after 1 July 2012.

Subdivision 293-E - Modifications for constitutionally protected State higher level office holders

Guide to Subdivision 293-E

293-140 What this Subdivision is about

Constitutionally protected State higher level office holders do not pay Division 293 tax in respect of contributions to constitutionally protected funds, unless the contributions are made as part of a salary package.

Table of sections

Operative provisions

293-145 Who this Subdivision applies to

293-150 Low tax contributions - modification for CPFs

293-155 High income threshold - effect of modification

293-160 Salary packaged contributions

Operative provisions

293-145 Who this Subdivision applies to

(1) This Subdivision applies to an individual for an income year if:

(a) the individual has a *superannuation interest in a *constitutionally protected fund in the corresponding *financial year; and

(b) at any time in the income year, the individual is declared by regulation to be an individual to whom this Subdivision applies.

(2) Despite subsection 12(2) of the Legislative Instruments Act 2003, a regulation made for the purposes of paragraph (1)(b) may be expressed to take effect from any time on or after 1 July 2012.

(3) Nothing in this Subdivision limits section 6 of the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013.

Note: Section 6 of the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013 provides that Division 293 tax is not imposed in relation to a person if the imposition would exceed the legislative power of the Commonwealth.

293-150 Low tax contributions - modification for CPFs

(1) This section applies for the purpose of working out under section 293-25 or 293-105 the amount of the individual's *low tax contributions for the *financial year corresponding to the income year.

Modified low tax contributed amounts in CPFs

(2) Despite section 293-30, the low tax contributed amounts covered by that section for the *financial year do not include any contributions to a *constitutionally protected fund, other than contributions covered by section 293-160 (about salary packaged contributions).

Modified defined benefit contributions in CPFs

(3) Despite section 293-115, the individual's defined benefit contributions for the *financial year in respect of a *defined benefit interest in a *constitutionally protected fund are equal to:

(a) unless paragraph (b) applies - nil; or

(b) if, having regard to subsection (2) of this section, the low tax contributed amounts covered by section 293-30 for the year include contributions in respect of the defined benefit interest - the amount of those contributions.

293-155 High income threshold - effect of modification

(1) For the purpose of working out the extent (if any) to which the sum mentioned in subsection 293-20(1) for the individual exceeds the $300,000 threshold mentioned in that subsection, disregard section 293-150.

(2) To avoid doubt, the effect of subsection (1) is that the amount of the individual's *taxable contributions for an income year is the lesser of:

(a) the excess (if any) mentioned in subsection 293-20(1) (worked out disregarding section 293-150) for the income year; and

(b) the individual's *low tax contributions for the corresponding *financial year (worked out having regard to section 293-150).

293-160 Salary packaged contributions

(1) A contribution made to a *complying superannuation plan in respect of an individual is covered by this section if it is made because the individual agreed with an entity, or an *associate of an entity:

(a) for the contribution to be made; and

(b) in return, for the *withholding payments covered by subsection (2) that are to be made to the individual by the entity to be reduced (including to nil).

(2) This subsection covers a *withholding payment covered by any of the provisions in Schedule 1 to the Taxation Administration Act 1953 listed in the table.

Subdivision 293-F - Modifications for Commonwealth justices

Guide to Subdivision 293-F

293-185 What this Subdivision is about

Division 293 tax is not payable by Commonwealth justices and judges in respect of contributions to a defined benefit interest established under the Judges' Pensions Act 1968.

Table of sections

Operative provisions

293-190 Who this Subdivision applies to

293-195 Defined benefit contributions - modified treatment of contributions under the Judges' Pensions Act 1968

293-200 High income threshold - effect of modification

Operative provisions

293-190 Who this Subdivision applies to

(1) This Subdivision applies to an individual if the individual is a Justice of the High Court, or a justice or judge of a court created by the Parliament, at any time on or after the start of the individual's 2012-13 income year.

(2) Nothing in this Subdivision limits section 6 of the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013.

Note: Section 6 of the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013 provides that Division 293 tax is not imposed in relation to a person if the imposition would exceed the legislative power of the Commonwealth.

293-195 Defined benefit contributions - modified treatment of contributions under the Judges' Pensions Act 1968

(1) This section applies for the purpose of working out under section 293-105 the amount of the individual's *low tax contributions for any *financial year.

(2) Despite section 293-115 and subsection 293-150(3), the individual's defined benefit contributions for a *financial year for a *defined benefit interest in a *superannuation fund established under the Judges' Pensions Act 1968 are nil.

293-200 High income threshold - effect of modification

(1) For the purpose of working out the extent (if any) to which the sum mentioned in subsection 293-20(1) for the individual exceeds the $300,000 threshold mentioned in that subsection, disregard section 293-195.

(2) To avoid doubt, the effect of subsection (1) is that the amount of the individual's *taxable contributions for an income year is the lesser of:

(a) the excess (if any) mentioned in subsection 293-20(1) (worked out disregarding section 293-195) for the income year; and

(b) the individual's *low tax contributions for the corresponding *financial year (worked out having regard to section 293-195).

Subdivision 293-G - Modifications for temporary residents who depart Australia

Guide to Subdivision 293-G

293-225 What this Subdivision is about

If you receive a departing Australia superannuation payment, you are entitled to a refund of any Division 293 tax you have paid.

Table of sections

Operative provisions

293-230 Who is entitled to a refund

293-235 Amount of the refund

293-240 Entitlement to refund stops all Division 293 tax liabilities

Operative provisions

293-230 Who is entitled to a refund

You are entitled to a refund if:

(a) you have made payments of any of the following:

(i) *assessed Division 293 tax;

(ii) a voluntary payment made under section 133-70 in Schedule 1 to the Taxation Administration Act 1953 for the purpose of reducing the amount by which a debt account for a *superannuation interest is in debit;

(iii) *debt account discharge liability; and

(b) you receive a *departing Australia superannuation payment; and

(c) you apply to the Commissioner in the *approved form for the refund.

Note: How the refund is applied is set out in Part IIB of the Taxation Administration Act 1953.

293-235 Amount of the refund

(1) The amount of the refund to which you are entitled is the sum of the payments mentioned in paragraph 293-230(a) that you have made.

(2) However, the amount of the refund is reduced by the amount of any refunds to which you are entitled under a previous application of this Subdivision.

Exception - Division 293 tax attributable to period when you are an Australian resident

(3) Despite subsection (1), if:

(a) at any time in your 2012-13 income year, or a later income year, you are an Australian resident (but not a *temporary resident); and

(b) a payment mentioned in paragraph 293-230(a) that you have made relates, or is reasonably attributable, to that income year;

the payment is to be disregarded in working out under subsection (1) of this section the amount of the refund to which you are entitled.

293-240 Entitlement to refund stops all Division 293 tax liabilities

(1) The Commissioner may decide to release you from any existing or future liability to pay *Division 293 tax or *debt account discharge liability if:

(a) you become entitled to a refund under section 293-230; or

(b) you would become entitled to such a refund, if you were to pay the liability and paragraph 293-230(c) were disregarded.

(2) The Commissioner may take such action as is necessary to give effect to a decision under subsection (1).