Commonwealth: Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997 (Cth)

Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997 No. 187, 1997 Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997 No. 187, 1997 An Act to amend certain Acts dealing with superannuation to provide for the payment of reduced benefits to or in respect of persons on whose surchargeable contributions superannuation contributions surcharge was assessed to be payable, and for related purposes Contents 1 Short title..................................1 2 Commencement..............................2 3 Schedule(s).................................2 Schedule 1—Amendment of the Superannuation Act 1976 3 Schedule 2—Amendment of the Superannuation Act 1990 22 Schedule 3—Amendment of the Parliamentary Contributory Superannuation Act 1948 23 Schedule 4—Amendment of the Governor‑General Act 1974 31 Schedule 5—Amendment of the Judges' Pensions Act 1968 35 Schedule 6—Amendment of the Defence Force Retirement and Death Benefits Act 1973 43 Schedule 7—Amendment of the Military Superannuation and Benefits Act 1991 60 Schedule 8—Amendment of the Defence Act 1903 61 Schedule 9—Amendment of the Superannuation Contributions Tax (Application to the Commonwealth—Reduction of Benefits) Act 1997 62 Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997 No. 187, 1997 An Act to amend certain Acts dealing with superannuation to provide for the payment of reduced benefits to or in respect of persons on whose surchargeable contributions superannuation contributions surcharge was assessed to be payable, and for related purposes [Assented to 7 December 1997] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997. 2 Commencement (1) Subject to subsection (2), this Act commences on the day on which it receives the Royal Assent. (2) Schedule 9 is taken to have commenced on 5 June 1997, immediately after the commencement of the Superannuation Contributions Tax (Application to the Commonwealth—Reduction of Benefits) Act 1997. 3 Schedule(s) Subject to section 2, each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Amendment of the Superannuation Act 1976 1 Subsection 3(1) (definition of accumulated contributions) Repeal the definition, substitute: accumulated contributions, in relation to a person who has ceased to be an eligible employee, means the sum of: (a) the person's accumulated basic contributions; and (b) the person's accumulated supplementary contributions (if any); less, if the person has made an election under section 80B or subsection 136(3A) or if the person's spouse has made an election under subsection 92(1A), the person's surcharge deduction amount. 2 Subsection 3(1) Insert: surcharge debt account, in relation to a person, means the surcharge debt account kept for the person by the Board under section 16 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 3 Subsection 3(1) Insert: surcharge deduction amount, in relation to a person to or in respect of whom benefits become payable under this Act, means the surcharge deduction amount that is specified in the determination made by the Board, under section 80A, in relation to the person. 4 Subsection 42(5A) After "other than", insert "the Superannuation Contributions Tax (Assessment and Collection) Act 1997,". 5 Paragraph 55(1)(a) Omit "or (3)", substitute ", (3) or (5)". 6 Paragraph 55(1)(b) After "(1)", insert "or (1A)". 7 At the end of paragraph 55(2)(a) Add "or (5)". 8 Paragraph 55(2)(b) After "(1)", insert "or (1A)". 9 Subsection 56(1) Omit "subsection (2)", substitute "subsections (2) and (5)". 10 Subsection 56(2) Before "the annual rate", insert "then, subject to subsection (5),". 11 Subsection 56(3) Before "the annual rate", insert "then, subject to subsection (5),". 12 Subsection 56(4) Before "the annual rate", insert "then, subject to subsection (5),". 13 At the end of section 56 Add: (5) If: (a) a person is entitled to standard age retirement pension by virtue of subsection 55(1) or (2); and (b) the person's surcharge debt account is in debit when the pension becomes payable to the person; and (c) the person does not make an election under section 80B or 80C; the annual rate of the pension is the rate worked out as provided in subsection 80D(1). 14 Subsection 57(1) Before "the annual rate", insert "then, subject to subsection (1A),". 15 After subsection 57(1) Insert: (1A) If: (a) a person is entitled to additional age retirement pension by virtue of section 55; and (b) the person's surcharge debt account is in debit when the pension becomes payable to the person; and (c) the person makes an election under section 80C; the annual rate of that pension is the rate worked out as provided in subsection 80D(2). 16 Paragraph 59(1)(b) After "(1)", insert "or (1A)". 17 Section 60 Before "the annual rate", insert "then, subject to subsection (2),". 18 At the end of section 60 Add: (2) If: (a) the person's surcharge debt account is in debit when standard early retirement pension becomes payable to the person; and (b) the person does not make an election under section 80B or 80C; the annual rate of that pension is the rate worked out as provided in subsection 80D(1). 19 Subsection 61(1) Before "the annual rate", insert "then, subject to subsection (1A),". 20 After subsection 61(1) Insert: (1A) If: (a) a person is entitled to additional early retirement pension by virtue of section 59; and (b) the person's surcharge debt account is in debit when the pension becomes payable to the person; and (c) the person makes an election under section 80C; the annual rate of that pension is the rate worked out as provided in subsection 80D(2). 21 Subsection 62(2) After "Subject to", insert "subsection (2CA) and". 22 Subsection 62(2A) After "Subject to", insert "subsection (2CA) and". 23 Subsection 62(2B) After "the person is", insert "(subject to subsection (2CA))". 24 Subsection 62(2C) After "the person is", insert "(subject to subsection (2CA))". 25 After subsection 62(2C) Insert: (2CA) If the person's surcharge debt account is in debit when the lump sum benefit becomes payable to the person, the lump sum benefit to which the person is entitled is equal to the difference between: (a) the lump sum benefit to which the person would be entitled if this subsection did not apply to the person; and (b) the person's surcharge deduction amount. 26 Subsection 67(2) Omit "subsection (3)", substitute "subsections (3) and (4A)". 27 Subsection 67(3) Before "the annual rate", insert "then, subject to subsection (4A),". 28 Subsection 67(4) Before "the annual rate", insert "then, subject to subsection (4A),". 29 After subsection 67(4) Insert: (4A) If the surcharge debt account of a person to whom this section applies is in debit when invalidity pension becomes payable to the person, the annual rate of the pension to which the person is entitled is the rate worked out as provided in subsection 80D(21). 30 Subsection 68(2) Omit "subsection (3)", substitute "subsections (3) and (4A)". 31 Subsection 68(3) Before "the annual rate", insert "then, subject to subsection (4A),". 32 Subsection 68(4) Before "the annual rate", insert "then, subject to subsection (4A),". 33 After subsection 68(4) Insert: (4A) If: (a) a person makes an election under subsection (1); and (b) the person's surcharge debt account is in debit when invalidity pension becomes payable to the person; and (c) the person does not make an election under section 80B; the annual rate of the pension to which the person is entitled is the rate worked out as provided in subsection 80D(1). 34 Subsection 69(2) Before "the lump sum", insert "then, subject to subsection (3),". 