Amendments to the taxation and superannuation regulations, relating to unclaimed moneys and the calculation of the amount of defined benefit contributions, have been made by the Tax and Superannuation Laws Amendment (2014 Measures No 2) Regulation 2014 (SLI 2014 No 52; registered 16 May 2014).
Method for calculating the amount of defined benefit contributions
The amending regulation amends the Income Tax Assessment Regulations 1997 to provide the meaning of defined benefit contributions and to specify a method of determining an individual’s defined benefit contributions for the 2013-14 financial year and subsequent years, for the purposes of Div 293 of the Income Tax Assessment Act 1997. That Division applies to high income earners, broadly those whose income and concessionally taxed superannuation contributions exceed $300,000 in an income year. Individuals are liable to pay the tax imposed at 15% on certain superannuation contributions that exceed the $300,000 threshold. Subdivision 293-D of the ITAA 1997 provides that an individual’s concessionally taxed superannuation contributions, or the person’s low tax contributions, include notional contributions in respect of defined benefit interests (defined benefit contributions). However, as the actual value of benefits received by an individual from a defined benefit interest can only be known when the benefit is paid, it is necessary to estimate the value of the employer financed benefits that accrue in a financial year for the interest (notional employer contributions) in order to assess liability to Div 293 tax each year.
The Superannuation (Unclaimed Money and Lost Members) Act 1999 establishes a scheme for the administration of superannuation accounts that are considered to be “unclaimed money” or “lost member” accounts. Unclaimed money or lost member accounts are required to be reported, and in some circumstances, paid to the Commissioner.
Public sector superannuation schemes can elect to be prescribed for any or all of the elements of the unclaimed money scheme. The amending regulation prescribes certain South Australian public sector superannuation schemes for this purpose.
CPI and Treasury bond rate definitions
A superannuation provider must pay amounts of unclaimed money to the Commissioner, which may be claimed back by the member. In certain circumstances, interest is payable by the Commissioner on unclaimed money re-claimed by the member. The Superannuation (Unclaimed Money and Lost Members) Regulations 1999 prescribe the meaning of "interest rate", which is based on the “Treasury bond rate” and “CPI”.
It seems that the definitions of “Treasury bond rate” and “CPI” were inadvertently omitted from the regulations by a previous amending regulation. This amending regulation re-inserts these definitions.