ATO Interpretative Decision

ATO ID 2002/477 (Withdrawn)

Superannuation

• This ATO Interpretative Decision is withdrawn from the database because it contains a view in respect of section 27CAA of the Income Tax Assessment Act 1936 which does not apply after the 2006 - 2007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.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the payment received from an overseas superannuation fund assessable to the resident taxpayer?

Decision

No. The payment received from an overseas superannuation fund is not assessable to the resident taxpayer as it is a payment from an 'eligible non-resident non-complying superannuation fund' as defined under subsection 27A(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The taxpayer worked for a diplomatic mission in Australia and was a resident of Australia for taxation purposes. As a condition of employment the taxpayer was required to join a foreign- based retirement fund. The taxpayer would have been eligible to receive an annuity upon reaching 62 years of age. However, the taxpayer elected to make an early withdrawal of benefits from the fund.

Reasons for Decision

The assessable income of a taxpayer who receives a lump sum payment from an 'eligible non-resident non-complying superannuation fund' (which is not exempt under section 27CD or section 27CE of the Income Tax Assessment Act 1936 (ITAA 1936) generally includes the gross amount of the payment less contributions by the taxpayer or an employer of the taxpayer and less the taxpayer's accumulated entitlement before the 'relevant day' (section 27CAA of the ITAA 1936).

Where a payment is made from an 'eligible non-resident non-complying superannuation fund' more than 6 months after the 'relevant day' the amount is assessable under section 27CAA of the ITAA 1936. Under section 27CAA of the ITAA 1936 if the amount that was 'properly payable' (which is the taxpayer's vested benefit) on the day on which the relevant payment was made exceeds 'accumulated entitlements' and 'additional contributions', then that excess is included in the taxpayer's assessable income.

The accumulated entitlements is the amount properly payable to the taxpayer out of the fund on the 'relevant day'. Additional contributions are contributions paid by the taxpayer or the taxpayer's employer on or after the 'relevant day'. The 'relevant day' is the day the taxpayer became a resident of Australia or became a member of the fund, whichever is the later.

The taxpayer made an early withdrawal of the benefit thus forfeiting all the interest that may have accrued in the fund had the taxpayer retired at the earliest retirement age. The amount properly payable to the taxpayer out of the fund on the relevant day and superannuation contributions (paid by the taxpayer or an employer of the taxpayer on or after the relevant day) are more than the lump sum payment actually received. As a result the amount assessable under section 27CAA of the ITAA 1936 is nil.

Legislative References:
Income Tax Assessment Act 1936
   subsection 27A(1)
   section 27CAA
   section 27CD
   section 27CE

Other References:
Previously released as CDS10169

Keywords
Foreign termination payments
Foreign superannuation payments

Business Line:  Superannuation

Date of publication:  30 April 2002

ISSN: 1445-2782