On 15 June 2017, the Treasury Laws Amendment (2017 Measures No 2) Bill 2017 passed all stages of Parliament, without amendment, and effectively await Royal Assent, after having been passed by the Senate today
The Bill amends six Acts to make amendments arising out of the enactment of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 in relation to:
- transition to retirement income stream (TRIS) rules;
- operation of $1.6m pension transfer balance cap;
- CGT relief;
- an LRBA (Limited Recourse Borrowing Arrangement) integrity measure for the pension cap;
- concessional and non-concessional contribution cap rules;
- objectives of superannuation; and
- revised penalties for failing to provide a fund with a notice to release super amounts.
[APH – Bills Digest; Bill; EM; LTN 111, 15/6/17]
Extract from Explanatory Memorandum
Transfer balance cap amendments
1.28 Schedule 1 makes a number of changes to the transfer balance cap provisions. These changes:
- enable additional transfer balance credits and transfer balance debits to be prescribed;
- clarify the matters covered by the assumption about compliance with pension or annuity rules and standards and for which the consequences of not complying with a commutation authority are disregarded;
- enable the correct value for a debit that arises for failures to comply with rules and standards to be calculated for a failure that occurs part-way through an income year;
- provide an alternative debit where the proceeds of structured settlements were contributed into superannuation prior to
1 July 2017; - provide a transfer balance credit where the repayment of an LRBA shifts value between accumulation phase interests and retirement phase interests;
- amend the rules for the part-year defined benefit income cap so that they only apply where an individual is first entitled to concessional tax treatment in respect of defined benefit income; and
- bring forward the application of the rules about the transfer of assets by life insurance companies to facilitate those companies accounting for and rebalancing their assets in anticipation of the transfer balance cap applying from 1 July 2017.
Concessional contributions amendments
1.29 Schedule 1 updates the Guide Material for the concessional contributions cap to ensure that it accurately describes the way that the unused concessional cap carry forward rules apply.
1.30 Minor amendments are also made to the IT(TP) Act 1997 and the Superannuation Guarantee (Administration) Act 1992 to ensure that references to the concessional contributions cap within those Acts continue to apply to the basic concessional contributions cap rather than the cap as modified by the unused concessional cap carry forward rules.
1.31 Schedule 1 also clarifies the effect of provisions that cap an individual’s concessional contributions where their defined benefit contributions exceed their notional taxed contributions.
Non-concessional contributions amendments
1.32 Schedule 1 amends the application rules in Schedule 3 to the Amending Act for the rules that enable the Commissioner to determine a longer period for the proceeds from a structured settlement to be contributed into a superannuation plan, and that limit Government co-contributions where an individual has breached their non-concessional contributions cap (or has a total superannuation balance that equals or exceeds the general transfer balance cap). These rules will now apply correctly to financial years starting on 1 July 2017 and later years, as originally intended.
1.33 Schedule 1 also makes a further change to the application rules in Schedule 3 to the Amending Act to ensure that the changes in respect of review rights for determinations can apply from the 2013-2014 financial year, consistent with the review rights for the equivalent discretions for concessional contributions.
Objective of superannuation amendments
1.34 Schedule 1 amends the Legislation Act 2003 to repeal the requirement to prepare a statement of compatibility with the Superannuation (Objective) Act 2016. The requirement to prepare a statement of compatibility is also reinserted with application that is contingent on the Bill being enacted. These amendments recognise that the Superannuation (Objective) Act 2016 was not enacted in 2016.
Transition to retirement income stream amendments
1.35 The amendments in relation to the TRIS rules relax the existing prohibition on TRISs ever being in the retirement phase. As a result, a TRIS will now be in the retirement phase if the member has satisfied a condition of release with a nil cashing restriction.
Capital gains tax relief amendments
1.36 Schedule 1 modifies section 294-110 of the IT(TP) Act 1997 to ensure that a fund can apply CGT relief in respect of assets that cease to be segregated current pension assets when the broader TRIS changes come into effect.
1.37 The amendments also extend CGT relief to pooled superannuation trusts (PSTs) so that the tax exempt status of unrealised gains on assets that are held by such trusts is preserved where the underlying unit holders have rebalanced their asset holdings as a result of the transfer balance cap and TRIS changes.
Administrative streamlining amendments
1.38 Schedule 1 makes a technical correction to ensure that the amount of an administrative penalty can be correctly calculated under section 286-80 of Schedule 1 to the TAA 1953 for failures to provide an entity with a notice about releasing superannuation.
1.39 The amendments also remove a provision about the Commissioner combining notices that is redundant following the broader combined notices changes that were introduced through Schedule 10 to the Amending Act.