ATO Interpretative Decision

ATO ID 2002/138 (Withdrawn)

Superannuation

• This ATO ID is withdrawn from the database because it contains a view in respect of subsection 27A(12) and section 27D of the Income Tax Assessment Act 1936. These provisions do not apply for the 2007-08 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 2006-07 income year.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is there any provision in the Income Tax Assessment Act 1936 (ITAA 1936) that allows the taxpayer to rollover an eligible termination payment (ETP) after the ETP had been paid to the taxpayer and used, according to the taxpayer's instructions, for other purposes?

Decision

No. After the ETP had been paid to the taxpayer and used, according to the taxpayer's instructions, for other purposes, there is no provision in the Income Tax Assessment Act 1936 (ITAA 1936) that allows the taxpayer to rollover the ETP.

Facts

The taxpayer was paid an involuntary redundancy and ceased employment. At the time, the taxpayer was given the option of receiving the payment directly from their superannuation fund or rolling over the payment into another superannuation fund.

The taxpayer requested that the ETP from the superannuation fund be paid out directly to them and the payment was subsequently used to pay off the family home. The taxpayer was later advised, by a financial adviser, that it would have been more advantageous to the taxpayer if some of the payment had been rolled into a superannuation fund, with a view to preserving funds for the taxpayer's retirement.

The taxpayer subsequently approached the Commissioner of Taxation (Commissioner) requesting that the relevant funds be rolled over into another superannuation fund. In approaching the Commissioner, the taxpayer further added that as a result of being given an involuntary redundancy the taxpayer had been under considerable stress and suffered poor health. These factors had contributed to incorrect decisions being made on retirement regarding the ETP.

Reasons for Decision

There is no provision in the ITAA 1936 that allows a taxpayer to rollover an ETP after the funds have been paid out to the taxpayer and applied for other purposes. Under subsection 27A(12) of the ITAA 1936 an ETP must be rolled over 'immediately' after the payment is made. The circumstances in which an ETP can be accepted as having been 'immediately' rolled-over for the purposes of subsection 27A(12) of the ITAA 1936 are set out in Taxation Determination TD 96/36.

There was no provision that existed in the ITAA 1936 that would allow the ETP to be rolled over into a superannuation fund once the ETP had been applied for other purposes. Taxation Determination TD 96/36 provides an extension of time to roll over an ETP in various limited circumstances. These circumstances include, for example, where the person to whom the ETP relates has been seriously ill. However, this extension is only available where the taxpayer has, from the outset, made the decision to roll over the ETP and had not applied the funds for any intervening purpose.

Legislative References:
Income Tax Assessment Act 1936
   subsection 27A(12)

Related Public Rulings (including Determinations)
TD 96/36

Other References:
Previously released as CDS10143

Keywords
Eligible Termination Payments
ETP rollover

Business Line:  Superannuation

Date of publication:  8 February 2002

ISSN: 1445-2782