ATO Interpretative Decision

ATO ID 2002/588 (Withdrawn)

Superannuation

• This ATO ID is withdrawn from the database because it contains a view in respect of sections 27A, 27AAA, 27B and 27C of the Income Tax Assessment Act 1936. These provisions do not apply for the 2007-2008 income year and later income years. This ATO ID 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

Does an ETP rebate apply to an ETP paid from a superannuation fund to a deceased estate where there are no beneficiaries of the estate that are dependant's of the deceased?

Decision

Yes. A maximum rate of 15% applies to the taxed element of post-June 1983 component of a death benefit ETP. A maximum tax rate of 30% applies to the untaxed element of the post-June 1983 component of a death benefit ETP.

Facts

ETP amount was paid to the deceased taxpayer's estate by a complying superannuation fund.

No dependant dependants of the deceased are beneficiaries of the estate.

The ETP consists of pre July 1983 component and a post-June 1983 component - taxed element.

Reasons for Decision

Subparagraph 27A(3)(b) of the ITAA 1936 states that a lump sum payment made after the death of the taxpayer is an ETP in the hands of the trustee of the estate of the deceased taxpayer.

The ETP is included in the assessable income of that year of income of the trust estate under subsection 101A(3) of the ITAA 1936, and is deemed to be income to which no beneficiary is presently entitled.

The ETP will be assessable as an ordinary ETP and broken into its ordinary components based on the deceased taxpayer's eligible service period (ESP). ESP is defined in subsection 27A(1) of the ITAA 1936.

The ETP is a benefit ETP under section 27AAA of the ITAA 1936. The dependant's concession under subsection 27AAA(3) does not apply because none of the beneficiaries of the estate are dependants of the deceased as defined in subsection 27A(1) of the ITAA 1936.

As per section 27B(1A) of the ITAA 1936, if a death benefit ETP is made in relation to a taxpayer in relation to a year of income, the taxpayer's assessable income of the year of income includes:

(a)

the taxed element of the retained amount of the post-June 1983 component; and

(b)

the untaxed element of the retained amount of the post-June 1983 component.

Subsection 27C(1) of the ITAA 1936 includes in a taxpayer's assessable income 5% of the retained amount of the pre-July 1983 component of the ETP.

A rebate of tax effectively limits the rate of tax to the maximum rates set out in section 159SA of the ITAA 1936.

Under section 159SA of the ITAA 1936 the taxed element of the post-June 1983 component of a death benefit ETP has a maximum rate of tax of 15%. The untaxed element of the post-June 1983 component of a death benefit ETP has a maximum rate of tax of 30%.

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   Section 27AAA
   Subsection 27B(1A)
   Subsection 101A(3)
   Section 159SA
   Subsection 27A(1)
   Subsection 27C(1)

Keywords
ETP death benefit
ETP post June 1983 component
ETP rebates
ETP death benefit deceased estates

Business Line:  Superannuation

Date of publication:  31 May 2002

ISSN: 1445-2782