I am announcing today an amendment to the income tax law to prevent non-complying superannuation funds and non-complying approved deposit funds receiving a refund of excess imputation credits.
From 1 July 2000, resident individuals, superannuation funds and certain other entities have been eligible to receive a refund of excess imputation credits. This ensures that if these taxpayers receive a franked dividend from a company and the taxpayers are taxed at a rate which is lower than the company tax rate, they can receive a refund of the difference.
Non-complying superannuation funds and non-complying approved deposit funds are taxed at the top marginal tax rate rather than the concessional 15% rate generally applicable to complying superannuation entities. Therefore they would rarely be in a position to claim a refund of excess imputation credits. However, it might be possible for such funds to enter into artificial schemes so as to produce surplus imputation credits.
The income tax law will therefore be amended to ensure that non-complying superannuation funds and non-complying approved deposit funds are unable to access refunds of excess imputation credits. This amendment is in line with Australias retirement income policy, which provides tax concessions only for complying superannuation entities, where prudential controls provide some certainty that the concession will generate retirement income for individual fund members.
The amendment will apply to dividends paid to a non-complying superannuation fund or non-complying approved deposit fund in an income year ending on or after today.
CANBERRA
22 May 2001
Contact officer:
Simon Matthews
(02) 6216 1261