Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-D - Contributions excluded  

SECTION 295-265   Application of pre-1 July 88 funding credits  


Choice to reduce contributions included in assessable income

295-265(1)    
The *superannuation provider in relation to a *complying superannuation fund can choose to reduce the amount of contributions that would otherwise be included in the fund ' s assessable income for an income year under item 1 of the table in section 295-160 if it has pre-1 July 88 funding credits available for the income year.

When funding credits are available

295-265(2)    
Use this method to work out whether a fund has pre-1 July 88 funding credits available for an income year: Method statement


Step 1.

Identify the amount of pre-1 July 88 funding credits unused at the end of the previous income year.


Step 2.

Index that amount.

Note:

Subdivision 960-M shows you how to index amounts.


Step 3.

Add any pre-1 July 88 funding credits transferred to the fund in the income year under regulations made for the purposes of subsection 342(7) of the Superannuation Industry (Supervision) Act 1993 .


Step 4.

Deduct from the step 3 amount:

  • (a) pre-1 July 88 funding credits transferred from the fund in the income year under regulations made for the purposes of subsection 342(7) of that Act; and
  • (b) amounts specified in a notice given to the *superannuation provider in relation to the fund under subsection 342(6) of that Act for the income year.

  • Step 5.

    The result is the pre-1 July 88 funding credits available to the fund for the income year.

    That amount, reduced by any amount specified in a choice made under subsection (1) for the income year, is the amount of pre-1 July 88 funding credits unused at the end of the income year.

    Note 1:

    Regulations under subsection 342(7) of the SIS Act allow APRA to approve transfers of pre-1 July 88 funding credits between funds.

    Note 2:

    Subsection 342(6) of that Act covers the situation where the fund's rules are changed to produce a reduction in pre-1 July 88 funding credits and the trustee notifies APRA of the change.


    295-265(3)    
    If a notice is given to the *superannuation provider in relation to the fund under subsection 342(2) of the Superannuation Industry (Supervision) Act 1993 granting the trustee a pre-1 July 88 funding credit, this section applies as if the pre-1 July 88 funding credit had arisen at the beginning of the income year in which 1 July 1988 occurred.

    295-265(4)    
    However, if a notice is given to the *superannuation provider in relation to the fund under subsection 342(4) of the Superannuation Industry (Supervision) Act 1993 for the income year, the fund has no pre-1 July 88 funding credits.

    Note:

    Subsection 342(4) of that Act covers the situation where the fund ' s rules are changed to produce a reduction in pre-1 July 88 funding credits and the provider fails to notify APRA of the change.



    Limit on choice

    295-265(5)    
    The total amount covered by the choice cannot exceed the pre-1 July 88 funding credits available to the fund for the income year.

    295-265(6)    
    The total amount covered by the choice also cannot exceed the amount of contributions that would otherwise be included in the fund ' s assessable income for the income year under item 1 of the table in section 295-160 that are used to fund liabilities that accrued before 1 July 1988.

    295-265(7)    
    The regulations may prescribe either or both of the following:


    (a) the manner in which the *superannuation provider in relation to a *superannuation fund is to work out the amount applicable to the fund under subsection (6) for an income year;


    (b) methods (other than the method specified in subsection (6)) of working out how the provider of a superannuation fund can apply pre-1 July 88 funding credits.

    295-265(8)    
    Methods prescribed under paragraph (7)(b) may be applicable to particular *superannuation funds or to a class or classes of superannuation funds.


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