Superannuation Contributions rebate
There are 3 different rebates you can claim at this item!
There are two superannuation rebates.
Section 159 SZ (1) authorises a rebate in respect of eligible superannuation contributions
The other one allows a rebate in respect of superannuation pension received
And there is one savings rebate (1999 year only)
First the rebate in respect of contributions to a superannuation fund
Superannuation contribution rebate: who qualifies?
Superannuation contribution rebate: To qualify you must have an assessable income less than $31,000
What is the maximum rebate allowable, and does everyone get the maximum?
Second, the rebate allowed against pension income
The rebate allowed if you receive a superannuation pension
And third, the savings offset
The savings offset - a political stunt with a very short shelf life
Superannuation contribution rebate: who qualifies?
Section 159 SZ (1) authorises a rebate in respect of eligible superannuation contributions made by a taxpayer if ...
the taxpayer is not an ELIGIBLE PERSON within the meaning of section 82 AAS)
the taxpayer makes one or more eligible superannuation contributions
the taxpayer's assessable income is LESS THAN $31,000
Let's look at those conditions one by one.
If you want the superannuation rebate, you must be an eligible person - in other words, someone else must be contributing to your superannuation
Section 159 SZ (1) authorises a rebate in respect of eligible superannuation contributions made by a taxpayer if the taxpayer is
not an ELIGIBLE PERSON within the meaning of section 82 AAS)And what is an eligible person within the meaning of section 82 AAS?
The definition of ELIGIBLE PERSON in section 82 AAS (2) is a negative one.
It says
a person is an eligible person ... Unlesscircumstances existed by which it was reasonable to expect that superannuation benefits would be provided - in other words, he was a member of a superannuation fund ... and ...
those benefits would be wholly or partly attributable to contributions made by some other person or be paid out of moneys that would NOT represent contributions by that person (referred to as the relevant person) or from income or accretions from contributions previously made by him
So, if some other person is paying superannuation contributions on your behalf, you will NOT be an ELIGIBLE PERSON so you will not be eligible for the deduction
So now we know you can't get this rebate if you are an eligible person
(So
someone else must be contributing towards your superannuation for you to qualify for this rebate)
But what are eligible superannuation contributions?
Section 159 SZ (2) defines these as contributions made by the taxpayer to a fund where ...
the fund is a complying superannuation fund
the contributions are made to obtain superannuation benefits for
the taxpayer or
in the event of his death, his dependants
What is a complying superannuation fund?
Part IX of the Income Tax Assessment Act authorises the concessional tax treatment of superannuation funds if they comply with certain standards.
If you refer the CCH Master Tax Guide and read para 8-000 onwards, you will discover that these standards are not laid down in the Income Tax Assessment Act, but are found in the Superannuation Industry (Supervision) Act 1993.
If the superannuation fund complies with the conditions laid down in this legislation, it will be a COMPLYING FUND and will benefit from a tax rate of 15% on its income from contributions, investment and realised capital gains. Only receipts from non-arms length income and certain private company dividends will be taxed at higher rates (in fact the top marginal rate will apply to such income)
And what was the last condition laid down in section 159 SZ (1)?
Assessable income less than $31,000
Bear in mind that is assessable income, the figure you get after adding all you income receipts but before you subtract your allowable deductions.
Got that? It is
assessable income, not taxable income.What is the maximum rebate allowable?
$100
So you can get a rebate of $100, (which is 10% of $1000 worth of contributions) if your assessable income is less than $27,000
Not quite! (Unless you have less than $27,000 worth of assessable income)
Section 159 SZ (1) requires you to
deduct 25 cents for each dollar of assessable income in excess of $27,000
Answer this question….
Employed taxpayer contributes $4,000 to a fund.
His assessable income was $27,000.
What rebate will be allowed?
Maximum rebate = $100 = 10% of $1000
Answer this question….
Employed taxpayer contributes $1,000 to a fund.
His assessable income was $28,000.
What rebate will be allowed?
28,000 - 27,000 = 1000. For every $1 of assessable income over $27,000, 25 cents is deducted from rebate. Therefore 1000 * .25c = $250
10% of $250 is $25, so rebate is 100 - 25 = 75
Answer this question….
Employed taxpayer contributes $1,000 to a fund.
His assessable income was $31,001.
What rebate will be allowed?
No rebate unless assessable income is less than $31,000
The rebate allowed against some superannuation income receipts
A 15% Rebate is allowed against income from
Rebatable superannuation pensions (which includes Retirement Saving Account pensions)
Rebatable Eligible Termination Payment annuity (referred to as the rebatable ETP annuity)
The rebate is applied against the
rebatable 27H amount (defined in section 159SJ(1) ) as the pension or annuity amount (reduced by the deductible amount ) which is included in the assessable income of the recipient by section 27H of the 1936 Assessment ActAnd which is either
Received by the recipient on after attaining the age of 55, or
is a death or disability annuity or pension as defined in section 159SJ(1)
In other words, you do not get the rebate unless you are over 55 or in receipt of a death or disability pension
Moreover, the rebate is quarantined to that part of the pension, which does not exceed the Reasonable Benefit Limit for the taxpayer.
Want to know more? - Refer to the topic on
annuity income!
A political stunt with a very short shelf life!
For the year ended 30/6/1999, an offset of 7.5% on up to $3000 of
net savings and investment income
otherwise undeducted superannuation contributions
is allowable. The offset is not means tested - so anyone can claim it.
(Refer Subdivision 61-A of the 1997 Income Tax Assessment Act, or paragraph 17-220 of the CCH Master Tax Guide if you don't think you will get around to that in the next twelve months)
If you take 7.5% of $3,000, you get $225, which is the maximum benefit anyone can get.
The offset was introduced as a budget sweetener, but it lost a lot of it's taste when the Leader of the Opposition announced he would not claim it on moral grounds, and the Prime Minister followed suite.
Savings and investment income means all assessable income other than salary and wages (eg rent, capital gains, assessable life insurance bonuses) and includes the following salary type income
Non 'social security type' Australian source pensions and annuities
Foreign pensions if the recipient qualifies for an exclusion in respect of undeducted purchase price.
Eligible termination payment
Don't claim for assessable reimbursements of tax deductible expenses.
If you are a member of a local governing body don't claim for remunation and allowances.
The offset is allowed to anyone who has been resident at any time during the year, and trustees assessed under section 98 of the 1936 Income Tax Assessment Act (details - paragraph 17-220 of the CCH Master Tax Guide)
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