Income Tax Assessment Amendment Regulations 2008 (No. 3)

Administered by Department of the Treasury

Legislation au F2008L02193 Regulations Not in force Legislative Instrument

Select Document

EXPLANATORY STATEMENT

Select Legislative Instrument 2008 No. 144

Issued by the authority of the Minister for Superannuation and Corporate Law

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2008 (No. 3)

Subsection 909-1(1) of the Income Tax Assessment Act 1997 (the Act) provides, in part, that the Governor-General may make regulations 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.

The purpose of the Regulations is to support recent changes made to the Act by the Tax Laws Amendment (2008 Measures No. 2) Act 2008 which provide tax-free treatment for superannuation lump sums paid to persons suffering from a terminal medical condition.

Specifically, the Regulations define terminal medical condition for the purpose of the tax‑free treatment. This definition is consistent with the definition of this term which was inserted into the Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations) in February 2008 for the purpose of introducing a new condition of release for superannuation benefits for persons in this situation.

The Regulations also provide that a superannuation lump sum paid to a person with a terminal medical condition must be cashed and cannot be rolled over within the superannuation system.

Details of the Regulations are set out in the Attachment.

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

Regulations 1 to 3 and Schedule 1 to the Regulations are taken to have commenced on 1 July 2007.

Subsection 12(2) of the Legislative Instruments Act 2003 prohibits the retrospective operation of regulations which adversely affect the rights of, or impose liabilities on, a person other than the Commonwealth in respect of anything done or omitted to be done before the date of notification.

Schedule 1 supports amendments to the Act which apply retrospectively to superannuation lump sums paid on or after 1 July 2007. These amendments remove tax from the affected payments. Accordingly, their retrospective application does not adversely affect taxpayers. As the tax law amendments have effect from 1 July 2007, the Regulations supporting these changes have effect from the same date.

The Office of Legislative Drafting and Publishing has advised that the Regulations do not contravene subsection 12(2) of the Legislative Instruments Act 2003.

Regulation 4 and Schedule 2 to the Regulations commence on the day after the Regulations are registered on the Federal Register of Legislative Instruments.

Consultation was undertaken earlier this year on amendments to the SIS Regulations which introduced a new condition of release for superannuation benefits for persons with a terminal medical condition. As terminal medical condition has the same meaning in these Regulations as it has in the SIS Regulations, further consultation on this definition was not considered necessary.

ATTACHMENT

Details of proposed Income Tax Assessment Amendment Regulations 2008 (No. 3)

Regulation 1 specifies the name of the Regulations as the Income Tax Assessment Amendment Regulations 2008 (No. 3).

Regulation 2 provides that the Regulations commence, or are taken to have commenced:

• on 1 July 2007 for regulations 1, 2 and 3 and Schedule 1; and

• on the day after they are registered for regulation 4 and Schedule 2.

Regulation 3 provides that Schedule 1 amends the Income Tax Assessment Regulations 1997.

Regulation 4 provides that Schedule 2 amends the Income Tax Assessment Regulations 1997.

Schedule 1 – Amendments taken to have commenced on 1 July 2007

Item 1

Item 1 inserts a new Division 303 into the Income Tax Assessment Regulations 1997. This Division introduces a new regulation 303-10.01 which contains the meaning of terminal medical condition. Paragraphs 303-10.01(a), (b) and (c) prescribe the circumstances which need to exist in order for a person to be considered to have a terminal medical condition for the purpose of receiving tax-free superannuation lump sum benefits.

Item 2

Item 2 inserts a new definition of terminal medical condition into regulation 995‑1.01. This term has the meaning given by regulation 303‑10.01.

Schedule 2 – Amendment commencing on the day after registration

Item 1

Section 306-10 of the Income Tax Assessment Act 1997 sets out the meaning of roll‑over superannuation benefit. This section provides, inter alia, that the regulations may specify particular types of benefits that are not roll-over superannuation benefits for the purposes of the Act. These benefits are specified in regulation 306-10.01.

