Part 1 — Deductible percentage of insurance premiums

Division 1—Deductions for insurance premiums

Income Tax Assessment Act 1997

1  Before subsection 295-465(1)

Insert:

Deductions for insurance premiums

2  After subsection 295-465(1)

Insert:

          (1A)  If item 5 of the table applies to part, but not all, of an insurance policy premium, item 6 of the table applies to the rest of the premium as if item 5 did not apply to the premium.

          (1B)  For the purposes of item 6 of the table, the regulations may provide that a specified proportion of a specified insurance policy premium may be treated as being attributable to the * complying superannuation fund’s liability to provide benefits referred to in section 295-460.

Note:          The fund may deduct a proportion other than that specified in the regulations for the premium, but must obtain an actuary’s certificate in accordance with subsection (3) in order to do so. The same applies if the insurance policy premium is not specified in the regulations.

3  After subsection 295-465(3)

Insert:

          (3A)  Subsection (3) does not apply to an amount referred to in item 6 of the table in relation to an insurance policy premium, if the trustee deducts, under that item, only the proportion (if any) of the premium specified in the regulations made for the purposes of subsection (1B).

4  Application provision

The amendments made by this Division apply to insurance policy premiums paid in the 2011-12 income year and later income years.

Division 2—Deductions for self-insurance

Income Tax Assessment Act 1997

5  Before subsection 295-465(2)

Insert:

Deductions for self-insurance

6  After subsection 295-465(2)

Insert:

          (2A)  For the purposes of subsection (2), the regulations may provide that a specified proportion of an amount mentioned in subsection (2B) may be treated as being the amount the fund could reasonably be expected to pay in an * arm’s length transaction to obtain an insurance policy to cover it for its current or contingent liabilities to provide benefits referred to in section 295-460.

Example:    If:

(a)    an actuary certifies the amount a fund could reasonably be expected to pay in an arm’s length transaction to obtain an insurance policy; and

(b)    the insurance policy covers liabilities of the fund to provide a class of total and permanent disability benefits broader than that covered by section 295-460; and

(c)    the insurance policy is specified in the regulations; and

(d)    the fund does not have insurance coverage for the liabilities;

                   the fund may deduct, under subsection (2), so much of that certified amount as is specified in the regulations.

          (2B)  The amount is the amount a * complying superannuation fund could reasonably be expected to pay in an * arm’s length transaction to obtain an insurance policy specified in the regulations.

7  Application provision

The amendments made by this Division apply to a complying superannuation fund’s current or contingent liabilities if the fund has the liabilities in the 2011-12 income year or later income years.

Part 2 — Definition of disability superannuation benefits

Division 1—Main provisions

8  Complying funds—deductions for self-insurance for disability benefits

Scope

(1)       This item applies if:

                     (a)  during the whole or a part of a year of income, a complying superannuation fund is subject to a current or contingent liability to provide benefits for members of the fund; and

                     (b)  the year of income is:

                              (i)  the 2004-05 year of income; or

                             (ii)  the 2005-06 year of income; or

                            (iii)  the 2006-07 year of income.

Note:       For liabilities during the 2007-08 to 2010-11 years of income, see section 295-467 of the Income Tax (Transitional Provisions) Act 1997 .

Entitlement to deduction

(2)       Treat the benefits mentioned in paragraph (1)(a) as being death or disability benefits , in relation to the members mentioned in that paragraph, to the extent that:

                     (a)  the benefits are conditional on the disability of the members; and

                     (b)  the disability is described as a permanent disability in regulations made for the purposes of section 295-466 of the Income Tax (Transitional Provisions) Act 1997 .

Note:       Other events might have to occur after the event of the disability of the members before the fund pays the benefits to the members. For example, the members might have to satisfy a condition of release of benefits specified in a standard made under paragraph 31(2)(h) of the Superannuation Industry (Supervision) Act 1993 , such as by reaching a certain age.

(3)       Subitem (2) applies:

                     (a)  for the purposes of applying former subsection 279(2) of the Income Tax Assessment Act 1936 to the liability mentioned in paragraph (1)(a) of this item; and

                     (b)  without limiting that former subsection.

Income Tax Assessment Act 1997

9  Paragraph 295-460(b) (note)

Omit “subsection 295-465(1): see section 295-466”, substitute “subsections 295-465(1) and (2): see sections 295-466 and 295-467”.

Income Tax (Transitional Provisions) Act 1997

10  At the end of section 295-466

Add:

Note:          This section will be repealed on 1 January 2017: see Division 2 of Part 2 of Schedule 2 to the Superannuation Legislation Amendment Act 2010 .

11  After section 295-466

Insert: