ATO Interpretative Decision

ATO ID 2002/284 (Withdrawn)

Superannuation

Superannuation, retirement and employment termination: Lump sum and pension from overseas superannuation fund. Amount to which section 27CAA of the Income Tax Assessment Act 1936 (ITAA 1936) applies
FOI status: may be released
  • This ATO Interpretative Decision is withdrawn from the database because it contains a view in respect of section 27CAA of the Income Tax Assessment Act 1936 which does not apply after the 2006 - 2007 income year. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of decisions for income years up to, and including, the 2006 - 2007 income year.
    Note: Please refer to Subdivision 305-B of the Income Tax Assessment Act 1997 for the 2007-2008 and later income years.
    This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Where a taxpayer receives a lump sum payment and a pension from an overseas superannuation fund, and the lump sum payment is assessable under section 27CAA of the ITAA 1936, what is the amount of the 'accumulated entitlement' for the purposes of section 27CAA?

Decision

The accumulated entitlement is the portion of the amount properly payable that relates to the payment of the lump sum.

The portion relating to the payment of the lump sum is calculated by applying the relevant proportion ascertained with the following formulae:

A / (A + B)

Where

'A' is the amount of the lump sum benefit received; and

'B' is the present value of the pension entitlement at the time when the lump sum benefit is received.

Facts

The taxpayer contributes to an overseas superannuation fund.

On reaching 75 years of age, the taxpayer elects to receive a lump sum payment and a reduced pension from the fund.

Reasons for Decision

Although lump sum superannuation paid jointly with a pension (including partial commutations) is clearly assessed under section 27CAA of the ITAA 1936, the section is silent as to whether the accumulated entitlement should be apportioned.

The Explanatory Memorandum to Act No. 181 of 1994 is also silent as to whether the accumulated entitlement should be apportioned.

The Commissioner considers that:

the accumulated entitlement should be the portion that relates to the payment of the lump sum; and
that where there is no immediate apparent basis for determining that portion, the formulae in paragraph 8 of Taxation Ruling IT 2272 be used.

This is consistent with the method for apportionment of 'purchase price' used in IT 2272.

Date of decision:  13 March 2001

Legislative References:
Income Tax Assessment Act 1936
   Subsection 27A(1)
   Section 27CAA
   Section 27CD

Related Public Rulings (including Determinations)
Income Tax Ruling IT 2272

Keywords
Foreign pension
Annuities and superannuation pensions
Annuity and superannuation purchase price
Non complying superannuation funds

Business Line:  Superannuation

Date of publication:  28 March 2002

ISSN: 1445-2782

history
  Date: Version:
  13 March 2001 Original statement
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