The Government on Tue 23.9.2014, released draft legislation to clarify that a tax integrity rule would not be triggered when superannuation benefits are rolled over to another fund as part of a merger between funds.
The draft legislation proposes to amend the ITAA 1997 to ensure that individuals whose superannuation benefits are involuntarily transferred from one superannuation plan to another plan without their request or consent are not disadvantaged through the application of the proportioning rule to their benefits.
The draft would also amend the Taxation Administration Act 1953 to remove the need for a roll-over benefit statement to be provided to an individual whose superannuation benefits are involuntarily transferred.
COMMENTS are due by 20 October 2014
[LTN 184, 23/9/14]
The ‘proportioning rule’ per ATO website
The proportioning rule is used to calculate the tax free and taxable part of a super benefit that is paid or commenced to be paid from 1 July 2007.
The tax-free and taxable parts of the member’s super benefits are taken to be paid in the same proportion as the tax-free and taxable parts of the member’s interest in the super fund. In general, if the benefit is a lump sum benefit, the value of the super interest is determined just before the benefit is paid. If the benefit is an income stream or a benefit arising from a commutation of an income stream, the value is determined when the income stream commences or commenced.
The proportioning rule is modified for certain benefits such as disability lump sum benefits.
When working out the proportions, you should not round down the decimal places as the relevant legislation does not provide for a rounding rule. (For display purposes only, rounding has been applied to the results produced by this calculator.)