Income Tax Assessment Amendment Regulations 2007 (No. 9)

Administered by Department of the Treasury

Legislation au F2007L03803 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Select Legislative Instrument 2007 No. 330

Issued by authority of the Minister for Revenue
and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2007 (No. 9)

Section 909-1 of the Income Tax Assessment Act 1997 (the Act) provides that the Governor General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. 

Subdivision 292-D of the Act creates special rules for the calculation of concessional contributions in relation to defined benefit interests.  Defined benefit concessional contributions may include a calculation of ‘notional taxed contributions’.  Where contributions made by an employer into a defined benefit fund are not linked to individual fund members, the concessional contributions amount for a particular member cannot be calculated on actual contributions made and is instead based on a member’s notional taxed contribution. 

Subdivision 292-D of Part 2 and Schedule 1A of the Income Tax Assessment Regulations 1997 (the Principal Regulations) prescribe various matters relating to the manner of calculation of notional taxed contributions for defined benefit interests.

The proposed Regulations amend the Principal Regulations to make a number of minor amendments to clarify the operation of Subdivision 292-D and Schedule 1A of the Principal Regulations and ensure those provisions operate as intended. 

In particular, the proposed Regulations will:

  • amend the provisions in the Principal Regulations dealing with the circumstances in which a member's concessional contributions can be taken to be equal to the concessional contributions cap to:
    • ensure that the ability to treat such contributions as equal to the cap is not lost under Sub-regulation 292-170.05 or Sub-regulation 292‑170.06 if the member has moved to a new benefit category unless that new category provides improved benefits for the member;  and
    • confirm the intended operation of Sub-regulations 292-170(5) and 292‑170(6) dealing with the impact of large increases in superannuation salary;
  • amend the provisions in the Principal Regulations dealing with how an actuary is to work out notional taxed contributions to:
    • clarify the circumstances in which an actuary may certify a benefit category;
    • clarify the circumstances in which an actuary must take allowance of certain discretions in working out a new entrant rate; and
    • clarify that in working out the new entrant rate:
      • an actuary may use the relevant entrant ages from a predecessor fund; and
      • the entrant ages of pensioners or deferred beneficiaries will not be taken into account.

 Details of the proposed Regulations are set out in the Attachment.

The Act specifies no conditions that need to be satisfied before the power to make the proposed Regulations may be exercised.

The Regulations commence on the day after they are registered.

The Regulations outlined are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Targeted consultation with industry was undertaken.


ATTACHMENT

 

Details of the Income Tax Assessment Amendment Regulations 2007 (No. 9)

Regulation 1 provides that the title of the Regulations is the Income Tax Assessment Amendment Regulations 2007 (No. 9)

Regulation 2 provides for the Regulations to commence on the day after they are registered.

Regulation 3 provides that the Income Tax Assessment Regulations 1997 (the Principal Regulations) are amended as set out in the Schedule.

Schedule 1 Amendments

Items 1 and 3

In certain circumstances a member may be subject to ‘grandfathering’ arrangements which ensure that their notional taxed contributions do not exceed the concessional contributions cap.  Paragraphs 292-170.05(2)(b) and 292-170.06(2)(b) of the Principal Regulations currently provide that a condition for maintaining these grandfathering arrangements is that the member has not moved to a new benefit category. 

Items 1 and 3 amend the Principal Regulations to clarify that this condition only applies if the member has moved to a new benefit category that has improved the member’s benefits. 

Items 2 and 4

Items 2 and 4 amend subregulations 292-170.05(5) and 292-170.06(5) to confirm that if the rate of superannuation salary has increased by more than 50% in 1 year or more than 75% over 3 years then the condition that needs to be met to maintain grandfathering is that the employer sponsor advises the trustee that the increase is on an arms‑length basis.  This confirms the intent of the original provision.

Item 5

Item 5 amends Schedule 1A, section 1.3 of the Principal Regulations to clarify that an actuary may certify a category of membership to be a benefit category if either the conditions in paragraph (a) or (b) of that section are satisfied.

Item 6

Subsection 2.5(2) of Schedule 1A to the Principal Regulations provides that in calculating the new entrant rate, an actuary is to assume that certain discretions are always exercised.  In particular, the Principal Regulations currently require that if the fund rules provide a discretion to pay a higher benefit on voluntary exit then the actuary is to assume the accrued retirement benefit is always paid on voluntary exit on or after age 55.

