Part 5 (This annex part is policy guidance)

ADF COMPLETION BONUSES – CLARIFICATION OF ADMINISTRATIVE ADVICE

Salary sacrifice of bonus payments to an approved superannuation fund

The following is a repeat of ADHQ PE98-34396 (DGPPEC 174/2000) dated 22 May 2000. The references (which have been preserved in their original form) are to the former INDMAN instructions and their Annexes. These Instructions have been reproduced unchanged as Attachments A to E of this Part (except for the RAN Technical Sailors Completion Bonus scheme, which has now expired).

To Recipients of:

Medical and Dental Officers Completion Bonus

RAN Observer Completion Bonus

RAAF Flight Engineer Completion Bonus

RAN Technical Sailors Completion Bonus

RAN Submariner Completion Bonus

RAAF Engineer Completion Bonus

A recent re-examination of policy advice, contained in INDMAN instructions, a copy of which was given to each member when offers of the relevant bonus were made, has highlighted a procedure/view that is not supported by information received from the Deputy Commissioner of Taxation.

Annex B (in the case of the Medical and Dental Officers Completion Bonus - Annex C) to each relevant instruction, the Bonus Payment Election form, indicates that the form ‘... must be completed in conjunction with the Acknowledgment by Member form’.  This was essential where any member intended to sacrifice the whole or any portion of the bonus payment.  If this form was not completed at the time of accepting the offer, indicating the member intended to sacrifice the whole or partial payment, then the member is not able to sacrifice to an Approved Superannuation Fund and can only be paid in cash.

Unfortunately, contained in the text of each Instruction, at either paragraphs 31, 32, 34 or 47, depending on the relevant bonus scheme, was an inference that the Payment Election form could be amended just prior to final payment at the maturity of the bonus scheme.  The only amendment allowed, based on the view of the Deputy Commissioner for Taxation, would be a reduction in the amount of the contribution to an Approved Superannuation Fund.  A member is not able to elect for the first time to make the whole or partial payment to an Approved Superannuation Fund, or where previously elected, the amount under the election cannot be increased.

For members who sought external professional financial advice, as recommended in Annex B, the above clarification should have no impact.

(Signed)

M. PEARCE

Director General

Personnel Policy and Employment Conditions

PACMAN                                                              Version 2 (May 2005)                             Chapter 3 – Annex 3.5.D Part 5 – 1