ATO Interpretative Decision

ATO ID 2001/235 (Withdrawn)

Superannuation

Superannuation: Undeducted Purchase Price (UPP) - Pension purchased by a roll-over of an ETP that is a commutation of an earlier pension which commenced to be payable prior to 1 July 1994
FOI status: may be released

This ATO ID is withdrawn from the database because it contains a view in respect of section 27AAAA and subsection 27A(1) of the Income Tax Assessment Act 1936 that does not apply for the 2007-08 and later income years. Despite its withdrawal, 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.

Status of this decision: Decision Withdrawn 4 July 2008

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

What is the undeducted purchase price (UPP) of an immediately payable pension (the 'new pension') which is wholly purchased by rolling-over an eligible termination payment (ETP) that is the commutation of an earlier pension when, (a) the earlier pension was itself wholly purchased by the roll-over of an ETP that was the commutation of an original pension, and (b) the original pension commenced to be payable prior to 1 July 1994?

Decision

The UPP of the new pension is the amount of the ETP used to purchase the new pension reduced by the sum of the taxed element of the post-June 83 component of the ETP and the untaxed element of the post-June 83 component of the ETP.

Facts

A superannuation fund currently pays a pension which satisfies the standards as set out in subregulation 1.06(2) of the Superannuation Industry (Supervision) Regulations (SISR).

The current pension was wholly purchased with a rolled-over ETP. The ETP resulted from the partial commutation of an allocated pension which commenced to be payable prior to 1 July 1994.

The member will commute the current pension, and roll-over the resulting ETP to wholly purchase a new pension which satisfies the standards as set out in subregulation 1.06(2) of the SISR.

Reasons for Decision

Section 27AAAA of the Income Tax Assessment Act 1936 (ITAA 1936) applies to a pension if the pension is purchased exclusively with commutation ETPs that are wholly attributable to a pension or annuity that commenced before 1 July 1994. A commutation ETP can be attributed to a pension or annuity that commenced before 1 July 1994 through one or more roll-overs.

'Commutation ETP' is defined in subsection 27AAAA(2) of the ITAA 1936, and means an ETP arising from the commutation or residual capital value of a superannuation pension or annuity.

The 'undeducted purchase price' of the new pension is defined in subsection 27A(1) of the ITAA 1936. When section 27AAAA of the ITAA 1936 applies to a pension that has been wholly purchased by the roll-over of one or more ETPs, the undeducted purchase price of the pension is the amount of the ETPs used to purchase the pension reduced by the following components of the ETPs:

(a): the taxed element of the post-June 83 component, and
(b): the untaxed element of the post-June 83 component.

Date of decision: 14 June 2001

Legislative References:
Income Tax Assessment Act 1936
   section 27AAAA
   subsection 27AAAA(2)
   subsection 27A(1)

Superannuation Industry (Supervision) Regulations
subregulation 1.06(2)

Keywords
Annuities & superannuation pensions
Annuity & superannuation pension purchase price
Superannuation pensions
Undeducted purchase price
Deductible amount

Business Line: Superannuation

Date of publication: 21 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	14 June 2001	Original statement
You are here →	4 July 2008	Archived

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