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

Schedule 4   Sustaining the superannuation contribution concession: consequential amendments

Part 3   Amendment of the Superannuation Act 1976

11   After Part IXB

Insert:

Part IXC - Sustaining the superannuation contribution concession: release of benefits to meet deferred tax liability

146RA Definitions

In this Part:

release authority lump sum has the meaning given by section 146RB.

146RB Release of benefits under a release authority

(1) A lump sum (the release authority lump sum ) may be paid at a time in compliance with a release authority issued to a person under item 3 of the table in subsection 135-10(1) in Schedule 1 to the Taxation Administration Act 1953 and given to CSC in accordance with Subdivision 135-B in that Schedule if:

(a) at or before that time, the person gives CSC written notice of the person's election under section 146RC of this Act (which deals with the reduction of benefits to reflect the release authority lump sum); and

(b) at that time, either:

(i) there is no surcharge deduction amount in relation to the person; or

(ii) subsection (2) applies.

Note: The purpose of the release authority is to allow a lump sum to be paid to the Commissioner to meet a debt the person has under Subdivision 133-C in Schedule 1 to the Taxation Administration Act 1953.

Surcharge election must be made or forgone

(2) This subsection applies if any of the following are satisfied:

(a) the person has made an election under section 80B or 80C (which deal with the adjustment of benefits to take account of the surcharge deduction amount);

(b) the person has not made an election under either of those sections and the periods within which such elections may be made have expired;

(c) the person gives CSC written notice that the person forgoes making an election under both of those sections.

146RC Election specifying which benefit is to be reduced

(1) A person who gives CSC a release authority in accordance with Division 135 in Schedule 1 to the Taxation Administration Act 1953 may make an election specifying which of the following is to be reduced to reflect the release authority lump sum:

(a) a lump sum benefit to which the person is (or is about to become) entitled under this Act (unless the lump sum benefit has already been paid);

(b) a pension to which the person is (or is about to become) entitled under this Act (whether or not the pension has started to be paid).

(2) However, a person cannot specify that 2 or more benefits are to be reduced to reflect a release authority lump sum, unless the person elects to reduce all, or all but one, of the specified benefits to zero.

146RD Limit on amount that may be released

(1) In addition to any requirements in Division 135 in Schedule 1 to the Taxation Administration Act 1953, the amount of a release authority lump sum must not have the effect that a benefit specified in an election under section 146RC is reduced below zero.

(2) For the purpose of subsection (1), the effect of a release authority lump sum on the amount of a benefit specified in an election under section 146RC is to be worked out after taking account of:

(a) the person's surcharge deduction amount (if any); and

(b) any reduction under section 79D (which deals with reductions for early release lump sums); and

(c) any reductions under Division 3 of Part IXB (which deals with family law splitting).

(3) Apart from subsection (2), the amount of a release authority lump sum is not to be reduced under any provision of this Act.

146RE Calculation of benefits after payment of release authority lump sum

(1) If a release authority lump sum is paid in relation to a release authority issued to a person, the benefits to which the person is entitled under this Act must be reduced to reflect the release authority lump sum, in accordance with the person's election under section 146RC.

(2) If the election specifies that a pension is to be reduced (but not to zero), the annual rate of the pension is to be reduced so that it equals the amount worked out using this formula:

Pre-reduction rate - (Reduced release authority lump sum / Conversion factor)

where:

conversion factor means the factor that is applicable to the person under the determination made by CSC under subsection (4).

pre-reduction rate means the annual rate of the pension that would, apart from this section (but having regard to any other provisions of this Act that affect that rate), be payable to the person on the pension reduction day mentioned in subsection (3).

reduced release authority lump sum means the amount of the release authority lump sum, reduced by the sum of each reduction made under a previous application of this section to a benefit to which the person is entitled.

(3) The reduction mentioned in subsection (2) takes effect from the day (the pension reduction day ) that is:

(a) if the pension has not started to be paid - the first pension pay day; or

(b) if the pension has started to be paid - the first pension pay day that occurs 14 days after the release authority was given to CSC.

(4) CSC may, by legislative instrument, determine the conversion factor, or the method for working out the conversion factor, for the purposes of subsection (2).