Item 6 amends the Principal Regulations to clarify that the actuary must assume that the higher benefit is paid, though if the higher benefit exceeds the accrued retirement benefit they may assume that the accrued retirement benefit, or a benefit between the accrued retirement benefit and the higher benefit, is paid.

Item 7

Section 3.6 of Schedule 1A of the Principal Regulations provides that the age of new entrants to be assumed in calculating the new entrant rate for the purposes of determining notional contributions is based on the average age of entry of the persons who were defined benefit members of the fund at 1 July 2007. 

Item 7 amends the Principal Regulations to clarify that in working out the new entrant rate an actuary may use the relevant entrant ages from a predecessor fund (for example, a fund that has been merged into the current fund) and is not to take account of the entrant ages of pensioners or deferred beneficiaries.

 

 

 

Overview

The Income Tax Assessment Amendment Regulations 2007 (No. 9) were enacted to amend the Income Tax Assessment Regulations 1997. These amendments were introduced to clarify and ensure the proper operation of the rules concerning concessional contributions for defined benefit interests within the Income Tax Assessment Act 1997. The regulations were issued under the authority of the Minister for Revenue and Assistant Treasurer, aiming to address specific issues in the calculation and certification of notional taxed contributions for superannuation funds. The objective of these regulations is to refine the application of the existing provisions to avoid misinterpretation and ensure that the intended policy outcomes are achieved effectively. The regulations focus on ensuring that the grandfathering arrangements for concessional contributions are preserved appropriately when members transition to new benefit categories, and they clarify the circumstances under which actuaries can certify benefit categories and calculate new entrant rates.

Scope and Application

The Income Tax Assessment Amendment Regulations 2007 (No. 9) apply to the Income Tax Assessment Regulations 1997 and are designed to refine the operation of certain provisions related to concessional contributions in defined benefit funds under the Income Tax Assessment Act 1997. These Regulations are applicable to employers and trustees of defined benefit superannuation funds, particularly those involved in the calculation of notional taxed contributions for their members. They aim to ensure that the special rules for concessional contributions operate as intended, with a focus on clarifying conditions for maintaining grandfathering arrangements, confirming the impact of significant increases in superannuation salary, and providing guidance on the role of actuaries in calculating notional taxed contributions. The Regulations have a national reach as they pertain to the Commonwealth of Australia's taxation laws. There are no specific exclusions or thresholds outlined in the text, but the changes are minor and are meant to ensure the proper interpretation and application of existing provisions. The Regulations themselves do not extend or restrict the application of the Act beyond what is necessary to achieve their stated purposes.

Key Provisions

The Income Tax Assessment Amendment Regulations 2007 (No. 9) amend the existing Income Tax Assessment Regulations 1997 (Principal Regulations) to clarify certain provisions related to notional taxed contributions for defined benefit interests under Subdivision 292-D of the Income Tax Assessment Act 1997. These amendments aim to ensure the intended operation of the regulations governing concessional contributions to superannuation funds. Regulation 1 identifies the title of these amendments as the "Income Tax Assessment Amendment Regulations 2007 (No. 9)", while Regulation 2 stipulates that the regulations come into effect on the day after their registration. Regulation 3 specifies that the Principal Regulations will be amended as outlined in the attached Schedule. These regulations impose specific obligations on employers, trustees, and actuaries involved in the calculation of notional taxed contributions. Employers are required to ensure that the conditions for maintaining 'grandfathering' arrangements are met, particularly when a member moves to a new benefit category. Trustees must be informed by employers when there is a significant increase in the superannuation salary rate. Actuaries must follow the clarified criteria for certifying benefit categories and calculating the new entrant rate, including considering relevant entrant ages from predecessor funds and disregarding those of pensioners or deferred beneficiaries. Breaches of these regulations may not be explicitly stated within the explanatory statement, but non-compliance with tax regulations generally can lead to various civil and criminal consequences. Civil penalties could include financial penalties or interest charges on unpaid taxes, while serious or repeated breaches may lead to criminal charges, resulting in fines or imprisonment. The specific penalties would depend on the nature and severity of the breach, as outlined in the Income Tax Assessment Act 1997 and other relevant legislation.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.