ATO Interpretative Decision

ATO ID 2002/191 (Withdrawn)

Income Tax

• This ATO ID contains a view in respect of section 27H of the Income Tax Assessment Act 1936 (ITAA 1936). Section 27H of the ITAA 1936 has been amended for the 2007-08 income year and later income years. This ATO ID is withdrawn as it does not reflect the amendments made to section 27H of the ITAA 1936. This ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2006-07 income year.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a superannuation annuity received from a non-resident superannuation fund by a resident individual taxpayer assessable under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) and included in the assessable income of a taxpayer under subsection 6-10(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. A superannuation annuity received from a non-resident superannuation fund by a resident individual taxpayer is assessable income of a taxpayer under section 27H of the ITAA 1936 and included in the assessable income of a taxpayer under subsection 6-10(4) of the ITAA 1997.

Facts

The taxpayer, a non-resident of Australia since the early 1970's:

•

contributed to a non-resident superannuation fund established by their employer;

•

filed income tax returns in respect of Australian sourced income in the relevant years; and

•

did not receive or claim any tax deductions or tax offsets in relation to superannuation contributions.

The non-resident superannuation fund is not an eligible resident non-complying superannuation fund.

The non-resident superannuation fund is registered in an overseas country that does not have a double tax agreement with Australia.

The taxpayer recently became a resident of Australia.

The taxpayer intends to draw on the funds by way of an annual annuity.

Reasons for Decision

An annuity is a sum of money payable periodically for a fixed or indefinite period of time.

Subsection 6-10(1) of the ITAA 1997 provides that a taxpayer's assessable income includes some amounts that are not ordinary income. Subsection 6-10(2) of the ITAA 1997 states that amounts that are not ordinary income but are included in assessable income by provisions about assessable income are called 'statutory income'.

Subsection 6-10(4) of the ITAA 1997 states that an Australian resident is assessable on statutory income from all sources, whether in or out of Australia. Annuities are included in the list of various types of statutory income in section 10-5 of the ITAA 1997.

Subsection 27H(1) of the ITAA 1936 provides that assessable income includes annuities and superannuation pensions. However, under subsection 27H(1A) of the ITAA 1936, an annuity is exempt from income tax if the annuity is paid from a fund that is an eligible resident non-complying superannuation fund.

The taxpayer will be in receipt of annuity income paid from a fund that is not an eligible resident non-complying superannuation fund. The income will be assessable under subsection 27H(1) of the ITAA 1936 and therefore included in the assessable income of the taxpayer under subsection 6-10(4) of the ITAA 1997.

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-10(1)
   subsection 6-10(2)
   subsection 6-10(4)
   section 10-5

Keywords
Non resident superannuation funds
Annuity income
Non complying superannuation funds

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 February 2002

ISSN: 1445-2782