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House of Representatives

Income Tax Assessment Amendment Bill 1985

Income Tax Assessment Amendment Act 1985

Explanatory Memorandum

(Circulated by Authority of the Treasurer, The Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

This Bill will amend the Income Tax Assessment Act 1936 to modify the provisions introduced last year relating to the taxation of lump sum superannuation, termination of employment and kindred payments. The provisions of the Bill will:

·
overcome a technical deficiency in the law and ensure that no part of the eligible service period accruing before 1 July 1983 in relation to an eligible termination payment is preserved where none of the pre - 1 July 1983 component of that eligible termination payment is rolled-over into a superannuation fund or approved deposit fund, or is applied in purchasing an annuity (proposal announced on 22 January 1985);
·
prevent a rolled-over eligible termination payment that is used to purchase an annuity or a superannuation pension from being treated as unused undeducted purchase price in relation to a commutation or residual capital value of the annuity or superannuation pension (proposal in relation to annuities announced on 18 February 1985);
·
provide that the approved rules of approved deposit funds must require deposits made by a taxpayer who has since died to be paid to the estate of the deceased depositor not later than 90 days after the grant of probate or letters of administration in relation to that estate;
·
replace the existing test of premature retirement, for the purposes of the bona fide redundancy and approved early retirement scheme payment concessions, so that retirement will be premature if it occurs before the date (being no later than age 65) on which termination would have to occur by reason that the employee attained a particular age or completed a particular period of service;
·
treat annuities, and supplements to pensions and annuities, as "salary or wages" for tax instalment deduction purposes; and
·
in several respects, clarify and reinforce the intended operation of the eligible termination provisions of the income tax law.


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