Income Tax Rates Amendment (Superannuation) Act 2007

No. 19, 2007

An Act to amend the Income Tax Rates Act 1986, and for related purposes

[Assented to 15 March 2007]

The Parliament of Australia enacts:

This Act may be cited as the Income Tax Rates Amendment (Superannuation) Act 2007.

This Act commences immediately after the commencement of Schedule 1 to the Tax Laws Amendment (Simplified Superannuation) Act 2007.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Amendment of the Income Tax Rates Act 1986

Income Tax Rates Act 1986

1 Subsection 3(1) (definition of complying ADF)

Repeal the definition, substitute:

complying ADF means a complying approved deposit fund as defined in the Income Tax Assessment Act 1997.

2 Subsection 3(1) (definition of complying superannuation fund)

Omit “Part IX of the Assessment Act”, substitute “the Income Tax Assessment Act 1997”.

3 Subsection 3(1) (definition of EC part of the taxable income)

Repeal the definition.

4 Subsection 3(1) (definition of eligible ADF)

Repeal the definition, substitute:

eligible ADF means a fund that is a complying approved deposit fund or a non‑complying approved deposit fund, as defined in the Income Tax Assessment Act 1997.

5 Subsection 3(1) (definition of eligible superannuation fund)

Repeal the definition, substitute:

eligible superannuation fund means a fund that is a complying superannuation fund or a non‑complying superannuation fund, as defined in the Income Tax Assessment Act 1997.

6 Subsection 3(1)

Insert:

employment termination remainder of taxable income means so much of the taxable income as:

(a) is included in assessable income under a maximum tax rate provision in Division 82 of the Income Tax Assessment Act 1997 or Division 82 of the Income Tax (Transitional Provisions) Act 1997; and

(b) does not give rise to an entitlement to a tax offset under that maximum tax rate provision.

7 Subsection 3(1) (definition of ETP)

Repeal the definition.

8 Subsection 3(1)

Insert:

low tax component has the same meaning as in the Income Tax Assessment Act 1997.

9 Subsection 3(1)

Insert:

maximum tax rate provision means any of the following provisions:

(a) section 82‑10 of the Income Tax Assessment Act 1997;

(b) section 82‑65 of the Income Tax Assessment Act 1997;

(d) section 301‑95 of the Income Tax Assessment Act 1997;

(e) section 301‑105 of the Income Tax Assessment Act 1997;

(f) section 301‑115 of the Income Tax Assessment Act 1997;

(g) section 82‑10A of the Income Tax (Transitional Provisions) Act 1997;

(h) section 82‑10C of the Income Tax (Transitional Provisions) Act 1997.

10 Subsection 3(1)

Insert:

non‑arm’s length component has the same meaning as in the Income Tax Assessment Act 1997.

11 Subsection 3(1) (definition of non‑complying ADF)

Repeal the definition, substitute:

non‑complying ADF means a fund that, at all times during the year of income when the fund is in existence, is an approved deposit fund within the meaning of the Income Tax Assessment Act 1997, but does not include a fund that is a complying ADF.

12 Subsection 3(1) (definition of non‑complying superannuation fund)

Omit “Part IX of the Assessment Act”, substitute “the Income Tax Assessment Act 1997”.

13 Subsection 3(1)

Insert:

no‑TFN contributions income has the same meaning as in the Income Tax Assessment Act 1997.

14 Subsection 3(1) (definition of ordinary taxable income)

Omit “EC part of the taxable income”, substitute “superannuation remainder of the taxable income and by the employment termination remainder of the taxable income”.

15 Subsection 3(1) (definition of pooled superannuation trust)

Omit “Part IX of the Assessment Act”, substitute “the Income Tax Assessment Act 1997”.

16 Subsection 3(1) (definition of post‑June 83 component)

Repeal the definition.

17 Subsection 3(1) (definition of retained amount)

Repeal the definition.

18 Subsection 3(1) (paragraph (b) of the definition of RSA component)

Omit “Part IX of the Assessment Act”, substitute “the Income Tax Assessment Act 1997”.

19 Subsection 3(1) (definition of special component)

Repeal the definition.

20 Subsection 3(1) (subparagraph (b)(ii) of the definition of special income component)

Repeal the subparagraph, substitute:

(ii) the superannuation remainder of the taxable income; and

(iii) the employment termination remainder of the taxable income;

21 Subsection 3(1) (paragraph (b) of the definition of standard component)

Omit “Part IX of the Assessment Act”, substitute “the Income Tax Assessment Act 1997”.

22 Subsection 3(1)

Insert:

superannuation remainder of taxable income means so much of the taxable income as:

(a) is included in assessable income under a maximum tax rate provision in Division 301 of the Income Tax Assessment Act 1997; and

(b) does not give rise to an entitlement to a tax offset under that maximum tax rate provision.

23 Subsection 3(1) (definition of taxed element)

Repeal the definition.

24 Subsection 3(1)

Insert:

tax offset has the same meaning as in the Income Tax Assessment Act 1997.

25 Paragraph 26(1)(a)

Omit “standard component”, substitute “low tax component”.

26 Paragraph 26(1)(b)

Omit “special component”, substitute “non‑arm’s length component”.

27 Paragraph 27(1)(a)

Omit “standard component”, substitute “low tax component”.

28 Paragraph 27(1)(b)

Omit “special component”, substitute “non‑arm’s length component”.

29 Paragraph 27A(a)

Omit “standard component”, substitute “low tax component”.

30 Paragraph 27A(b)

Omit “special component”, substitute “non‑arm’s length component”.

31 Paragraph 29(1)(c)

Omit “(other than a life insurance company)”.

32 At the end of subsection 29(2)

Add:

; or (iv) for a life insurance company that is an RSA provider—set out in paragraph 23(4A)(ba).

33 Paragraphs 1(a) and (aa) of Part I of Schedule 7

Repeal the paragraphs, substitute:

(a) 45% for the superannuation remainder (if any) of the taxable income;

(aa) 45% for the employment termination remainder (if any) of the taxable income;

34 Paragraphs 1(a) and (aa) of Part II of Schedule 7

Repeal the paragraphs, substitute:

(a) 45% for the superannuation remainder (if any) of the taxable income;

(aa) 45% for the employment termination remainder (if any) of the taxable income;

35 Application

(1) The amendments made by this Schedule apply to the 2007‑2008 income year and later years.

(2) Despite subitem (1), those amendments apply on and after 1 July 2007, to the extent that they relate to any of the following:

(a) Divisions 82 and 83 of the Income Tax Assessment Act 1997;

(b) Divisions 301 to 307 of that Act.

[Minister’s second reading speech made in—

House of Representatives on 7 February 2007

Senate on 26 February 2007]

(10/07)