Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 (44 of 1999)

Schedule 7   Consequential amendment of Acts

Income Tax Assessment Act 1936

88   At the end of Division 8A of Part III

Add:

Subdivision B - RSA providers

116K Overview

This Subdivision sets out how to calculate the taxable income of an RSA provider that is a registered organization (so far as its RSA business is concerned) and the components of that taxable income.

Note 1: RSA providers that are life assurance companies are covered by Subdivision AA of Division 8.

Note 2: RSA providers that are not life assurance companies or registered organizations are covered by Division 7A of Part IX.

116L Assessable income includes taxable contributions

The assessable income of an RSA provider that is a registered organization includes all taxable contributions made during the year of income to RSAs provided by the RSA provider.

116M Calculation of RSA category A amount

(1) This section sets out how to calculate the RSA category A amount of an RSA provider's RSA combined component.

(2) The RSA category A amount of an RSA provider is the sum of:

(a) all taxable contributions made; and

(b) other amounts (other than contributions) credited;

during the year of income, to RSAs provided by the RSA provider, reduced by any amounts paid from the RSA other than benefits paid to, or in respect of, the holder of the RSA.

(3) In calculating the RSA category A amount, any amount of tax paid in respect of an RSA is taken not to have been an amount paid from the RSA.

(4) In calculating the sum, the amounts set out in subsections (5) and (6) are taken not to have been credited.

(5) Amounts credited to an RSA where an annuity was paid from the RSA in respect of so much of the year of income as the RSA existed.

(6) Where an annuity was being paid from an RSA in respect of a part, but not the whole, of so much of the year of income as the RSA existed, amounts worked out using the following formula:

Amount credited to RSA * (No. od days in part of year in respect of which annuity was paid / No. of days in year in which RSA existed)

116N Components of RSA combined component

(1) The RSA combined component of an RSA provider that is a registered organization is divided into the RSA category A component and the RSA category B component .

(2) The RSA category A component is equal to the RSA category A amount worked out under section 116M.

(3) The RSA category B component is the amount (if any) remaining after deducting the RSA category A component from the RSA combined component.

116O Taxable income and amount of components in certain cases

(1) This section applies if:

(a) an RSA provider has no taxable income; or

(b) an RSA provider has no RSA combined component; or

(c) the RSA combined component of an RSA provider is less than the RSA category A amount.

(2) If, apart from this subsection, an RSA provider has no taxable income, or the taxable income is less than the RSA category A amount:

(a) the RSA provider is taken to have both a taxable income and a tax loss in relation to the year of income; and

(b) the taxable income is taken to equal the RSA category A amount; and

(c) the tax loss is taken to be the amount that would have been the RSA provider's tax loss if the RSA category A amount were not income derived; and

(d) the RSA combined component and the RSA category A component of that component are taken to be equal to the RSA category A amount; and

(e) all other components of taxable income are taken to be nil.

(3) If, apart from this subsection, the taxable income of an RSA provider is equal to or greater than the RSA category A amount:

(a) the RSA combined component and the RSA category A component of that component are taken to be equal to the RSA category A amount; and

(b) an amount equal to the difference between the RSA category A amount and the amount that would, apart from this subsection, have been the RSA combined component is to be applied in reducing the other components of taxable income in the following order:

(i) EIB;

(ii) CS/RA;

(iii) NCS.

116P Deductions from assessable income of RSA providers

No deduction is allowable in respect of amounts credited to RSAs.

116Q Exempt income of RSA providers

Any amounts that, but for the operation of subsection 116M(4), would have been taken into account under paragraph 116M(2)(b) in calculating the RSA category A component of the RSA provider's RSA combined component for the year of income are exempt.