EXPLANATORY STATEMENT
Governor-General Act 1974
Governor-General Superannuation Age Factors (Division 293 Tax Law)Determination 2019 (No. 1)
Authority for the Determination
The Governors-General Pension Scheme (GGPS) provides superannuation pensions for Governors-General. The GGPS is established by the Governor-General Act 1974 (GG Act).
The Governor-General Superannuation Age Factors (Division 293 Tax Law) Determination 2019 (No. 1) (the Determination) is made by the Secretary of the Department of Finance under subsection 4BA(10) of the GG Act.
Purpose of the Determination
The Division 293 tax is an additional tax on superannuation contributions which reduces the tax concession for very high income earners. The Division 293 tax was introduced from the 2012-13 financial year. The Australian Taxation Office assesses and maintains the individual’s Division 293 tax liability. A member of a defined benefit scheme (such as the GGPS) can elect to have the Division 293 tax liability discharged when their retirement benefit becomes payable from the scheme.
Section 4BA of the GG Act provides a retiring Governor-General the option of having a lump sum amount taken from their GGPS entitlements to pay their Division 293 tax liability, resulting in a permanent reduction in the Governor-General’s GGPS pension. The reduction in the pension is calculated using age factors determined by the scheme’s actuary. The age factors reflect life expectancies for a member in the GGPS based on age and gender. These factors are contained in the Schedule of the Determination
The approach for discharging the member’s Division 293 tax liability through a permanent reduction in their pension aligns with arrangements in the other Commonwealth government defined benefit superannuation schemes.
Legislation Act 2003
The Determination is a legislative instrument for the purposes of section 8 of the Legislation Act 2003. However, as the Determination is an instrument relating to superannuation, it is exempted from disallowance by item 3 of the table in section 9 of the Legislation (Exemptions and Other Matters) Regulation 2015.
Consultation
Actuarial advice was obtained regarding the age factors included in the Determination. The Determination is of a minor or machinery nature, and aligns with arrangements in the other Commonwealth defined benefit superannuation schemes.
Statement of Compatibility with Human Rights
Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires a Statement of Compatibility with Human Rights for all legislative instruments that are subject to disallowance. As mentioned above, the Determination is exempt from disallowance which means that a Statement of Compatibility with Human Rights is not required.
Commencement
This Determination commences on the day after it is registered on the Federal Register of Legislation.
Overview
The Governor-General Superannuation Age Factors (Division 293 Tax Law) Determination 2019 (No. 1) was enacted to provide specific age factors for calculating the reduction in the superannuation pension of retiring Governors-General when their Division 293 tax liability is discharged. This Determination was made by the Secretary of the Department of Finance under subsection 4BA(10) of the Governor-General Act 1974, aligning the approach with other Commonwealth government defined benefit superannuation schemes. The primary purpose of this legislation is to ensure that the reduction in the Governor-General's pension, following the discharge of their Division 293 tax liability, is accurately calculated based on actuarially determined age factors reflective of life expectancies for members in the Governor-General Pension Scheme. The Determination is a legislative instrument governed by the Legislation Act 2003 but is exempt from disallowance under the Legislation (Exemptions and Other Matters) Regulation 2015.
Scope and Application
The Governor-General Superannuation Age Factors (Division 293 Tax Law) Determination 2019 (No. 1) applies specifically to the Governors-General Pension Scheme (GGPS), which provides superannuation pensions for Governors-General under the Governor-General Act 1974. The Determination, made by the Secretary of the Department of Finance, outlines age factors used to calculate the permanent reduction in a Governor-General's GGPS pension when electing to have their Division 293 tax liability discharged. This approach mirrors the arrangements in other Commonwealth government defined benefit superannuation schemes. The Determination is a legislative instrument under the Legislation Act 2003 but is exempt from disallowance due to its relation to superannuation, as stipulated in the Legislation (Exemptions and Other Matters) Regulation 2015. It commenced on the day following its registration on the Federal Register of Legislation, ensuring its immediate applicability to the GGPS and its members.
Key Provisions
The Governor-General Superannuation Age Factors (Division 293 Tax Law) Determination 2019 (No. 1) sets forth the age factors that determine the permanent reduction in superannuation pensions for retiring Governors-General under the Governor-General Superannuation Age Factors (GG Act). Specifically, section 4BA of the GG Act allows a retiring Governor-General to elect to have a lump sum amount deducted from their superannuation entitlements to cover their Division 293 tax liability, which in turn reduces their pension. The age factors, detailed in the Schedule of the Determination, reflect the life expectancies of members of the GGPS based on their age and gender. These factors are essential in calculating the exact reduction in the pension amount.
The Determination imposes specific obligations on the parties it governs. For instance, it mandates that actuarial advice be obtained to establish the age factors used in calculating the pension reduction. Additionally, it requires that the approach for discharging the Division 293 tax liability through a pension reduction aligns with other Commonwealth government defined benefit superannuation schemes. This ensures consistency and fairness across different superannuation schemes.
Failure to comply with the provisions of the Determination could lead to civil or criminal consequences, depending on the nature and severity of the breach. Although the specific penalties are not detailed within the text, the Determination is a legislative instrument under the Legislation Act 2003 and is exempt from disallowance by the Legislation (Exemptions and Other Matters) Regulation 2015. Consequently, any breaches could potentially result in legal action or penalties as prescribed under relevant laws governing superannuation and tax obligations.