Classification of superannuation contributions: APRA update

In its Superannuation Circular I.A.1 Contributions and Benefit Accrual Standards for Regulated Superannuation Funds, APRA classified 'Employer Eligible Termination Payments' (Employer ETPs) as non-mandated employer contributions for the purposes of the contribution standards in the SIS Regulations. APRA says it has now reviewed this classification in consultation with the Tax Office and considers that Employer ETPs (and Directed Termination Payments after 1 July 2007) are appropriately regarded as member contributions made by the member rather than as non-mandated employer contributions.

Variation of PAYG withholding for certain superannuation beneficiaries

An instrument varying the rate of withholding for certain superannuation income stream beneficiaries who turn 60 during the financial year has been registered on the Federal Register of Legislative Instruments. It applies from 1 July 2007 and prescribes reduced rates of withholding from payments made from a taxed element of a superannuation income stream benefit to a payee who:

• is 59 years of age
  

• will turn 60 in the financial year in which the payment is made

What are the key changes for employers?

From 1 July 2007:

• when an employee gives an employer a Tax file number declaration form, the employer must pass the tax file number onto the employee’s super fund
• employers can claim a full deduction for all contributions to super funds they make on behalf of their employees provided certain conditions are met, and
• ‘eligible termination payments’ will change to ‘employment termination payments’ and generally can no longer be rolled over into super funds.

Super co-contribution: ATO payment arrangement

The Tax Office has provided an update on its payment arrangements in relation to the 2007-08 Federal Budget announcement to provide one-off additional super co-contribution payment for people who were, or will be, eligible to receive a co-contribution for the 2005-06 financial year. The Tax Office says that due to the large number of payments, the exact date for release of electronic commerce interface (ECI) files, mail out of cheques and remittance advices are not known, but the expected dates should be shortly after the 12 June 2007 for ECI files and after the 15 June for mail out of cheques to super funds.

Family Tax Benefit and child care rates to increase

The Minister for Family & Community Services has announced that the rates for Family Tax Benefit (FTB) and Child Care Benefit (CCB) will be increased from 1 July 2007 . Under the changes, families on a single income of $50,000 with two young children will receive $10,768pa in FTB. The FTB family income threshold to still receive the maximum rate will be increased to $41,318. In addition, the Child Care Benefit will increase 13 per cent from 1 July so that a low income family with one child in full-time care will receive an extra $20.50 per week.

CGT rollover on ending of a statutory licence

The Assistant Treasurer has announced that the Government will amend the CGT provisions in the ITAA 1997 that apply to holders of statutory licences to allow a partial CGT roll-over where a statutory licence ends and is replaced by one or more new licences and the licensee is offered non-licence capital proceeds such as money. Partial roll-over will be available to the extent that the original licence is replaced by a new statutory licence or licences. The amendment will apply to CGT events that happen in the 2006-07 income year and later income years.