Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (81 of 2016)

Schedule 1   Transfer balance cap

Part 2   Defined benefit income

Income Tax Assessment Act 1997

32   Division 303 (after the heading)

Insert:

Table of Subdivisions

Guide to Division 303

303-A Modifications for defined benefit income

303-B Other special circumstances

Guide to Division 303

303-1 What this Division is about

Under Subdivision 303-A, the tax treatment of superannuation income stream benefits that are defined benefit income can be less favourable to you if that income exceeds your defined benefit income cap.

Subdivision 303-B sets out special circumstances in which superannuation benefits are neither assessable income nor exempt income.

Subdivision 303-A - Modifications for defined benefit income

Table of sections

Operative provisions

303-2 Effect of exceeding defined benefit income cap on assessable income

303-3 Effect of exceeding defined benefit income cap on tax offsets

303-4 Meaning of defined benefit income cap

Operative provisions

303-2 Effect of exceeding defined benefit income cap on assessable income

(1) Despite sections 301-10 and 302-65, if:

(a) during a *financial year, you receive one or more *superannuation income stream benefits:

(i) that are *defined benefit income; and

(ii) to which either section 301-10 or 302-65 applies; and

(b) the sum of all of those benefits (other than any *elements untaxed in the fund of those benefits) exceeds your *defined benefit income cap for the financial year;

50% of that excess is assessable income.

(2) Defined benefit income is a *superannuation income stream benefit that is paid from a *capped defined benefit income stream.

303-3 Effect of exceeding defined benefit income cap on tax offsets

Despite sections 301-100 and 302-85, if:

(a) during a *financial year, you receive one or more *superannuation income stream benefits:

(i) that are *defined benefit income; and

(ii) in relation to which you are entitled, or apart from this section you would be entitled, to one or more *tax offsets under section 301-100 or 302-85; and

(b) the sum of all of the superannuation income stream benefits you receive during the financial year:

(i) that are defined benefit income; and

(ii) to which section 301-10, 301-100, 302-65 or 302-85 applies;

exceeds your *defined benefit income cap for the financial year;

the sum of those tax offsets is reduced (but not below zero) by an amount equal to 10% of that excess.

303-4 Meaning of defined benefit income cap

(1) Your defined benefit income cap for a *financial year is the following amount (rounded up to the nearest dollar):

(2) Despite subsection (1) of this section, if a particular day in a *financial year is the first day in relation to which section 301-10, 301-100, 302-65 or 302-85:

(a) applies to you; or

(b) would apart from this Subdivision apply to you;

your defined benefit income cap for the financial year is the following amount (rounded up to the nearest dollar):

(3) Despite subsections (1) and (2) of this section, if:

(a) in a case where subsection (1) applies - during the *financial year, you receive any amounts of *defined benefit income to which none of sections 301-10, 301-100, 302-65 and 302-85 apply; or

(b) in a case where subsection (2) applies - during the financial year, you receive after the day mentioned in that subsection any amounts of defined benefit income to which none of sections 301-10, 301-100, 302-65 and 302-85 apply;

your defined benefit income cap for the financial year under subsection (1) or (2) (as the case requires) is reduced by the sum of those amounts.

Subdivision 303-B - Other special circumstances