Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013 (89 of 2013)

Schedule 2   Sustaining the superannuation contribution concession: consequential amendments for Defence Force superannuation

Defence Force Retirement and Death Benefits Act 1973

6   After Part VIA

Insert:

Part VIB - Sustaining the superannuation contribution concession: release of benefit to meet deferred tax liability

49K Release of benefits under a release authority

A lump sum (the release authority lump sum ) may be paid at a time in compliance with a release authority issued to a person under item 3 of the table in subsection 135-10(1) in Schedule 1 to the Taxation Administration Act 1953 and given to CSC in accordance with Subdivision 135-B in that Schedule.

Note: The purpose of the release authority is to allow a lump sum to be paid to the Commissioner to meet a debt the person has under Subdivision 133-C in Schedule 1 to the Taxation Administration Act 1953.

49L Limit on amount that may be released

(1) In addition to any requirements in Division 135 in Schedule 1 to the Taxation Administration Act 1953, the amount of a release authority lump sum must not have the effect that a benefit of the person under this Act is reduced below zero.

(2) For the purpose of subsection (1), the effect of a release authority lump sum on the amount of a person's benefit is to be worked out after taking account of any reduction under another provision of this Act, apart from the following:

(a) a reduction under section 24 in relation to an amount not yet paid;

(b) a reduction under section 32A in relation to an amount not yet paid.

Note: Other provisions that reduce a person's benefit before a release authority lump sum include the following:

(a) subsections 23(6) and 31(4) (which deal with surcharge elections), if the election under section 124 is made before giving CSC the release authority (see subsection 124(3));

(b) subsections 75(3A) and (4A) (which deal with surcharge deduction amounts for deferred benefits);

(c) Part VIA (which deals with family law superannuation splitting).

49M Priority order in relation to commutation of pension

(1) This section applies if:

(a) a person gives CSC a release authority issued to the person under item 3 of the table in subsection 135-10(1) in Schedule 1 to the Taxation Administration Act 1953; and

(b) an amount has not yet been paid to the person by virtue of a commutation under section 24 or 32A.

(2) The release authority lump sum is to be paid before an amount is paid to the person by virtue of a commutation under section 24 or 32A.

(3) To avoid doubt, the person's retirement pay or invalidity pay is to be reduced under this Part to reflect the release authority lump sum, and the following are to be worked out having regard to that reduced amount of retirement pay or invalidity pay:

(a) the amount that may be paid by virtue of the commutation;

(b) the retirement pay or invalidity pay payable after the commutation takes effect.

49N Calculation of person's benefits after payment of release authority lump sum

(1) If a release authority lump sum is paid in relation to a release authority issued to a person, any benefits to which the person is entitled under this Act must be reduced to reflect the release authority lump sum.

(2) If:

(a) a release authority lump sum is paid in relation to a release authority issued to a person; and

(b) the person is entitled to retirement pay or invalidity pay;

the rate at which retirement pay or invalidity pay is payable to the person is to be reduced so that it equals the amount worked out using this formula:

Pre-reduction rate - (Release authority lump sum / Conversion factor)

where:

conversion factor means the factor that is applicable to the person under the determination made by CSC under subsection (3).

pre-reduction rate means the annual rate at which retirement pay or invalidity pay would, apart from this section (but having regard to any other provisions of this Act that affect that rate at the time), be payable to the person at the time that pay becomes payable.

(3) CSC may, by legislative instrument, determine the conversion factor, or the method for working out the conversion factor, for the purposes of subsection (2).

49P Modification for candidates at parliamentary elections

For the purposes of paragraph 55(5)(a), disregard a benefit that is a release authority lump sum.

Note: Subsection 55(5) is about benefits that must be repaid.

49Q Modification for section 62

(1) If:

(a) a person's retirement pay or invalidity pay, worked out having regard to section 49N, is cancelled under subsection 62(1); and

(b) after that cancellation, the person becomes entitled to retirement pay or invalidity pay;

the rate of the person's retirement pay or invalidity pay mentioned in paragraph (b) is to be reduced in accordance with section 49N.

(2) However, for the purpose of the formula in subsection 49N(2), the amount of the release authority lump sum is reduced by the amount of any reductions made because of the previous application of section 49N to the retirement pay or invalidity pay before it was cancelled.