21BEffect of the holding of offices of profit—reduction of certain retiring allowances and annuities

21B  Effect of the holding of offices of profit—reduction of certain retiring allowances and annuities  (1) In this section, unless the contrary intention appears: annual after‑tax income, in relation to a hypothetical taxpayer and in relation to a year of income, means the hypothetical taxpayer’s taxable income for the year of income, reduced by the income tax and the medicare levy imposed on that taxable income. assessable income has the same meaning as in the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997, as appropriate. authorized officer means an officer of the Department who is appointed by the Secretary to be an authorized officer for the purposes of this section. fortnightly grossed‑up amount, in relation to particular remuneration, means the amount of assessable income that a hypothetical taxpayer would have to derive during each fortnight in the year of income concerned in order that the hypothetical taxpayer’s annual after‑tax income for the year of income would equal the annual rate of the remuneration. Governor means:  (a) in relation to a State—the Governor of the State; and  (b) in relation to a Territory—the Administrator of the Territory. holder of an office of profit under a State means:  (a) the Governor of the State;  (b) a Justice or Judge of a court of the State;  (c) a magistrate; or  (d) the holder of:  (i) an office established for a public purpose by or under a law of the State, being an office appointments to which are or may be made by:  (A) the Governor of the State; or  (B) a Minister of the State; or  (ii) any other appointment made for a public purpose by:  (A) the Governor of the State; or  (B) a Minister of the State; or  (iii) an office of Head of Administration or Associate Head of Administration under section 49 of the Australian Capital Territory (Self‑Government) Act 1988; but does not include a member of the Parliament of the State. holder of an office of profit under the Commonwealth means:  (a) the Governor‑General;  (b) a Justice or Judge of a federal court;  (c) a person who, by virtue of an Act, has the same status as a Justice or Judge of a federal court or of the Supreme Court of a Territory;  (d) the holder of an office of Secretary within the meaning of the Public Service Act 1999; or  (e) a head of mission within the meaning of the Vienna Convention on Diplomatic Relations, a copy of the English text of which is set out in the Schedule to the Diplomatic Privileges and Immunities Act 1967, or a head of consular post within the meaning of the Vienna Convention on Consular Relations, a copy of the English text of which is set out in the Schedule to the Consular Privileges and Immunities Act 1972, being a mission sent, or consular post established, by Australia; or  (f) the holder of a public office within the meaning of Part II of the Remuneration Tribunal Act 1973. hypothetical taxpayer means a hypothetical taxpayer where the following assumptions are made:  (a) that the taxpayer is an individual;  (b) that the taxpayer is not a trustee;  (c) that the taxpayer is a resident for the purposes of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997, as appropriate;  (d) that the taxpayer has no entitlement to a rebate or credit under either of those Acts;  (e) that no deductions are allowable to the taxpayer under either of those Acts. income tax has the same meaning as in the Income Tax Assessment Act 1936. medicare levy has the same meaning as in Part VIIB of the Income Tax Assessment Act 1936. Minister means:  (a) in relation to a State—a Minister of the Crown for the State; and  (b) in relation to a Territory—a person holding, in relation to the Territory, an office corresponding to the office of Minister of the Crown for a State. Parliament, in relation to the Australian Capital Territory means the Legislative Assembly for the Australian Capital Territory, and in relation to the Northern Territory, means the Legislative Assembly of the Northern Territory. relevant benefit means:  (a) a retiring allowance under section 18, and includes additional retiring allowance under subsection 18(9); or  (b) an annuity under section 19. remuneration includes any annual allowance, but does not include:  (a) any amount paid for the reimbursement of expenses reasonably incurred; or  (b) any remuneration payable under section 14 of the Parliamentary Business Resources Act 2017. Secretary means the Secretary of the Department. State includes Territory. taxable income has the same meaning as in the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997, as appropriate. year of income means:  (a) a year of income (within the meaning of the Income Tax Assessment Act 1936); or  (b) an income year (within the meaning of the Income Tax Assessment Act 1997); as appropriate.  (2) Subject to subsection (4), if the following conditions are satisfied in relation to a person who is entitled to a relevant benefit:  (a) the person is:  (i) the holder of an office of profit under the Commonwealth; or  (ii) the holder of an office of profit under a State;  (b) the person receives remuneration in respect of the office;  (c) the fortnightly rate of the remuneration exceeds 20% of the fortnightly rate of parliamentary allowance for the time being payable to a member; the fortnightly rate at which the relevant benefit would otherwise be payable to the person is to be reduced by 50 cents for each $1 of the excess. Note: See subsection (3A) for the calculation of the fortnightly rate of parliamentary allowance payable to a member.  (2A) For the purposes of working out the reduction of a relevant benefit under subsection (2), if the remuneration referred to in that subsection is exempt from income tax, the fortnightly rate of the remuneration is taken to be the fortnightly grossed‑up amount of the remuneration.  (3) If the remuneration by reference to which the relevant benefit is to be reduced under subsection (2) is payable otherwise than on a fortnightly basis, the fortnightly rate of the remuneration is taken to be the rate that the Trust determines in writing is the equivalent of a fortnightly rate.  (3A) For the purposes of working out the reduction of a relevant benefit under subsection (2), the fortnightly rate of parliamentary allowance payable to a member is the amount worked out using the formula:     (3B) For the purpose of the reference in the formula in subsection (3A) to the annual rate of parliamentary allowance, any reductions under Division 3 of Part 2 of the Parliamentary Business Resources Act 2017 (about salary sacrifice) of a particular member’s entitlement to parliamentary allowance are to be disregarded.  (4) Notwithstanding anything contained in subsection (2), the rate of a relevant benefit to which a person is entitled shall not be reduced, or continue to be reduced, under that subsection by a rate that is more than one‑half of the rate at which the relevant benefit would have been payable to the person but for that subsection and:  (aa) if subsection 18A(6) applies, whether directly or indirectly, in relation to the relevant benefit—that subsection; and  (a) if subsection 18B(6) applies, whether directly or indirectly, in relation to the relevant benefit—that subsection; and  (b) if subsection 20(3A) applies, whether directly or indirectly, in relation to the relevant benefit—that subsection.  (5) In the event of a person who is entitled to a relevant benefit becoming:  (a) the holder of an office of profit under the Commonwealth; or  (b) the holder of an office of profit under a State; the person shall, within 14 days after the occurrence of the event, notify the Secretary, in writing, accordingly. Penalty for contravention of subsection: 15 penalty units. Note: Part IA of the Crimes Act 1914 contains provisions dealing with penalties.  (6) The Secretary or an authorized officer may, by notice in writing served, personally or by post, on a person who is entitled to a relevant benefit (whether or not the relevant benefit is immediately payable), require the person to furnish to the Secretary, within such reasonable time as is specified in the notice, such information as is specified in the notice, being information that, in the opinion of the Secretary or the authorized officer, as the case may be, is or may be relevant to the application of this section to the person.  (7) A person shall not refuse or fail duly to furnish information that he or she is required to furnish by virtue of a notice under subsection (6). Penalty for contravention of subsection: Imprisonment for 6 months, or 30 penalty units, or both. Note: Part IA of the Crimes Act 1914 contains provisions dealing with penalties.  (8) Subsection (7) does not apply if the person has a reasonable excuse. Note: A defendant bears an evidential burden in relation to the matter in subsection (8) (see subsection 13.3(3) of the Criminal Code).