I have released for consultation exposure draft legislation and regulations for six measures that address important issues affecting retirees announced in October last year.
It is proposed that superannuation legislation be amended to:
- Correct the way that market-linked pensions are valued under the transfer balance when they are commuted or rolled over, resulting in a nil debit.
- Ensure that death benefits that include life insurance proceeds are not subject to tax when they are rolled over to a new superannuation fund.
The legislation also includes amendments that permit the Commissioner of Taxation to account for additional tax debts in running balance accounts.
The draft regulations would:
- Fix the valuation of defined benefit pensions under the transfer balance cap to reflect when pensions are permanently reduced following an initial higher payment, such as for some public sector defined benefit reversionary pensions.
- Change the definition of life-expectancy period for innovative income stream products to account properly for the number of days in a leap year.
- Maintain the capped defined benefit treatment of market-linked pensions under the transfer balance cap where they have been rolled over as a result of a successor fund transfer.
- Provide transfer balance cap debit and credit values for innovative income stream products that are paid-off in instalments, ensuring they receive appropriate treatment under the transfer balance cap.
The Government invites stakeholder feedback on the exposure draft legislation and regulations. The draft regulations and explanatory material are available from the Treasury website.
Consultation concludes on March 27.