Subdiv AA (heading) substituted by No 15 of 2007, s 3 and Sch 1 item 59, applicable to the 2007-2008 income year and later years. The heading formerly read:
Subdivision AA - Superannuation, termination of employment and kindred payments
Subdiv AA inserted by No 47 of 1984.
S 27AAA repealed by No 15 of 2007, s 3 and Sch 1 item 3, applicable to the 2007-2008 income year and later years. S 27AAA formerly read:
SECTION 27AAA SPECIAL RULES FOR DEATH BENEFITS
27AAA(1) Outline of section.
(a) defines the types of payments that are treated as death benefits for the purpose of the rules providing for taxing of ETPs; and
(b) provides concessional treatment for death benefits that are paid in relation to dependants.
27AAA(2) Table of death benefits.
Table 1 sets out the payments that are death benefits for the purposes of this section. In applying the table, the dependant's concessions provided by this section are ignored in deciding whether a payment is covered by a particular ETP paragraph.
TABLE 1 - DEATH BENEFITS
|Item||ETP paragraph||When payment is a death benefit||Dependant's concession (if any)|
|1||(a), (b), (c), (d), (e), (g) or (h)||if the payment is made after the death of the taxpayer to the trustee of the taxpayer's estate||calculated under subsection (3)|
|2||(aa), (ba), (ca), (db), (f), (gb) or (j)||always||calculated under subsection (4)|
|3||(da), (fb), (fd), (ff) or (ga)||always||calculated under subsection (3)|
|4||(d) or (g)||if the payment is connected with a deceased person as described in subsection (6) and is made within the period specified in subsection (7)||calculated under subsection (4)|
Subsection (7A) contains an exception in relation to splittable payments under Part VIIIB of the Family Law Act 1975.
S 27AAA(2) amended by No 78 of 2005; No 53 of 1995.
27AAA(3) Dependant's concession for Items 1 and 3.
In the case of a death benefit covered by Item 1 or 3 in Table 1, the amount that would otherwise be an ETP in relation to the deceased taxpayer is to be reduced by such amount (if any) as the Commissioner considers appropriate having regard to the extent to which dependants of the deceased taxpayer may reasonably be expected to benefit from the estate. However, the ETP is not to be reduced to an amount less than the notional excessive component (if any) that applies to the death benefit under subsection (5).
27AAA(4) Dependant's concession for Items 2 and 4.
This subsection applies if a death benefit covered by Item 2 or 4 in Table 1 is paid to a taxpayer who was a dependant of the deceased person referred to in the relevant ETP paragraph, either at the time of the deceased person's death or at the time of payment of the death benefit. The amount that would otherwise be an ETP in relation to the taxpayer is not to exceed the notional excessive component (if any) that applies to the death benefit under subsection (5).
27AAA(5) Notional excessive component of a death benefit.
The notional excessive component of a death benefit is the amount that would be worked out under Division 14 as the excessive component of the death benefit if the whole of the death benefit were treated as an ETP for the purposes of that Division.
27AAA(6) Required link with deceased person for Item 4 death benefit.
In order to be covered by Item 4 in Table 1, the pension or annuity that was commuted as mentioned in ETP paragraph (d) or (g) must be a pension or annuity that:
(a) before it became payable to the taxpayer, was payable to another person who has died; or
(b) became payable to the taxpayer because of the death of another person.
27AAA(7) Period for paying Item 4 death benefit.
In order to be covered by Item 4 in Table 1, the payment must be made:
(a) within 6 months after the death of the deceased person mentioned in subsection (6); or
(b) within 3 months after the grant of probate of that deceased person's will or letters of administration of that deceased person's estate;
whichever is the longer period.
27AAA(7A) [Payment split]
A payment is not a death benefit under subsection (2) if it is made to the non-member spouse as a result of a payment split applying to a splittable payment after the death of the member spouse unless the non-member spouse was a dependant (within the ordinary meaning of that expression) of the member spouse immediately before the death of the member spouse.
S 27AAA(7A) inserted by No 78 of 2005.
In this section:
ETP paragraph means any of the paragraphs of the definition of eligible termination payment in subsection 27A(1).
S 27AAA inserted by No 7 of 1993.