ATO Interpretative Decision
ATO ID 2002/159 (Withdrawn)
Superannuation
Superannuation, retirement & employment termination: Eligible termination payment (ETP): ETP invalidity paymentFOI status: may be released
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This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is a payment from a superannuation fund for permanent and partial disability an invalidity payment under section 27G of the Income Tax Assessment Act 1936 (ITAA 1936) and therefore exempt from tax?
Decision
No. The payment is not an invalidity payment under section 27G of the ITAA 1936.
Facts
The taxpayer retires from employment on medical grounds. The retirement happens after 1 July 1994 and before the taxpayer's 65th birthday. The taxpayer's superannuation fund makes a payment to the taxpayer as it considers the taxpayer, under the rules of the fund, to be 'permanently and partially disabled'.
Reasons for Decision
Under section 27G of the ITAA 1936 a payment made after 1 July 1994 qualifies as an 'invalidity payment' providing two legally qualified medical practitioners certify that the disability is likely to result in the taxpayer being unable ever to be employed in a capacity for which the taxpayer is reasonably qualified because of education, training or experience (paragraph 27G(b)(i) of the ITAA 1936). The termination must also occur before the last retirement date in relation to the employment (usually the 65th birthday).
The two medical practitioners consulted by the fund state that the taxpayer can undertake alternative or light duties. Consequently, the tests in paragraph 27G(b)(i) of the ITAA 1936 have not been met as the taxpayer may be employed in a capacity reflective of the taxpayer's 'education, training or experience'.
Date of decision: 15 July 1998
Legislative References:
Income Tax Assessment Act 1936
section 27G
paragraph 27G(b)(i)
Other References:
Previously released as CDS10343
Keywords
Eligible termination payments
Superannuation funds
ETP post June 1994 invalidity component
Invalidity & disablement
Sickness & invalidity payments
ISSN: 1445-2782
| Date: | Version: | |
| 15 July 1998 | Original statement | |
| You are here | 9 April 2010 | Archived |