Tax Laws Amendment (Simplified Superannuation) Act 2007 (9 of 2007)
Schedule 3 Indexation
Income Tax Assessment Act 1997
7 After section 960-280
960-285 Indexation - superannuation and employment termination
(1) This section applies in relation to an amount mentioned in a provision listed at items 8 to 12 in section 960-265.
(2) You index the amount by:
(a) firstly, multiplying the amount for the 2007-2008 income year by its *indexation factor mentioned in subsection (4); and
(b) next, rounding the result in paragraph (a) down to the nearest multiple of $5,000.
Example 1: If the amount to be indexed is $140,000 and the indexation factor increases this to an indexed amount of $143,000, the indexed amount is rounded back down to $140,000.
Example 2: If the amount to be indexed is $140,000 and the indexation factor increases this to an indexed amount of $146,000, the indexed amount is rounded down to $145,000.
(3) You do not index the amount if its indexation factor mentioned in subsection (4) is 1 or less.
(4) For indexation of the amount on an annual basis, the indexation factor is:
Index number mentioned in subsection (6) for the quarter ending on 31 December just before the start of the relevant income year / Index number mentioned in subsection (6) for the quarter ending on 31 December 2006
(5) You work out the *indexation factor mentioned in subsection (4) to 3 decimal places (rounding up if the fourth decimal place is 5 or more).
(6) For calculating the amounts, the index number for a quarter is the estimate of full-time adult average weekly ordinary time earnings for the middle month of the quarter first published by the Australian Statistician in respect of that month.