35 After subsection 69(2) Insert: (3) If: (a) a person makes an election under subsection (1); and (b) the person's surcharge debt account is in debit when invalidity benefit becomes payable to the person; the lump sum benefit to which the person is entitled is an amount equal to the difference between: (c) the amount that would be payable to the person under subsection (2) if this subsection did not apply to the person; and (d) the person's surcharge deduction amount. 36 Subsection 70(2) Before "the annual rate", insert "then, subject to subsection (4A),". 37 Subsection 70(3) Before "the annual rate", insert "then, subject to subsection (4A),". 38 Subsection 70(4) Before "the annual rate", insert "then, subject to subsection (4A),". 39 After subsection 70(4) Insert: (4A) If the surcharge debt account of a person to whom this section applies is in debit when invalidity pension becomes payable to the person, the annual rate of the pension to which the person is entitled is the rate worked out as provided in subsection 80D(1). 40 Subsection 71(2) Before "the annual rate", insert "then, subject to subsection (4A),". 41 Subsection 71(3) Before "the annual rate", insert "then, subject to subsection (4A),". 42 Subsection 71(4) Before "the annual rate", insert "then, subject to subsection (4A),". 43 After subsection 71(4) Insert: (4A) If: (a) a person makes an election under subsection (1); and (b) the person's surcharge debt account is in debit when invalidity pension becomes payable to the person; and (c) the person does not make an election under section 80B; the annual rate of the pension to which the person is entitled is the rate worked out as provided in subsection 80D(1). 44 Subsection 72(2) Before "the lump sum", insert "then, subject to subsection (3),". 45 After subsection 72(2) Insert: (3) If: (a) a person makes an election under subsection (1); and (b) the person's surcharge debt account is in debit when invalidity pension becomes payable to the person; the lump sum benefit to which the person is entitled is an amount equal to the difference between: (c) the amount that would be payable to the person under subsection (2) if this subsection did not apply to the person; and (d) the person's surcharge deduction amount. 46 Subsection 73(2) Omit "The", substitute "Subject to subsection (3), the". 47 At the end of section 73 Add: (3) If the person's surcharge debt account is in debit when invalidity benefit becomes payable to the person, the lump sum benefit to which the person is entitled is an amount equal to the difference between: (a) the amount that would be payable to the person under subsection (2) if this subsection did not apply to the person; and (b) the person's surcharge deduction amount. 48 At the end of subparagraph 77(2)(a)(i) Add "and subsection 68(4A) did not apply to him or her". 49 Subparagraph 77(2)(a)(ii) After "71(1)", insert "and subsection 71(4A) did not apply to him or her". 50 Subparagraph 78(2)(a)(i) (at the end of the definition of A) Add "and if subsection 68(4A) did not apply to him or her". 51 Subparagraph 78(2)(b)(iii) (at the end of the definition of A) Add "and if subsection 71(4A) did not apply to him or her". 52 At the end of Division 5 of Part V Add: 80A Surcharge deduction amount (1) If: (a) benefits become payable to or in respect of a person who has ceased to be an eligible employee; and (b) the person's surcharge debt account is in debit when those benefits become so payable; the Board must determine in writing the surcharge deduction amount that, in its opinion, it would be fair and reasonable to take into account in working out the amount of those benefits. (2) In making the determination, the Board must have regard to the following: (a) the amount by which the person's surcharge debt account is in debit when those benefits become payable; (b) the value of the employer‑financed component of those benefits; (c) the value of the benefits that, for the purpose of working out (under the Superannuation Contributions Tax (Assessment and Collection) Act 1997) the notional surchargeable contributions factors applicable to the person, were assumed to be likely to be payable to the person on his or her ceasing to be an eligible employee; (d) whether the person has or had qualified for his or her maximum benefit entitlement under this Act; (e) any other matter that the Board considers relevant. (3) The amount determined by the Board may not be more than 15% of the employer‑financed component of that part of the benefits payable to the person that accrued after 20 August 1996. 80B Election not to have pension adjusted to take surcharge deduction amount into account A person: (a) who, by virtue of an election (first election) under this Act, is entitled to a lump sum benefit under section 65, 68 or 71; and (b) whose surcharge debt account is in debit when the benefit becomes payable to him or her; may, within the period during which the first election may be made, by notice in writing given to the Board, elect not to have any pension payable to the person adjusted to take the person's surcharge deduction amount into account. 80C Election to have additional retirement pension adjusted to take surcharge deduction amount into account A person: (a) who is entitled to additional age retirement pension (see sections 55 and 57) or additional early retirement pension (see sections 59 and 61); and (b) whose surcharge debt account is in debit when the benefit becomes payable to him or her; may, not later than 3 months after, but not earlier than 3 months before, the pension becomes payable, by notice in writing given to the Board, elect that the pension be adjusted to take the person's surcharge deduction amount into account. 80D Calculation of certain pension rates (1) The following rates of pension: (a) the annual rate at which standard age retirement pension is payable to a person under subsection 56(5); (b) the annual rate at which standard early retirement pension is payable to a person under subsection 60(2); (c) the annual rate at which invalidity pension is payable to a person under subsection 67(4A), 68(4A), 70(4A) or 71(4A); are worked out by using the formula: where: basic pension rate means the annual rate at which the pension to which the person is entitled would be payable to the person if the person's surcharge debt account were not in debit when the pension becomes payable. conversion factor means the factor that is applicable to the person under the determination made by the Board under subsection 154AB(1). surcharge deduction amount means the person's surcharge deduction amount. (2) The following rates of pension: (a) the annual rate at which additional age retirement pension is payable to a person under subsection 57(1A); (b) the annual rate at which additional early retirement pension is payable to a person under subsection 61(1A); are worked out by using the formula: where: basic pension rate means the annual rate at which the pension to which the person is entitled would be payable to the person if the person's surcharge debt account were not in debit when the pension becomes payable. conversion factor means the factor that is applicable to the person under the determination made by the Board under subsection 154AB(2). surcharge deduction amount means the person's surcharge deduction amount. 53 Subsection 84(2) After "(2)", insert "or (3) (as the case may be)". 54 Subsection 87(2) After "(2)", insert "or (3) (as the case may be)". 55 After subsection 92(1) Insert: (1A) If a spouse makes an election under subsection (1), the spouse may, at the same time, by notice in writing to the Board, elect not to have any pension payable to him or her adjusted to take the eligible employee's surcharge deduction amount into account. 56 Subsection 99(2) After "(2)", insert "or (3) (as the case may be)". 57 Subsection 101(2) After "(2)", insert "or (3) (as the case may be)". 