Superannuation reform package amending provisions - limited recourse borrowing arrangements Outline of chapter The amendments in Schedule 1 the transfer balance cap and total superannuation balance rules that were enacted through the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016. The changes ensure that the transfer balance cap rules apply appropriately where there is a repayment of a limited recourse borrowing arrangement that transfers value from accumulation interests into retirement phase interests. The changes also ensure that where a fund has limited recourse borrowing arrangements in place, the total value of its assets is properly accounted for in working out individual members’ total superannuation balances. All legislative references in this Chapter are to the Income Tax (ITAA 1997) unless otherwise stated. Assessment Act 1997 Context of amendments The Treasury Laws Amendment (Fair and Sustainable (the Amending Act) legislated the Superannuation) Act 2016 Government’s superannuation reform package that was announced in the 2016-17 Budget. The amendments contained in Schedule 1 relate to the transfer balance cap measure and the definition of total superannuation balance that were included in that package. Transfer balance cap The transfer balance cap was enacted through Division 294 and limits the total value of capital that can be transferred into the tax exempt phase’ of superannuation in respect of an individual. ‘retirement It does this by requiring individuals to commute one or more of superannuation income streams where they have transfer ‘excess balance’. An individual has excess transfer balance when the transfer balance in their transfer balance account exceeds their transfer balance cap ($1.6 million for the 2017/18 financial year) (see section 294-30). Subdivision 136-A of Schedule 1 to the Taxation Administration Act 1953
Superannuation reform package amending provisions - limited recourse borrowing arrangements Outline of chapter The amendments in Schedule 1 the transfer balance cap and total superannuation balance rules that were enacted through the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016. The changes ensure that the transfer balance cap rules apply appropriately where there is a repayment of a limited recourse borrowing arrangement that transfers value from accumulation interests into retirement phase interests. The changes also ensure that where a fund has limited recourse borrowing arrangements in place, the total value of its assets is properly accounted for in working out individual members’ total superannuation balances. All legislative references in this Chapter are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise stated. Context of amendments The Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (the Amending Act) legislated the Government’s superannuation reform package that was announced in the 2016-17 Budget. The amendments contained in Schedule 1 relate to the transfer balance cap measure and the definition of total superannuation balance that were included in that package. Transfer balance cap The transfer balance cap was enacted through Division 294 and limits the total value of capital that can be transferred into the tax exempt ‘retirement phase’ of superannuation in respect of an individual. It does this by requiring individuals to commute one or more of superannuation income streams where they have ‘excess transfer balance’. An individual has excess transfer balance when the transfer balance in their transfer balance account exceeds their transfer balance cap ($1.6 million for the 2017/18 financial year) (see section 294-30). Subdivision 136-A of Schedule 1 to the Taxation Administration Act 1953
C2017-016_Exposure_Draft_EM.docx