Taxation on benefits
44C Taxation on benefits
In this section—
actuary means a person who is—
a fellow or an accredited member of the Institute of Actuaries of Australia; and
approved by the Minister; and
appointed by the Board as the actuary for the purpose of this section;
affected member means in relation to a benefit reduction under subsection (2) or (3) a person who is a member of the Fund immediately before the date from which that reduction commences to apply;
after-tax benefit means the amount of benefit after allowing for income tax calculated at the rates and in the manner as at the date of commencement of section 134 of the Public Sector Superannuation (Administration) Act 1993 applicable to a person aged 55 years or more;
detriment means receiving a lesser amount of after-tax benefit than would have been received if the benefit—
had not been reduced in accordance with subsections (2) and (3); and
had been an untaxed benefit;
S. 44C(1) def. of post‑June 1983 component amended by No. 50/1997 s. 18(6).
post-June 1983 component has the same meaning as in section 27A of the tax law;
rebatable 27H amount has the same meaning as in section 159SJ of the tax law;
tax law means the Commonwealth Income Tax Assessment Act 1936;
taxed element has the same meaning as in section 27A of the tax law;
taxed in respect of a benefit means a benefit in relation to which there is a taxed element or a rebatable 27H amount as the case may be;
untaxed in respect of a benefit means a benefit in relation to which there is no taxed element or rebatable 27H amount as the case may be.
If before the commencement of section 134 of the Public Sector Superannuation (Administration) Act 1993 the Board determined that any part of the post-June 1983 component of a benefit paid or payable to a member of the Fund was to be classified for the purposes of the tax law as taxed, then the benefits accruing in respect of members of the Fund in relation to the period after 1 July 1993 (and any relevant maximum benefit) must be reduced on the basis determined by an actuary and approved by the Minister.
If at any time after the commencement of section 134 of the Public Sector Superannuation (Administration) Act 1993 the Board determines that any part of the post-June 1983 component of a benefit paid or payable to a member of the Fund is to be classified for the purposes of the tax law as taxed, then the benefits (including any relevant maximum benefit) must be reduced on the basis determined by an actuary and approved by the Minister.
In addition to any other form of determination by the Board, the Board shall be deemed to have made a determination under subsection (2) or (3) if it fails to issue a relevant notice to a benefit recipient under the tax law classifying all of the post-June 1983 component of a benefit payable to a member of the Fund as untaxed.
In determining the basis of the reduction required under subsection (2) or (3), the actuary must aim to ensure as far as practicable that—
the cost of the Fund to employers participating in the Fund is not greater than what would have been the employer cost if the income of the Fund was from 1 July 1988 not subject to tax; and
no unreasonable detriment is caused to an affected member of the Fund.
If, having received an application from an affected member in accordance with subsection (7), the Board is satisfied that a reduction in benefits has resulted in an unreasonable detriment to the member in respect of a benefit which has become payable to the member, the Board may take such steps, including without limitation increasing the benefit, as the Board considers necessary to avoid or compensate for that detriment.
An affected member may within 3 months of a benefit becoming payable from the Fund (or any longer period approved by the Board if the Board considers that there are special circumstances) apply to the Board for a review of the amount of the benefit.
The application must be in a form and contain and be accompanied by information prescribed by the Board.
The Board must not consider an application for review under this subsection on any ground other than unreasonable detriment.
In determining whether an unreasonable detriment exists and the extent of that detriment—
the Board must act on the advice of the actuary, given either generally or in any specific case; and
the actuary must have regard to the following factors—
the receipt by a member of a post-June 1983 component of the benefit classified for the purposes of the tax law as a taxed element rather than as an untaxed element; and
the rates of tax and the basis for its assessment under the tax law as at the date of commencement of this Act in respect of a benefit that becomes payable to a person aged 55 years or more; and
any other matters the actuary considers relevant.
S. 44CA inserted by No. 29/2000 s. 18.
This Act’s bill:Second reading speech
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