ATO Interpretative Decision
ATO ID 2002/134 (Withdrawn)
Superannuation
Superannuation, retirement & employment termination: Lump sum payment from a foreign superannuation fundFOI status: may be released
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This ATO Interpretative Decision is withdrawn from the database because it contains a view in respect of aspects of section 27CAA of the Income Tax Assessment Act 1936 which do not apply after the 2003 - 2004 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 2003 - 2004 income year.Note: Please refer to sections 27CAA (as amended) and 27CAB of the Income Tax Assessment Act 1936 for the 2004 - 2005 to 2006 - 2007 income years. For 2007 - 2008 and later income tax years please refer to Subdivision 305-B of the Income Tax Assessment Act 1997.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Are payments made from a foreign superannuation fund to a taxpayer resident in Australia included in the taxpayer's assessable income?
Decision
Yes. Payments made from a foreign superannuation fund are included in the taxpayer's assessable income by virtue of section 27CAA of the Income Tax Assessment Act 1936 (ITAA 1936) providing the payment is made more than 6 months after the taxpayer became a resident of Australia (see definition of 'exempt resident foreign termination payment' in subsection 27A(1) of the ITAA 1936.
Facts
The taxpayer works in another country and is a member of a provident fund. In the future the taxpayer intends to leave the other country and become an Australian resident. At that time the benefit in the provident fund will be due for payment. The taxpayer plans to transfer the benefit into a superannuation fund that is resident in the other country.
There is no Double Taxation Agreement which currently applies to income derived by Australian residents from sources in the other country.
Reasons for Decision
Based on the facts, the foreign superannuation fund would be classified as an 'eligible non-resident non complying superannuation fund' (subsection 27A(1) of the ITAA 1936).
The following two paragraphs were deleted on 26 March 2002 as they do not indicate the ATO view:
If no other provisions had operation, the general income provision, subsection 25(1) of the ITAA 36, would therefore operate to assess the taxpayer on income from all sources, including the benefit paid by the foreign superannuation fund.
However, the operation of section 27CAA of the ITAA 1936, which deals with the assessability of payments made from an 'eligible non resident non complying superannuation fund', takes precedence over the operation of the general income provision, subsection 25(1) of the ITAA 1936.]
The general intention of section 27CAA of the ITAA 1936 is to include in the taxpayer's assessable income any amounts which accrue in a 'non-resident superannuation fund' which are attributable to the period that the taxpayer is a resident of Australia.
If a taxpayer receives a lump sum payment from an 'eligible non-resident non complying superannuation fund' and the amount that was 'properly payable' (that is the taxpayer's vested benefit) on the day on which the relevant payment was made exceeds:
'accumulated entitlements' (the amount properly payable to the taxpayer out of the fund on the 'relevant day', being the day immediately before the day the taxpayer became a resident of Australia or became a member of the fund, whichever is later)
plus,
'additional contributions' (amount paid by the taxpayer or the taxpayer's employer on or after the relevant day)
then that excess is included in the taxpayer's assessable income.
However, section 27CAA of the ITAA 1936 does not apply to 'exempt non-resident foreign termination payments'. An 'exempt non resident foreign termination payment' is defined in subsection 27A(1) of the ITAA 1936 to include a payment made from an 'eligible non-resident non-complying superannuation fund' within 6 months after the taxpayer became a resident of Australia. Therefore, where an amount is paid from an 'eligible non-resident non-complying superannuation fund' within this period, it will be exempt from tax under section 27CD of the ITAA 1936.
If the payment from the foreign superannuation fund is made within six months of the taxpayer becoming a resident of Australia, the payment will be exempt from tax in Australia (section 27CD of the ITAA 1936). If the payment is made after the taxpayer has been a resident for more than six months, then any part of the payment which exceeds the accumulated entitlements plus additional contributions will be included in the taxpayer's assessable income (section 27CAA (ITAA 1936)).
Date of decision: 4 June 1998
Legislative References:
Income Tax Assessment Act 1936
subsection 25(1)
subsection 27A(1)
section 27CAA
section 27CD
Related Public Rulings (including Determinations)
TR 97/19
Other References:
Previously released as CDS10281
Keywords
Lump sum superannuation payments
Non resident superannuation funds
Double tax agreements
Hong Kong
China
ISSN: 1445-2782
| Date: | Version: | |
| 4 June 1998 | Original statement | |
| You are here | 26 June 2009 | Archived |