58 Subsection 110P(1) Omit ", equal to the accumulated employer contributions in respect of the person,". 59 After subsection 110P(1) Insert: (1A) If: (a) the person's surcharge debt account is in debit when the productivity benefit becomes payable; and (b) the productivity benefit is to be paid to the person or preserved in a preservation fund; the amount of the benefit is equal to the difference between the amount of the accumulated employer contributions in respect of the person (basic amount) and: (c) if paragraphs (d) and (e) do not apply—the person's surcharge deduction amount; or (d) if part of the person's surcharge deduction amount has, under another provision of this Act, been deducted from a benefit payable to the person—the balance of the surcharge deduction amount; or (e) if the person's surcharge deduction amount, or the balance of the surcharge deduction amount referred to in paragraph (d), is greater than the basic amount—so much of the surcharge deduction amount, or of the balance of the surcharge deduction amount, as is equal to the basic amount. In any other case, the productivity benefit is equal to the accumulated employer contributions in respect of the person. (1B) Subsection (1A) does not apply if the whole of the person's surcharge deduction amount has, under another provision of this Act, been deducted from a benefit payable to the person. 60 Subsection 110SE(2) Repeal the subsection, substitute: (2) The top-up benefit is: (a) if paragraph (b) does not apply—a lump sum benefit equal to the amount referred to in subsection (1); or (b) if: (i) the person's surcharge debt account is in debit when the top-up benefit becomes payable; and (ii) the top-up benefit is to be paid to the person or to a preservation fund for the benefit of the person; a lump sum benefit equal to the difference between the amount referred to in subsection (1) (basic amount); and (iii) if subparagraphs (iv) and (v) do not apply—the person's surcharge deduction amount; or (iv) if part of the person's surcharge deduction amount has, under another provision of this Act, been deducted from a benefit payable to the person—the balance of the surcharge deduction amount; or (v) if the person's surcharge deduction amount, or the balance of the surcharge deduction amount referred to in subparagraph (iv), is greater than the basic amount—so much of the surcharge deduction amount, or of the balance of the surcharge deduction amount, as is equal to the basic amount. (2A) Paragraph (2)(b) does not apply if the whole of the person's surcharge deduction amount has, under another provision of this Act, been deducted from a benefit payable to the person. 61 Subsection 111(1) Omit "equal to the person's accumulated contributions", substitute "worked out under subsection (1A)". 62 After subsection 111(1) Insert: (1A) The amount of the lump sum benefit referred to in subsection (1) is: (a) if paragraph (b) does not apply—an amount equal to the person's accumulated contributions; or (b) if the person's surcharge debt account is in debit when the benefit becomes payable in respect of the person—an amount equal to the difference between the person's accumulated contributions and the person's surcharge deduction amount. 63 Subsection 135(1) Omit "subsection", substitute "subsections (1AA) and". 64 After subsection 135(1) Insert: (1AA) If, when a transfer value becomes payable under this Division to or in respect of a person who has ceased to be an eligible employee, the person's surcharge debt account is in debit, the amount of the transfer value is an amount equal to the difference between: (a) the amount that would be payable to or in respect of the person under subsection (1) if this subsection did not apply to the person; and (b) the person's surcharge deduction amount. 65 Paragraph 135(1A)(a) After "(1)", insert "or (1AA) (as the case may be)". 66 Paragraph 136(2)(a) Omit all the words from and including "the annual rate", substitute: the annual rate of that pension is: (iii) if subparagraph (iv) does not apply—an amount per annum equal to the amount worked out by using the formula: (iv) if the person's surcharge debt account is in debit when the benefit becomes payable to the person and the person does not make an election under subsection (3A) or (3B)—an amount per annum equal to the amount worked out by using the formula: 67 Paragraph 136(2)(b) After "the annual rate of that pension is", insert ", if the person does not make an election under subsection (3A),". 68 At the end of paragraph 136(2)(b) Add: but, if the person makes an election under subsection (3A), the annual rate of that pension is an amount per annum equal to the amount worked out by using the formula: 69 Paragraph 136(2)(d) Omit all the words from and including "the annual rate", substitute: the annual rate of that pension is: (i) if subparagraph (ii) does not apply—an amount per annum equal to the amount worked out by using the formula: (ii) if the person's surcharge debt account is in debit when the benefit becomes payable to the person—an amount per annum equal to the amount worked out by using the formula: 70 Paragraph 136(2)(f) Omit all the words from and including "the annual rate", substitute: the annual rate of that pension is: (i) if subparagraph (ii) does not apply—an amount per annum equal to the amount worked out by using the formula: (ii) if the person's surcharge debt account is in debit when the benefit becomes payable to the person and the person does not make an election under subsection (3B)—an amount per annum equal to the amount worked out by using the formula: 71 Paragraph 136(2)(h) Before "the lump sum", insert "then, subject to paragraph (i),". 72 After paragraph 136(2)(h) Insert: (i) if: (i) a deferred benefit by way of a lump sum benefit is payable to the person in accordance with section 69, 72 or 73; and (ii) the person's surcharge debt account is in debit when the benefit becomes payable to the person; the lump sum benefit is an amount equal to the difference between: (iii) the amount that would be payable to the person under paragraph (h) if this paragraph did not apply to the person; and (iv) the person's surcharge deduction amount. 73 At the end of subsection 136(2) Add: BR (basic rate) means the annual rate of pension that would be payable to the person under subparagraph (21)(b)(iii) or (iv) if the person did not make an election under subsection (3AB). CF1 means the conversion factor that is applicable to the person under the determination made by the Board under subsection 154AB(1). CF2 means the conversion factor that is applicable to the person under the determination made by the Board under subsection 154AB(2). SDA means the person's surcharge deduction amount. 74 After subsection 136(3) Insert: (3A) A person: (a) who is entitled to a deferred benefit referred to in paragraph (2)(b); and (b) whose surcharge debt account is in debit when the benefit becomes payable to him or her; may, not later than 3 months after, but not earlier than 3 months before, the benefit becomes payable, by notice in writing given to the Board, elect that the benefit be adjusted to take the person's surcharge deduction amount into account. (3B) A person: (a) who, by virtue of an election (first election) under this Act, is entitled to a deferred benefit referred to in paragraph (2)(c) or (g); and (b) whose surcharge debt account is in debit when the benefit becomes payable to him or her; may, within the period during which the first election may be made, elect in writing that the surcharge deduction amount in relation to him or her not be deducted from any deferred benefit payable by way of pension to the person. 