Superannuation (Sustaining the Superannuation Contributions Concession – CSS Pension Reduction Conversion Factors) Determination 2015 – Explanatory Statement
1 Name of Determination
This Determination is the Superannuation (Sustaining the Superannuation Contributions Concession – CSS Pension Reduction Conversion Factors) Determination 2015.
2 Commencement
This Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
3 Authority for this Determination
This Determination is made under subsection 146RE(4) of the Superannuation Act 1976 (the CSS Act).
4 Purpose and operation of this Determination
In 2013 the tax concession that individuals with income above $300,000 received on their concessional superannuation contributions was reduced from 30 per cent to 15 per cent. This is known as Sustaining the Superannuation Contributions Concession, also known as “Division 293 tax”.
Schedule 4 of the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013 inserted Part IXC into the CSS Act to allow for the adjustment of benefits to meet this liability.
Under Part IXC of the CSS Act, a person may give Commonwealth Superannuation Corporation (CSC) a release authority in accordance with Division 135 in Schedule 1 to the Taxation Administration Act 1953.
Under paragraph 146RC(1)(b) of the CSS Act, a person entitled to receive, or in receipt of, an indexed or non-indexed pension may elect to receive a reduced pension to reflect the release authority lump sum.
Pensions are reduced under subsection 146RE(2) of the CSS Act using conversion factors determined by CSC under subsection 146RE(4) of the CSS Act. Pension reductions take effect from the pension reduction day set out in subsection 146RE(3) of the CSS Act.
The pension reduction conversion factors for indexed and non-indexed pensions are set out in this Determination.
5 Legislative Instruments Act 2003
This Determination is a legislative instrument for the purposes of section 5 of the Legislative Instruments Act 2003 (LIA). However, as this Determination is an instrument relating to superannuation, it is exempted from disallowance by item 39 of the table in subsection 44(2) of the LIA.
6 Consultation
Section 17 of the LIA specifies that rule-makers should consult before making legislative instruments. Actuarial advice was obtained regarding the factors included in this Determination.
7 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 subject to disallowance under section 42 of the LIA. As mentioned above, this Determination is exempt from disallowance which means that a Statement of Compatibility with Human Rights is not required.