INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-40 - RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS  

Division 82 - Pre-10 May 2006 entitlements to life benefit termination payments  

Subdivision 82-B - Transitional termination payments: general  

SECTION 82-10B   Lower cap amount  

Initial lower cap amount is the ETP cap for the income year

82-10B(1)  
Your lower cap amount in relation to a transitional termination payment you receive at a time in an income year is the ETP cap amount for the year, reduced in accordance with this section.

Note:

For the ETP cap amount, see section 82-160 of the Income Tax Assessment Act 1997 .

Reduction of lower cap amount in relation to each payment

82-10B(2)  
Reduce your lower cap amount in relation to the payment (but not below zero):


(a) by the amount (if any) (the cap excess ) worked out under subsection (3); and


(b) by so much of the total amounts of transitional termination payments (if any) that you received at an earlier time (whether in the income year or in an earlier income year) for which you are entitled to a tax offset under subsection 82-10A(4) .

82-10B(3)  
For paragraph (2)(a), the cap excess is worked out using this method: Method statement


Step 1.

Work out the total of the taxable components of all the amounts (if any) of transitional termination payments received by you (including any directed termination payments received on your behalf) in any income year before the income year in which you reached your preservation age.


Step 2.

Work out the total of the taxable components of all the directed termination payments (if any) received on your behalf at an earlier time, in the income year in which you reached your preservation age or later.


Step 3.

Work out the amount (the cap difference ) by which $1,000,000 exceeds the ETP cap for the income year in which you receive the payment to which subsection (1) applies.


Step 4.

The cap excess is the amount (not less than zero) by which the sum of the amounts in steps 1 and 2 exceeds the cap difference in step 3.

Directed termination payments - time of receipt when received by entity to which they are directed

82-10B(4)  
For the purposes of this section, a directed termination payment is taken to be received on your behalf at the time the entity to which it is directed receives the payment. ETP cap not to be reduced under section 82-10 of the Income Tax Assessment Act 1997

82-10B(5)  
For the purposes of this section, disregard any reduction of the ETP cap amount under section 82-10 of the Income Tax Assessment Act 1997 .




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