75 After section 154A Insert: 154AB Determination with respect to surcharge deduction amount (1) The Board must, in accordance with advice received from the Australian Government Actuary, determine in writing, in relation to persons to whom standard age retirement pension, standard early retirement pension, invalidity pension or a deferred benefit by way of any such pension has become payable, the conversion factor that, having regard to: (a) a person's age when a benefit becomes payable to the person; and (b) other relevant factors (if any); is applicable for the purpose of working out, in relation to the person, the yearly amount that would have to be paid to discharge a liability equal to the person's surcharge deduction amount. (2) The Board must, in accordance with advice received from the Australian Government Actuary, determine in writing, in relation to persons to whom an additional age retirement pension, an additional early retirement pension or a deferred benefit by way of any such pension has become payable, the conversion factor that, having regard to: (a) a person's age when a benefit becomes payable to the person; and (b) other relevant factors (if any); is applicable for the purpose of working out, in relation to the person, the yearly amount that would have to be paid to discharge a liability equal to the person's surcharge deduction amount. (3) A determination under this section must be published in the Gazette. 76 After section 160 Insert: 160A Board liable to pay surcharge under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (1) To remove any doubt, it is stated that: (a) for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Board in its capacity as a superannuation provider is an entity distinct from the Commonwealth; and (b) consequently, section 33 of that Act does not affect the liability of the Board under that Act to pay surcharge on the surchargeable contributions of eligible employees. (2) Amounts payable by the Board under subsection 16(6) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 are to be paid out of the Consolidated Revenue Fund, which is appropriated accordingly. 77 At the end of section 168 Add: (17) Regulations made within one year after the commencement of this subsection for purposes arising from any amendment of this Act made by Schedule 1 to the Superannuation Legislation Amendment (Superannuation Contributions Tax) Act 1997 may commence on a day: (a) earlier than the day on which they are made; but (b) not earlier than the commencement of this subsection. Schedule 2—Amendment of the Superannuation Act 1990 1 Paragraph 26(1)(a) After "other than", insert "the Superannuation Contributions Tax (Assessment and Collection) Act 1997,". 2 After section 37 Insert: 37A Board liable to pay surcharge under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (1) To remove any doubt, it is stated that: (a) for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Board in its capacity as a superannuation provider is an entity distinct from the Commonwealth; and (b) consequently, section 33 of that Act does not affect the liability of the Board under that Act to pay surcharge on the surchargeable contributions of members. (2) Amounts payable by the Board under subsection 16(6) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 are to be paid out of the Consolidated Revenue Fund, which is appropriated accordingly. Schedule 3—Amendment of the Parliamentary Contributory Superannuation Act 1948 1 Subsection 4(1) Insert: surcharge debt account, in relation to a person who has held office as a member, means the surcharge debt account that was kept for the person (while he or she held that office) under section 16 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 2 Subsection 4(1) Insert: surcharge deduction amount, in relation to a person: (a) who has held office as a member; and (b) to or in respect of whom benefits become payable under this Act; means the surcharge deduction amount that is specified in the determination made by the Trust, under section 4E, in relation to the person. 3 Before subparagraph 4(4A)(a) Insert: (aa) a member is taken to be employed by the Commonwealth; and 4 At the end of Part I Add: 4E Surcharge deduction amount (1) If: (a) benefits become payable to or in respect of a person who has held office as a member; and (b) the person's surcharge debt account is in debit when those benefits become so payable; the Trust must determine in writing the surcharge deduction amount that, in its opinion, it would be fair and reasonable to take into account in working out the amount of those benefits. (2) In making the determination, the Trust must have regard to the following: (a) the amount by which the person's surcharge debt account is in debit when those benefits become payable; (b) the value of the employer‑financed component of those benefits; (c) the value of the benefits that, for the purpose of working out (under the Superannuation Contributions Tax (Assessment and Collection) Act 1997) the notional surchargeable contributions factors applicable to the person, were assumed to be likely to be payable to the person on his or her ceasing to hold office as a member; (d) whether the person has or had qualified for his or her maximum benefit entitlement under this Act; (e) any other matter that the Trust considers relevant. (3) The amount determined by the Trust may not be more than 15% of the employer‑financed component of that part of the benefits payable to the person that accrued after 20 August 1996. 5 Subsection 18(1A) Before "the benefit", insert "then, subject to subsection (8A),". 6 Subsection 18(1B) Before "the benefit", insert "then, subject to subsection (8A),". 7 Subsection 18(2) Omit "shall be", substitute "(subject to subsections (8A) and (8B)) is". 8 Subsection 18(2AA) After "benefit", insert "(subject to subsections (8A) and (8B))". 9 Subsection 18(4) Omit "shall be", substitute "(subject to subsection (8B)) is". 10 After subsection 18(8) Insert: (8A) If: (a) a person's surcharge debt account is in debit when a benefit becomes payable to the person; and (b) apart from this subsection, the person would be entitled to a retiring allowance under subsection (1A) or (1B) or paragraph (2)(a) or (aa) or (2AA)(a), (b), (c) or (d); then, instead of the retiring allowance referred to in paragraph (b), the person is entitled to a retiring allowance during his or her life‑time at a rate equal to such percentage of the rate of parliamentary allowance for the time being payable to a member as is worked out by using the formula: where: basic rate means the rate at which, when the retiring allowance becomes payable to the person, that retiring allowance would be payable to the person under this section if this subsection did not apply to him or her. percentage means: (a) if, apart from this subsection, the person would be entitled to a retiring allowance under subsection (1A) or (1B) or paragraph (2)(a) or (aa) or (2AA)(a)—the percentage of the rate of parliamentary allowance by reference to which the rate of that retiring allowance would be ascertained (see subsection (6) and, if applicable, subsections (7) and (8)); or (b) if, apart from this subsection, the person would be entitled to a retiring allowance under paragraph (2AA)(b), (c) or (d)—the percentage of the rate of parliamentary allowance specified in that paragraph. surcharge adjustment means: (a) if paragraph (b) does not apply to the person—the amount obtained by dividing the person's surcharge deduction amount by the conversion factor applicable to the person under the determination made by the Trust under section 22A; or (b) if the person has ceased to hold office as a member on more than one occasion—the amount obtained by: (i) dividing the person's surcharge deduction amount on the last of those occasions by the conversion factor applicable to the person under the determination made by the Trust under section 22A; and (ii) adding to the result obtained under subparagraph (i) the surcharge adjustment in respect of the person on the immediately preceding occasion on which the person ceased to hold office as a member. (8B) If: (a) a person's surcharge debt account is in debit when a benefit becomes payable to the person; and (b) apart from this subsection, the person would be entitled to a benefit under paragraph (2)(b) or (2AA)(e) or subsection (4); then, instead of the benefit referred to in paragraph (b), the amount of the benefit to which the person is entitled is an amount equal to the difference between: (c) the amount that would be payable to the person under this section if this subsection did not apply to the person; and (d) the person's surcharge deduction amount. 