The Treasury Laws Amendment (2019 Measures No 3) Bill 2019 was introduced into the House of Representatives on 5 December. The Bill proposes changes to the rules affecting minors and testamentary trusts, as well as minor and technical amendments across a range of Treasury laws.
The Bill clarifies that minors will only be taxed at adult marginal tax rates in respect of income a testamentary trust generates from assets of the deceased estate, or the proceeds from the disposal of these assets. This change will apply to assets acquired by or transferred to the trustee of a testamentary trust estate on or after 1 July 2019.
The following super-related changes are also included:
- market-linked pensions – the Bill corrects a valuation error under the pension transfer balance cap rules where a market-linked pension, that is a capped defined benefit income stream, is commuted and rolled over, or involved in a successor fund transfer;
- death benefit rollovers involving insurance proceeds – the Bill ensures that super death benefits that include life insurance proceeds with an untaxed element are not subject to tax when they are rolled over to a new superannuation fund. However, the new pension may have an untaxed element which could have negative income tax consequences when compared to the original death benefit pension; and
- super downsizer contributions – the Bill ensures that the rules operate as intended. For example, an amendment will ensure that the market value substitution rule cannot increase the amount of capital proceeds received in relation to the disposal of their ownership interests in a dwelling.
Parliament of Australia, Treasury Laws Amendment (2019 Measures No 3) Bill 2019 and explanatory memorandum, 5 December 2019