Taxation Administration Act - Notice exempting entities from giving a payment summary for lump sum superannuation benefits to certain recipients with a terminal medical condition

Explanatory Statement

General Outline of Instrument

1. 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 having a terminal medical condition.
2. 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).
3. This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
4. This legislative instrument will revoke Legislative Instrument No. F2007L03956 registered on the 4th day of October 2007.

Date of effect

5.     The instrument applies from 1 July 2007.

What is this Instrument about?

6.     On 13 February 2008, the Government introduced into Parliament, Tax Laws Amendment (2008 Measures No 2) Bill, to amend the Income Tax Assessment Act 1997  so that lump sum payments will be tax free when paid to members with a terminal medical condition . The announced change in law is to apply to all relevant payments made from 1 July 2007.

7.     This instrument removes the requirement for superannuation funds to issue a payment summary providing details of the relevant payments.

8.     This instrument is retrospectively dated to 1 July 2007 to ensure that those granted the variation under Legislative Instrument No. F2007L03956 and those additional payees that will be eligible once the legislation is passed will not be disadvantaged.

9.     Legislative Instrument No. F2007L03956 was based upon the policy announced by the previous government, applying to payees having a terminal illness, with a commencement date of 12 September 2007. The amendments introduced in February 2008, broaden eligibility to those with a Terminal Medical Condition, with an earlier commencement date of 1 July 2007.

What is the effect of this Instrument?

10. The announced law changes will ensure that no tax will be payable on the relevant payments when an assessment of income tax is made.

11. This instrument ensures that superannuation funds paying 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.

12. It is not desirable that superannuation funds 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

13. The Commissioner has the power to exempt entities from giving payment summaries, and this power must be made by way of a written notice.

14. In this case the power has been used in advance of the enactment of the relevant legislation to ensure that superannuation funds are not required to provide unnecessary documentation to payees.

Consultation

15. This instrument implements an announced change to the law which will remove an unnecessary administrative burden from superannuation funds.

16. In accordance with subsection 12(2) of the Legislative Instruments Act 2003, the retrospective operation of this determination does not adversely affect the rights or liabilities of any person other than the Commonwealth.

17. This instrument is urgently required to avoid unnecessary hardship for affected members of the community. Consultation would have delayed this process unreasonably.

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