EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 77
Issued by authority of the Minister for Revenue
and Assistant Treasurer
Taxation Administration Act 1953
Taxation Administration Regulations 1976
Taxation Administration Amendment Regulations 2007 (No. 1)
The Tax Laws Amendment (Simplified Superannuation) Act 2007 and related Acts give effect to the Simplified Superannuation reforms, announced in the Government’s 5 September 2006 statement A Plan to Simplify and Streamline Superannuation – Outcomes of Consultation. These reforms make superannuation easier to understand, improve incentives to work and save, and provide greater flexibility over how superannuation savings can be drawn down in retirement.
The reforms include consolidating superannuation tax law in the Income Tax Assessment Act 1997.
Section 18 of the Taxation Administration Act 1953 (Administration Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Administration Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Administration Act.
The Taxation Administration Regulations 1976 prescribe when an individual must give an entity a declaration in relation to withholding amounts and the taxation treatment of certain payments to prescribed individuals when a tax file number is not quoted.
The purpose of the Regulations is to amend the Taxation Administration Regulations 1976 to replace references and terms now redundant, as a result of the Simplified Superannuation reforms.
Details of the Regulations are set out in the Attachment A.
The Administration Act specifies no conditions that need to be met before the power to make the proposed Regulations may be exercised.
The Regulations commence on 1 July 2007.
The Regulations are legislative instruments for the purposes of the Legislative Instruments Act 2003.
ATTACHMENT A
Details of the Taxation Administration Amendment Regulations 2007 (No. 1)
Regulation 1 specifies the name of the Regulations as the Taxation Administration Amendment Regulations 2007 (No. 1).
Regulation 2 provides that the Regulations commence on 1 July 2007.
Subregulation 3(1) provides that Schedule 1 amends the Taxation Administration Regulations 1976 (Administration Regulations).
Subregulation 3(2) provides that the Regulations apply in relation to a financial year commencing on or after 1 July 2007.
Schedule 1 – Amendments
Item 1
This item inserts a definition of 1997 Tax Act (being the Income Tax Assessment Act 1997 (ITAA 1997)) into regulation 2 of the Administration Regulations. This is required as many references to the Income Tax Assessment Act 1936 (ITAA 1936) are now redundant, the provisions having been moved into the ITAA 1997. These Regulations update references to refer to that Act.
Items 2, 3, and 4
The Superannuation Legislation Amendment (Simplification) Act 2007 repeals section 27H of the ITA Act 1936. The Simplified Superannuation regime does not rely on the concept of a deductible amount as dealt with in section 27H. The Regulations omit regulation 25 and paragraph 26(1)(a) from the Administration Regulations (Items 2 and 3).
Item 4 is a consequential amendment to paragraph 26(1)(b) to ensure that the paragraph is referenced to the ITAA 1936.
Items 5 and 6
The Superannuation Legislation Amendment (Simplification) Act 2007 repeals sections 159SM and 159SU of the ITAA 1936. The Regulations update references to these sections to the equivalent sections in the ITAA 1997.
Item 7
The Tax Laws Amendment (Simplified Superannuation) Act 2007 amends the ITAA 1997 to introduce the concept of an ‘employment termination payment’ and a ‘superannuation lump sum’. These concepts replace the concept of an ‘eligible termination payment’ in the ITAA 1936.
Item 7 revises regulation 36 to update the existing references to an ‘eligible termination payment’ to cover ‘employment termination payments’ and ‘superannuation lump sums’ as defined in the ITAA 1997.
The Tax Laws Amendment (Simplified Superannuation) Act 2007 also amends the ITAA 1997 to simplify the taxation arrangements for the benefits of payments. The number of components in a superannuation benefit will be reduced.
The Regulations remove the references to the “retained amount of the pre‑July 83 component” and “the retained amount of the post-June 83 component” in regulation 36 and insert a reference to the taxable component of a payment. (Item 7)
This ensures that where a prescribed non-resident or a non-prescribed non‑resident does not quote a tax file number, the entity paying the employment termination payment or superannuation lump sum withholds the prescribed rate of tax from the payment. This is consistent with the existing application of regulation 36.
Items 8, 9 and 10
The Tax Laws Amendment (Simplified Superannuation) Act 2007 inserts a definition of a departing Australia superannuation payment into the ITAA 1997. The Regulations amend the Administration Regulations to update the references in regulation 43A to the ITAA 1997.