11 After subsection 18B(3) Insert: (3A) A person who has made an election under subsection (3) to convert a percentage of his or her retiring allowance to a lump sum payment may, not later than 3 months after, but not earlier than 3 months before, becoming a person to whom this section applies, by notice in writing given to the Secretary to the Department of Finance, elect that the person's surcharge deduction amount be deducted from the lump sum payment 12 Subsection 18B(4) Omit all the words before paragraph (a), substitute: If the person has not made an election under subsection (3A), the amount of the lump sum payment is: 13 After subsection 18B(4) Insert: (4A) If the person has made an election under subsection (3A), the amount of the lump sum payment is the difference between: (a) the amount of the lump sum payment that would have been payable to the person under subsection (4) if he or she had not made the election; and (b) the person's surcharge deduction amount. 14 Subsection 19AB(1) Omit "while entitled to a parliamentary allowance or". 15 After subsection 19AB(1A) Insert: (1B) If: (a) on or after the commencement of this subsection, a person dies while entitled to a parliamentary allowance; and (b) the deceased person is not survived by a spouse to whom an annuity is payable under section 19; and (c) no benefits are payable in respect of a child or children of the deceased person or of a former spouse of the deceased person; an amount of benefit worked out under subsection (1C) is payable to the personal representative of the deceased person. (1C) The amount of the benefit referred to in subsection (1B) is: (a) if paragraph (b) does not apply—the amount by which the greater of the following: (i) the sum of the contributions paid by the deceased person and the Commonwealth supplement in relation to him or her; (ii) the superannuation guarantee safety-net amount in relation to the person; exceeds the sum of any benefits under this Act paid to, or accrued due to, the person before his or her death; or (b) if the deceased person's surcharge debt account is in debit when a benefit under this section becomes payable in respect of the person—an amount equal to the difference between: (i) the amount referred to in (a); and (ii) the person's surcharge deduction amount. (1D) If the amount referred to in subparagraph (1C)(a)(i) (first amount) is equal to the amount referred to in subparagraph (1C)(a)(ii), subsection (1C) has effect as if the first amount were the greater of those 2 amounts. 16 Subsection 20(1) Repeal the subsection. 17 Subsection 20(1AA) Omit "The person", substitute "If a person who has received an eligible lump sum amount under this Act again becomes a member, the person". 18 Subsection 20(1AD) Repeal the subsection, substitute: (1AD) The amount referred to in subsection (1AA) is calculated as follows: (a) if paragraph (b) does not apply to the person—the amount is worked out by using the formula: (b) if the person's surcharge debt account was in debit when the eligible lump sum amount became payable to the person—the amount is worked out by using the formula: where: parliamentary allowance at contract date means the annual amount of parliamentary allowance payable to a member at the date on which the person enters into the contract. parliamentary allowance at retirement date means the annual amount of parliamentary allowance payable to a member at the date on which the person most recently retired from the Parliament. surcharge deduction amount means the person's surcharge deduction amount when the eligible lump sum amount became payable to the person. 19 At the end of Part V Add: 22A Determination with respect to surcharge deduction amount (1) The Trust must, in accordance with advice received from the Australian Government Actuary, determine in writing the conversion factor that, having regard to: (a) the age of a member when a benefit under section 18 becomes payable to him or her; and (b) other relevant factors (if any); is applicable for the purpose of working out, in relation to the member, the yearly amount that would have to be paid to discharge a liability equal to the member's surcharge deduction amount. (2) A determination under subsection (1) must be published in the Gazette. 20 After section 26B Insert: 26C Trustee of Scheme for purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (1) For the purposes of the definition of trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Trust is taken to be the person who manages the retirement scheme constituted by this Act (the Scheme). Note: The definitions of public sector superannuation scheme, superannuation fund and trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 are relevant to this section. (2) Section 4 of the Superannuation Contributions Tax (Application to the Commonwealth—Reduction of Benefits) Act 1997 does not apply to the Trust in its capacity (because of subsection (1)) of trustee of the Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. Schedule 4—Amendment of the Governor‑General Act 1974 1 Subsection 2A(2) Insert: Scheme means the scheme constituted by section 4 for the provision of retirement and other benefits to and in respect of the Governor‑General. 2 Subsection 2A(2) Insert: surcharge debt account, in relation to a person who has held office as Governor-General, means the surcharge debt account that was kept for the person (while he or she held that office) under section 16 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 3 Subsection 2A(2) Insert: surcharge deduction amount, in relation to a person: (a) who has held office as Governor-General; and (b) to or in respect of whom an allowance is payable under this Act; means the amount by which the person's surcharge debt account is in debit when the allowance becomes payable to or in respect of the person (as the case may be). 4 Subsection 4(2) Omit "(3)", substitute "(3A)". 