Document ID: chunk:federal_register_of_legislation:C2004A00865:clause:2_146g:p1
Version: federal_register_of_legislation:C2004A00865
Segment Type: clause
Provision Reference: sch 2 cl 146G (pt 1/2)
Character Range: 36486–39129

146G  Commutation of orphan pension—payment of surcharge liability

Election
 (1) If:
 (a) a person (the deceased person) dies; and
 (b) either:
 (i) the deceased person is not survived by a spouse but is survived by a child or children of the deceased person; or
 (ii) the deceased person is survived by a spouse, the spouse dies, and the spouse is survived by a child or children of the deceased person; and
 (c) an orphan pension is payable in respect of the child or children (whether or not by virtue of section 136); and
 (d) an assessment is made of the surcharge on the deceased person's surchargeable contributions for a financial year; and
 (e) the person to whom the pension is payable (the eligible person) (who may be the child or one of the children) becomes liable to pay the surcharge under the assessment in accordance with paragraph 10(4)(ca) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997;
the eligible person may, within 3 months after the assessment was made, give the Board a written notice electing to commute the whole or a part of the orphan pension to a lump sum benefit equal to the amount specified in the election.
 (2) The election must be accompanied by:
 (a) a written notice requesting that the amount of the lump sum benefit be:
 (i) paid to the Commissioner of Taxation; and
 (ii) wholly applied in payment of surcharge under the assessment; and
 (b) a copy of the notice of assessment.

Surcharge commutation amount
 (3) The amount specified in the election:
 (a) must be equal to or less than the amount of the surcharge under the assessment; and
 (b) must not have the effect of reducing the pension below zero; and
 (c) is to be known as the surcharge commutation amount for the purposes of this section.

Entitlement to lump sum benefit
 (4) If an eligible person makes an election under subsection (1) in relation to a pension, the eligible person is entitled to a lump sum benefit equal to the surcharge commutation amount.
 (5) If an eligible person is entitled to a lump sum benefit under subsection (4), the liability to pay that benefit must be discharged by:
 (a) paying the amount of that benefit to the Commissioner of Taxation in accordance with the eligible person's request; and
 (b) informing the Commissioner of Taxation of the eligible person's request that the amount be wholly applied in payment of surcharge under the assessment concerned.

Reduction of pension
 (6) If an eligible person makes an election under subsection (1) in relation to a pension, the annual rate of the pension is to be reduced in accordance with the method determined by the Board