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INCOME TAX ASSESSMENT ACT 1997 - SECT 295.265

Application of pre-1 July 88 funding credits

Choice to reduce contributions included in assessable income

             (1)  The * superannuation provider in relation to a * complying superannuation fund can choose to reduce the amount of contributions that would otherwise be included in the fund's assessable income for an income year under item 1 of the table in section 295-160 if it has pre-1 July 88 funding credits available for the income year.

When funding credits are available

             (2)  Use this method to work out whether a fund has pre-1 July 88 funding credits available for an income year:

Method statement

Step 1.    Identify the amount of pre-1 July 88 funding credits unused at the end of the previous income year.

Step 2.    Index that amount.

                   Note:             Subdivision 960-M shows you how to index amounts.

Step 3.    Add any pre-1 July 88 funding credits transferred to the fund in the income year under regulations made for the purposes of subsection 342(7) of the Superannuation Industry (Supervision) Act 1993 .

Step 4.    Deduct from the step 3 amount:

               (a)     pre-1 July 88 funding credits transferred from the fund in the income year under regulations made for the purposes of subsection 342(7) of that Act; and

              (b)     amounts specified in a notice given to the * superannuation provider in relation to the fund under subsection 342(6) of that Act for the income year.

Step 5.    The result is the pre-1 July 88 funding credits available to the fund for the income year.

              That amount, reduced by any amount specified in a choice made under subsection (1) for the income year, is the amount of pre-1 July 88 funding credits unused at the end of the income year.

Note 1:       Regulations under subsection 342(7) of the SIS Act allow APRA to approve transfers of pre-1 July 88 funding credits between funds.

Note 2:       Subsection 342(6) of that Act covers the situation where the fund's rules are changed to produce a reduction in pre-1 July 88 funding credits and the trustee notifies APRA of the change.

             (3)  If a notice is given to the * superannuation provider in relation to the fund under subsection 342(2) of the Superannuation Industry (Supervision) Act 1993 granting the trustee a pre-1 July 88 funding credit, this section applies as if the pre-1 July 88 funding credit had arisen at the beginning of the income year in which 1 July 1988 occurred.

             (4)  However, if a notice is given to the * superannuation provider in relation to the fund under subsection 342(4) of the Superannuation Industry (Supervision) Act 1993 for the income year, the fund has no pre-1 July 88 funding credits.

Note:          Subsection 342(4) of that Act covers the situation where the fund's rules are changed to produce a reduction in pre-1 July 88 funding credits and the provider fails to notify APRA of the change.

Limit on choice

             (5)  The total amount covered by the choice cannot exceed the pre-1 July 88 funding credits available to the fund for the income year.

             (6)  The total amount covered by the choice also cannot exceed the amount of contributions that would otherwise be included in the fund's assessable income for the income year under item 1 of the table in section 295-160 that are used to fund liabilities that accrued before 1 July 1988.

             (7)  The regulations may prescribe either or both of the following:

                     (a)  the manner in which the * superannuation provider in relation to a * superannuation fund is to work out the amount applicable to the fund under subsection (6) for an income year;

                     (b)  methods (other than the method specified in subsection (6)) of working out how the provider of a superannuation fund can apply pre-1 July 88 funding credits.

             (8)  Methods prescribed under paragraph (7)(b) may be applicable to particular * superannuation funds or to a class or classes of superannuation funds.



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