5 Subsection 4(3) Repeal the subsection, substitute: (3) The rate of the allowance payable at any time (relevant time) to a person who has held office as Governor-General is: (a) if paragraph (b) does not apply—a rate equal to 60% of the rate of the salary payable to the Chief Justice of Australia at the relevant time; or (b) if the person's surcharge debt account was in debit when the allowance became payable to the person—a rate equal to the prescribed percentage of the rate at which allowance would be payable at the relevant time to the person under paragraph (a) if this paragraph did not apply to him or her. Note: For prescribed percentage see subsection (3B). (3A) The rate of the allowance payable at any time (relevant time) to a spouse of a deceased person who held office as Governor‑General is: (a) in the case of a spouse of a person who died while holding office as Governor-General—a rate equal to five‑eighths of the rate that would be applicable at the relevant time to the person under subsection (3) if he or she had not died but had ceased to hold that office; or (b) in the case of a spouse of a person who died after ceasing to hold office as Governor-General—a rate equal to five‑eighths of the rate that would be applicable at the relevant time to the person under subsection (3) if he or she had not died. (3B) In subsection (3): prescribed percentage, in relation to a person who has held office as Governor‑General, means the percentage worked out using the formula: where: basic rate means the rate at which allowance would be payable to the person if the person's surcharge debt account was not in debit when an allowance under this section became payable to him or her. surcharge adjustment means the amount obtained by dividing the person's surcharge deduction amount by the conversion factor applicable to the person under the determination referred to in subsection (3C). (3C) The person who (because of section 5A) is the trustee of the Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 must, in accordance with advice received from the Australian Government Actuary, determine in writing the conversion factor that, having regard to: (a) the age of a person who has held office as Governor-General on the day on which an allowance becomes payable to the person; and (b) other relevant factors (if any); is applicable for the purpose of working out, in relation to the person, the yearly amount that would have to be paid to discharge a liability equal to the person's surcharge deduction amount. (3D) A determination under subsection (3C) must be published in the Gazette. 6 Paragraph 4A(3)(b) Omit all the words from and including "exceed", substitute: exceed: (i) if the deceased person died while holding office as Governor-General—100% of the rate of allowance that would have been applicable to the deceased person under subsection 4(3) if he or she had not died but had ceased to hold that office; or (ii) if the deceased person died after ceasing to hold office as Governor-General—100% of the rate of allowance that would have been applicable to the deceased person under subsection 4(3) if he or she had not died; and 7 Paragraph 4A(3)(c) Omit "paragraph 4(3)(b)", substitute "subsection 4(3A)". 8 After section 5 Insert: 5A Trustee of Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (1) For the purposes of the definition of trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997: (a) the Secretary to the Department; or (b) if the Secretary to the Department has declared in writing an officer of the Department to be the designated officer for the purposes of this section—that officer; is taken to be the person who manages the Scheme. Note: The definitions of public sector superannuation scheme, superannuation fund and trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 are relevant to this section. (2) Section 4 of the Superannuation Contributions Tax (Application to the Commonwealth—Reduction of Benefits) Act 1997 does not apply to the person who (because of subsection (1)) is the trustee of the Scheme for the purpose of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. Schedule 5—Amendment of the Judges' Pensions Act 1968 1 Section 4 Insert: period of exempt service: (a) in relation to a Judge who has prior judicial service—means any period in that service in respect of which no superannuation contributions surcharge was assessed to be payable on the Judge's surchargeable contributions under the Superannuation Contributions Tax (Assessment and Collection) Act 1997; or (b) in relation to a person: (i) who is a Judge because of paragraph (b) of the definition of Judge in this subsection; or (ii) who, being a presidential member of the Administrative Appeals Tribunal, is taken to be a Judge for the purposes of this Act because of section 16 of the Administrative Appeals Tribunal Act 1975; and the period of whose service as a Judge began before 21 August 1996—means the part of that period of service before that date. 2 Section 4 Insert: period of service as a Judge has a meaning affected by subsection (2). 3 Section 4 Insert: qualifying period for a pension, in relation to a person who has served as a Judge, has the meaning given by subsection (3). 4 Section 4 Insert: Scheme means the scheme constituted by this Act for the provision of retirement and other benefits to and in respect of Judges. 5 Section 4 Insert: superannuation contributions surcharge has the same meaning as in the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 6 Section 4 Insert: surcharge debt account, in relation to a person who has served as a Judge, means the surcharge debt account that was kept for the person (while he or she was serving as a Judge) under section 16 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 7 At the end of section 4 Add: (2) If a Judge has had prior judicial service, the period of that service is to be added to, and is taken to be part of, the period of his or her service as a Judge. (3) The qualifying period for a pension, in relation to a person who has served as a Judge, is: (a) if the period of the person's service as a Judge started when the person was not yet 50—a period equal to the number of years worked out by using the formula: (b) if the period of the person's service as a Judge started after the person had turned 50 but before he or she had turned 60—a period of 10 years; or (c) if the period of the person's service as a Judge started after the person had turned 60—a period equal to the number of years worked out by using the formula: where: age at start of period means the person's age at the start of the period of his or her service as a Judge. 8 Section 6 After "he" (wherever occurring), insert "or she". 9 Section 6 After "his" (wherever occurring), insert "or her". 10 Subsection 6(1) Omit all words after "pension", substitute "in accordance with subsection 6A(2) or 6B(2)". 11 Subsection 6(2) Omit all words after "pension", substitute "in accordance with subsection 6A(2) or 6B(2)". 12 Subsection 6(2A) Omit "to a pension". 13 Paragraph 6(2A)(a) Omit "at the rate specified in subsection (1)", substitute "to a pension in accordance with subsection 6A(2) or 6B(2)". 14 Paragraph 6(2A)(b) Omit "at the prescribed rate", substitute "to a pension in accordance with subsection 6A(3) or 6B(2)". 15 Subsection 6(2B) Omit all words after "pension" (first occurring), substitute "in accordance with subsection 6A(3) or 6B(2) should receive a pension in accordance with subsection 6A(2) or 6B(2), the retired Judge is entitled to receive a pension accordingly. 16 Subsection 6(2C) Repeal the subsection. 17 Subsection 6(2D) Omit all words after "pension", substitute "in accordance with subsection 6A(4) or 6B(2)". 18 Subsection 6(3) Repeal the subsection 19 After section 6 Insert: 6A Rate of pension—Judge's surcharge debt amount not in debit (1) This section applies to a Judge if the Judge's surcharge debt account is not in debit when a pension becomes payable to him or her. Note: For surcharge debt account see subsection 4(1). (2) If the Judge is entitled to a pension because of subsection 6(1) or (2) or paragraph 6(2A)(a), the annual rate of the pension is 60% of the appropriate current judicial salary. Note: For appropriate current judicial salary see subsection 4(1). (3) If the Judge is entitled to a pension because of paragraph 6(2A)(b), the annual rate of pension is worked out by using the formula: where: A means 60% of the appropriate current judicial salary. B means: (a) the sum of the total number of years (including a fraction of a year) of his or her service as a Judge and the total number of years (including a fraction of a year) that the Attorney‑General certifies to be the period, or aggregate of the periods, (if any) of leave in respect of that service due to the Judge immediately before his or her retirement; or (b) 10; whichever is the less. Note: For appropriate current judicial salary see subsection 4(1). (4) If the Judge is entitled to a pension because of subsection 6(2D), the annual rate of that pension is: (a) 0.5% of the appropriate current judicial salary for each completed month of his or her service as a Judge; or (b) 60% of the appropriate current judicial salary; whichever is the lesser rate. Note: For appropriate current judicial salary see subsection 4(1). 