This item substitutes a new regulation 306-10.01 for the purpose of adding another type of benefit that cannot be a roll-over superannuation benefit. The new type of benefit is a benefit to which section 303-10 of the Act, or section 303-10 of the Income Tax (Transitional Provisions) Act 1997, applies. The effect of this addition is to provide that a superannuation lump sum benefit paid to a person with a terminal medical condition must be cashed and cannot be rolled over within the superannuation system.

Overview

The Income Tax Assessment Amendment Regulations 2008 (No. 3) were enacted to support the changes introduced by the Tax Laws Amendment (2008 Measures No. 2) Act 2008, specifically addressing the tax-free treatment of superannuation lump sums for individuals diagnosed with a terminal medical condition. The regulations were issued under the authority of the Minister for Superannuation and Corporate Law, and are intended to align with the definition of "terminal medical condition" that was introduced into the Superannuation Industry (Supervision) Regulations 1994. The primary policy objective of these regulations is to ensure that superannuation lump sums paid to individuals with terminal medical conditions are exempt from tax and cannot be rolled over within the superannuation system. This legislative instrument is consistent with the broader legislative intent to provide relief to those facing terminal medical conditions, ensuring that they do not face additional financial burdens during their final stages of life.

Scope and Application

The Income Tax Assessment Amendment Regulations 2008 (No. 3) apply to individuals who have been diagnosed with a terminal medical condition and are seeking to receive superannuation lump sums free of tax, as well as to the entities managing these superannuation funds. These Regulations provide a clear definition of "terminal medical condition" consistent with the Superannuation Industry (Supervision) Regulations 1994, ensuring uniformity across different regulatory frameworks. The Regulations also clarify that superannuation lump sums paid to individuals with a terminal medical condition must be cashed and cannot be rolled over within the superannuation system. These provisions are in line with amendments to the Income Tax Assessment Act 1997 that were intended to provide tax-free treatment for such lump sums. The Regulations have a national jurisdictional reach, applying across Australia. Notably, while some provisions of the Regulations are taken to have commenced on 1 July 2007 to align with the retrospective tax law amendments, others commence on the day after the Regulations are registered on the Federal Register of Legislative Instruments. The Regulations do not contain specific exclusions, but they do clarify that certain superannuation benefits are not considered roll-over superannuation benefits for the purposes of the Act when paid to individuals with terminal medical conditions.

Key Provisions

The Income Tax Assessment Amendment Regulations 2008 (No. 3) (the Regulations) primarily introduce new provisions to support tax-free treatment for superannuation lump sums paid to individuals with terminal medical conditions, as per changes enacted in the Tax Laws Amendment (2008 Measures No. 2) Act 2008. Specifically, Regulation 303-10.01 (Item 1 of Schedule 1) defines what constitutes a terminal medical condition for the purpose of receiving tax-free superannuation benefits. Regulation 995-1.01 (Item 2 of Schedule 1) incorporates this definition into the broader regulatory framework. Additionally, Regulation 306-10.01 (Item 1 of Schedule 2) stipulates that superannuation lump sums paid to individuals with terminal medical conditions must be cashed and cannot be rolled over within the superannuation system. The Regulations impose specific obligations on various parties, including the requirement for superannuation funds to identify and apply the correct tax treatment to lump sums paid to individuals with terminal medical conditions. Trustees of superannuation funds must ensure that the lump sums are treated as cashed benefits and not as rollover benefits. Additionally, the individuals receiving the superannuation lump sums must meet the defined criteria of having a terminal medical condition to qualify for the tax-free treatment. The Regulations also introduce consequences for non-compliance with the stipulated provisions. Specifically, any superannuation fund or trustee that fails to correctly apply the tax-free treatment to eligible lump sums may be subject to penalties. The exact nature of these penalties is not detailed in the provided text, but typically, such breaches could result in financial penalties or other administrative consequences. It is essential for all involved parties to adhere strictly to the defined regulations to avoid any legal or financial repercussions.

Area of Law: Taxation Law
Instrument: Regulation
Concepts: Definitions & Interpretation; Commencement Provisions; Repeal & Amendment; Regulatory Standards

Interactions

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.

Legislation content