Taxation Administration Act
Notice exempting entities from giving a payment summary to certain terminally ill recipients of lump sum superannuation member benefits
Explanatory Statement
General Outline of Instrument
- This instrument is a notice removing the requirement to issue a payment summary to the recipient of a withholding payment under paragraph 12-85(a) of Schedule 1 to the Taxation Administration Act 1953, where the payee is classified as terminally ill.
- This instrument is made by the Commissioner of Taxation (the Commissioner) pursuant to section 16-180 of Schedule 1 to the Taxation Administration Act 1953 (TAA).
- This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
4. The instrument applies from 12 September 2007.
What is this Instrument about?
5. On 11 September 2007, the Federal Government announced its intention to amend all relevant legislation to ensure that lump sum superannuation benefits paid to a member who is terminally ill will be free from tax. The change in law is to apply to all relevant payments made after 11 September 2007.
6. This instrument removes the requirement for payers to issue a payment summary providing details of the relevant payments.
7. This instrument will cease to have effect on 1 July 2008. It is expected that by that time, the necessary law changes will be made providing ‘tax-free’ status to these payments, therefore removing the requirement for a payment summary to be issued.
What is the effect of this Instrument?
8. The announced law changes will ensure that no tax will be payable on the relevant payments when an assessment of income tax is made.
9. This instrument ensures that payers of these amounts will not be required to issue the payee a payment summary for payments that are made from the announced date of effect of the planned legislative amendments.
10. It is not desirable that payers be required to issue payment summaries for these payments as the recipient will not be liable for income tax in respect of these payments.
Background
11. The Commissioner has the power to exempt entities from giving payment summaries, and this power must be made by way of a written notice.
12. In this case the power has been used in advance of the enactment of the relevant legislation to ensure that payers are not required to provide unnecessary documentation to payees.
Consultation
13. This instrument implements an announced change to the law which will remove an unnecessary administrative burden from payers.
14. This instrument is urgently required to avoid unnecessary hardship for affected members of the community. Consultation would have delayed this process unreasonably.
Deputy Commissioner of Taxation
3 October 2007
Legislative references:
Taxation Administration Act 1953
Legislative Instruments Act 2003
Income Tax Assessment Act 1997
Superannuation Industry (Supervision) Act 1993
Retirement Savings Accounts Act 1997