6B Rate of pension—Judge's surcharge debt account in debit (1) This section applies to a Judge if the Judge's surcharge debt account is in debit when a pension becomes payable to him or her. Note: For surcharge debt account see subsection 4(1). (2) The annual rate of the pension to which the Judge is entitled is: (a) if the period of his or her service as a Judge does not include a period of exempt service—the rate worked out by using the formula: (b) if the period of his or her service as a Judge includes a period of exempt service that is less than his or her qualifying period for a pension—the rate worked out by using the formula: (c) if the period of his or her service as a Judge includes a period of exempt service that is equal to or longer than his or her qualifying period for a pension—a rate equal to BP; where: BP (basic pension) is the annual rate of the pension that would be payable to the Judge if his or her surcharge debt account were not in debit when the pension becomes payable. E means the number of years in the Judge's period of exempt service. Pt means the amount worked out in accordance with the formula: P1 is the proportion that the rate of the superannuation contributions surcharge that applies to the Judge for the first financial year included in the relevant period in relation to him or her bears to the maximum rate of superannuation contributions surcharge applicable for that financial year, and P2, P3 etc. have each a corresponding meaning. Q means the number of years in the Judge's qualifying period for a pension. relevant period, in relation to a Judge, means: (a) if paragraph (b) does not apply—the Judge's period of service as a Judge; or (b) if the Judge's period of service as a Judge began before 21 August 1996—that part of the period of service that began on that date. Y is the number of financial years included in the relevant period in relation to the Judge. Note: For qualifying period for a pension see subsection 4(3) and for period of exempt service see subsection 4(1). 20 At the end of the Act Add: 19 Surchargeable contributions (1) For the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the surchargeable contributions for a financial year of a Judge is the amount worked out by using the formula: where: annual salary means the amount that is the Judge's salary for the financial year. notional surchargeable contributions factor means the notional surchargeable contributions factor applying to the Judge for that financial year under the regulations. (2) The regulations may prescribe the notional surchargeable contributions factors that are to apply to a Judge when working out, for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Judge's surchargeable contributions. (3) Subsection (1) has effect despite any provision of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 20 Trustee of Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (1) For the purposes of the definition of trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Secretary to the Department is taken to be the person who manages the Scheme. Note: The definitions of public sector superannuation scheme, superannuation fund and trustee in section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 are relevant to this section. (2) The Secretary to the Department, in the capacity (because of subsection (1)) of trustee of the Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, may delegate any or all of the functions and powers that, as trustee of the Scheme, he or she has under that Act as follows: (a) in so far as those functions and powers are to be exercised in relation to presidential members of the Australian Industrial Relations Commission—to the Industrial Registrar; (b) in so far as those functions and powers are to be exercised in relation to the presidential members of the Administrative Appeals Tribunal—to the Registrar of the Tribunal, any officer of the Tribunal or any member of the staff of the Tribunal; (c) in any other case—to any person holding, or performing the duties of, a Senior Executive Service office in the Department. (3) Section 4 of the Superannuation Contributions Tax (Application to the Commonwealth—Reduction of Benefits) Act 1997 does not apply to the Secretary to the Department acting in the capacity of trustee of the Scheme for the purposes of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 21 Regulations The Governor‑General may make regulations prescribing matters: (a) required or permitted by this Act to be prescribed; or (b) necessary or convenient to be prescribed for carrying out or giving effect to this Act. 21 Application The amendments made by this Schedule do not apply in respect of a Justice or Judge of a federal court appointed before the commencement of this Schedule. Schedule 6—Amendment of the Defence Force Retirement and Death Benefits Act 1973 1 Subsection 3(1) (definition of benefit) Omit "a refund of contributions and a lump sum payment under subsection 32(2), a lump sum payment under section 48", substitute "a lump sum payment under subsection 32(2) or section 48". 2 Subsection 3(1) Insert: productivity superannuation benefit, in relation to a member of the scheme, means productivity superannuation benefit payable in respect of the member under the determination made by the Minister under section 52 of the Defence Act 1903. 3 Subsection 3(1) Insert: surcharge debt account, in relation to a member of the scheme, means the surcharge debt account kept for the member by the Authority under section 16 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997. 4 Subsection 3(1) Insert: surcharge deduction amount, in relation to a member of the scheme to or in respect of whom benefits become payable under this Act, means the surcharge deduction amount that is specified in the determination made by the Authority, under section 6C, in relation to the member. 5 At the end of Part I Add: 6C Surcharge deduction amount (1) If: (a) benefits become payable to or in respect of a member of the scheme; and (b) the member's surcharge debt account is in debit when those benefits become so payable; the Authority must determine in writing the surcharge deduction amount that, in its opinion, it would be fair and reasonable to take into account in working out the amount of those benefits. (2) In making the determination, the Authority must have regard to the following: (a) the amount by which the member's surcharge debt account is in debit when those benefits become payable; (b) the value of the employer‑financed component of those benefits; (c) the value of the benefits that, for the purpose of working out (under the Superannuation Contributions Tax (Assessment and Collection) Act 1997) the notional surchargeable contributions factors applicable to the member, were assumed to be likely to be payable to the member on his or her retirement; (d) whether the member has or had qualified for his or her maximum benefit entitlement under this Act; (e) any other matter that the Authority considers relevant. (3) The amount determined by the Authority may not be more than 15% of the employer‑financed component of that part of the benefits payable to the member that accrued after 20 August 1996. 