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ATO Interpretative Decision

ATO ID 2004/130

Superannuation

Reasonable benefit limits: Highest Average Salary
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can a 'trust distribution' made to the applicant be included in the calculation of the applicant's highest average salary (HAS) for reasonable benefit limit (RBL) purposes?

Decision

No. A 'trust distribution' made to the applicant cannot be included in the calculation of the applicant's HAS.

Facts

The applicant lodged a Transitional Reasonable Benefit Limit (TRBL) application form and now requests that the TRBLs be calculated on the basis that the HAS was understated in the original application.

The applicant requests that trust distributions received in the three years be included in the calculation of the HAS.

Reasons for Decision

The term 'salary' is defined in subregulation 47(1) of the Income Tax Regulations 1936 (ITR 1936) as:

'salary' , subject to subregulations (3) and (4), means salary, wages, commissions, bonuses, fees, allowances or gratuities paid to a person during a financial year, and includes:

(a)
subject to paragraph (k), other earnings; and
(b)
the amount that would be the value of a benefit to which section 57, 57A or 58 of the Fringe Benefits Tax Assessment Act 1986 applies if that benefit were not an exempt benefit; and
(c)
a payment made by a company by way of remuneration to a director of a company; and
(d)
in the case of a person who is an Australian citizen, or a resident of Australia- any amounts paid to the person from a source outside of Australia that would fall within this definition if they had been paid from a source in Australia;

but does not include:

(e)
a distribution from a trust estate; or...

Paragraph (e) of subregulation 47(1) of the ITR 1936 specifically excludes from the definition of 'salary', a distribution from a trust estate. Consequently, the applicant's salary for the purposes of determining HAS does not include the trust distributions.

Date of decision:  4 June 2003

Year of income:  Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1936
   section 26AC.
   section 26AD.

Fringe Benefits Tax Assessment Act 1986
   section 57A.
   section 57.
   section 58.

Income Tax Regulations 1936
   subregulation 47(1)

Keywords
Highest average salary
Reasonable benefit limits
Salary
Superannuation Business Line
Transitional RBLs
Upper Mt Gravatt ATO

Business Line:  Superannuation

Date of publication:  6 February 2004

ISSN: 1445-2782

history
  Date: Version:
You are here → 4 June 2003 Original statement
  16 November 2007 Archived

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