ATO Interpretative Decision

ATO ID 2002/1012 (Withdrawn)

Income Tax

Capital Gains Tax - transfer of assets between superannuation funds
FOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does the exception in paragraph 104-60(5)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the transfer of assets from one superannuation fund to another superannuation fund?

Decision

No. As the terms of both trusts are not the same, the exception in paragraph 104-60(5)(b) of the ITAA 1997 does not apply.

Facts

The assets of one superannuation fund were transferred to another superannuation fund in November 2000. The transferee fund was established under a new deed executed on 1 November 2000.

The terms of the trust deeds of both funds varied considerably. For example, the new deed includes clauses relating to trustee's powers, employer contributions, members' dependants and investments.

Reasons for Decision

Under subsection 104-60(3) of the ITAA 1997 a capital gain may arise from the transfer of assets from one superannuation fund to another fund (CGT even E2).

There are two exceptions that prevent CGT event E2 from happening. The first exception covers the situation where the taxpayer is the sole beneficiary of the trust (other than a unit trust) and the taxpayer is absolutely entitled to the asset as against the trustee (disregarding any legal disability): paragraph 104-60(5)(a) of the ITAA 1997. The second situation occurs when the trust is created by transferring the asset from another trust, and the beneficiaries and the terms of both trusts are the same: paragraph 104-60(5)(b) of the ITAA 1997.

The first exception does not apply as the member is not absolutely entitled to the assets of the fund as against the trustee. The second exception also does not apply as the terms of the trust are not the same.

Accordingly, CGT event E2 will occur and the taxpayer will be assessed on any capital gain arising from the transfer of assets from one superannuation fund to another.

Date of decision:  16 October 2002

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   subsection 104-60(3)
   paragraph 104-60(5)(a)
   paragraph 104-60(5)(b)

Related Public Rulings (including Determinations)
TD 2004/14

Related ATO Interpretative Decisions
ATO ID 2003/330 ATO ID 2003/559

Keywords
Capital gains
Net capital gains
CGT events
CGT events E1 - E9
Superannuation funds

Business Line:  Office of the Chief Tax Counsel

Date of publication:  30 October 2002

ISSN: 1445-2782

history
  Date: Version:
  16 October 2002 Original statement
You are here 28 September 2005 Archived

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).