6 Subsection 23(2) Omit "subsection (3)", substitute "subsections (3) and (6)". 7 Subsection 23(5) Omit "this section", substitute "subsection (2) or (3) but subject to subsection (6)". 8 At the end of section 23 Add: (6) If the member of the scheme makes an election under subsection 124(1), the rate at which retirement pay is payable to the member is the rate worked out by using the formula: where: basic rate means the annual rate at which retirement pay would be payable to the member under this section if the member did not make the election. conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. surcharge deduction amount means the member's surcharge deduction amount. 9 Subsection 24(3) After "section", insert ", then, subject to subsections (8) and (9)". 10 At the end of section 24 Add: (8) If: (a) a member of the scheme makes an election under this section (first election); and (b) the member's surcharge debt account is in debit when retirement pay becomes payable to the member; and (c) the member also makes an election under subsection 124(1); the following provisions apply: (d) the Commonwealth must pay to the member the difference between the amount (specified amount) specified in the first election as the amount that is to be payable to the member by virtue of the commutation and: (i) the member's surcharge deduction amount; or (ii) if the member's surcharge deduction amount exceeds the specified amount—so much of the surcharge deduction amount as does not exceed the specified amount; (e) the amount per annum of the retirement pay payable to the member, on and after the day on which the first election takes effect, is: (i) if subparagraph (ii) does not apply—the amount per annum referred to in paragraph (3)(b); or (ii) if the member's surcharge deduction amount exceeds the specified amount—the amount per annum worked out by using the formula: where: basic rate means the amount per annum referred to in paragraph (3)(b). conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. excess means the amount by which the member's surcharge deduction amount exceeds the specified amount. (9) If: (a) a member of the scheme makes an election under this section; and (b) the member's surcharge debt account is in debit when retirement pay becomes payable to the member; and (c) the member does not make an election under subsection 124(1); and (d) the member's surcharge deduction amount exceeds the amount of the member's productivity superannuation benefit; the following provisions apply: (e) the Commonwealth must pay to the member an amount equal to the amount specified in the election as the amount that is to be payable to the member by virtue of the commutation; (f) the amount per annum of the retirement pay payable to the member, on and after the day on which the election takes effect, is the amount per annum worked out by using the formula: where: basic rate means the amount per annum referred to in paragraph (3)(b). conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. excess means the amount by which the member's surcharge deduction amount exceeds the amount of the member's productivity superannuation benefit. 11 Subsection 31(2) Omit "subsection (3)", substitute "subsections (3) and (4)". 12 Subsection 31(3) Omit "this section", substitute "subsection (2)". 13 At the end of section 31 Add: (4) If the member of the scheme makes an election under subsection 124(1), the rate at which invalidity pay is payable to the member is the rate worked out by using the formula: where: basic rate means the annual rate at which invalidity pay would be payable to the member under this section if the member did not make the election. conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. surcharge deduction amount means the member's surcharge deduction amount. 14 Subsection 32(1) Omit all the words from and including "he is entitled", substitute: the member is entitled: (a) if the member does not make an election under subsection 124(1)—to invalidity pay at the rate at which retirement pay would have been payable to the member if the member had not made an election under subsection 124(1) in respect of the retirement pay; or (b) if the member makes an election under subsection 124(1)—to invalidity pay at the rate at which retirement pay would have been payable to the member if the member had made an election under subsection 124(1) in respect of the retirement pay. 15 Subsection 32(2) Omit all the words from and including "he is entitled", substitute: the member is entitled to a lump sum payment of an amount worked out under subsection (3). 16 At the end of section 32 Add: (3) The amount of the lump sum payment referred to in subsection (2) is: (a) if paragraph (b) does not apply—a lump sum payment equal to 1.5 times the amount of the member's contributions; or (b) if the member makes an election under subsection 124(1)—a lump sum payment equal to the difference between: (i) the lump sum payment referred to in paragraph (a); and (ii) the member's surcharge deduction amount. 17 Subsection 32A(5) After "section" (second occurring), insert ", then, subject to subsections (7) and (8)". 18 At the end of section 32A Add: (7) If: (a) a member of the scheme makes an election under this section (first election); and (b) the member's surcharge debt account is in debit when invalidity pay becomes payable to the member; and (c) the member also makes an election under subsection 124(1); the following provisions apply: (d) the Commonwealth must pay to the member the difference between the amount (specified amount) specified in the first election as the amount that is to be payable to the member by virtue of the commutation and: (i) the member's surcharge deduction amount; or (ii) if the member's surcharge deduction amount exceeds the specified amount—so much of the surcharge deduction amount as does not exceed the specified amount; (e) the amount per annum of the invalidity pay payable to the member, on and after the day on which the first election takes effect, is: (i) if subparagraph (ii) does not apply—the amount per annum referred to in paragraph (5)(b); or (ii) if the member's surcharge deduction amount exceeds the specified amount—the amount per annum worked out by using the formula: where: basic rate means the amount per annum referred to in paragraph (5)(b). conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. excess means the amount by which the member's surcharge deduction amount exceeds the specified amount. (8) If: (a) a member of the scheme makes an election under this section; and (b) the member's surcharge debt account is in debit when invalidity pay becomes payable to the member; and (c) the member does not make an election under subsection 124(1); and (d) the member's surcharge deduction amount exceeds the amount of the member's productivity superannuation benefit; the following provisions apply: (e) the Commonwealth must pay to the member an amount equal to the amount specified in the election as the amount that is to be payable to the member by virtue of the commutation; (f) the amount per annum of the invalidity pay payable to the member, on and after the day on which the election takes effect, is the amount per annum worked out by using the formula: where: basic rate means the amount per annum referred to in paragraph (5)(b). conversion factor is the factor that is applicable to the member under the determination made by the Authority under section 124A. excess means the amount by which the member's surcharge deduction amount exceeds the amount of the member's productivity superannuation benefit. 19 At the end of section 38 Add "and (in the case of a dece