ATO Interpretative Decision
ATO ID 2002/368 (Withdrawn)
Superannuation
Superannuation. Part IX taxation of superannuation entities. Segregated pension assets. Valuation of current pension liabilities.FOI status: may be released
-
This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2006-2007 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO 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Status of this decision: Decision Withdrawn 11 April 2014
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Can a complying superannuation fund claim tax exemption under section 282B of the Income Tax Assessment Act 1936 (ITAA 1936) in respect of any assets which exceed the value of current pension liabilities calculated by an actuary on a 'best estimate' basis?
Decision
No.
The amount of assets held by a complying superannuation fund that can be classed as segregated current pension assets under section 273A of ITAA 1936, for the purposes of claiming the tax exemption available under section 282B of ITAA 1936, may not exceed the value placed on the superannuation fund's current pension liabilities by an actuary as determined on a 'best estimate' basis.
Facts
The taxpayer is a superannuation fund.
The superannuation fund is required to obtain actuarial certificates for the purposes of section 282B of the ITAA 1936 in relation to segregated current pension assets.
Reasons for Decision
A complying superannuation fund as defined under section 267(1) of ITAA 1936 and section 45 of the Superannuation Industry (Supervision) Act 1993 can pay a pension to one or more members of the superannuation fund.
The assets of the complying superannuation fund are segregated current pension assets if the assets satisfy the conditions set out in section 273A of ITAA 1936.
To satisfy the conditions of section 273A of ITAA 1936, the trustee of the superannuation fund must obtain a certificate from an actuary which sets out the value of the superannuation fund's current pension liabilities (as defined in section 267(1) of ITAA 1936).
Taxation Ruling IT 2617 and mandatory Guidance Note 452 issued by the Institute of Actuaries of Australia provide further information for actuaries preparing a certificate under section 273A of ITAA 1936.
The Commissioner will accept a value placed on current pension liabilities by an actuary for the purposes of sections 273A and 282B of ITAA 1936, where the value has been determined by the actuary using a 'best estimate' basis. That is, the Actuary's assumptions should reflect a best estimate of the likely experience. The Commissioner does not accept that other valuation bases are appropriate for the purposes of section 273A of ITAA 1936.
The Commissioner relies on actuarial certification for the purposes of the administration of section 273A of ITAA 1936.
The Commissioner does not accept that the actuary's determination of current pension liabilities for this purpose should be influenced by other issues which are only incidental to an objective assessment of liabilities, for example, the trustee's desire to retain additional assets to ensure payment of pensions in the event of worse than expected mortality or investment experience, or the trustee's desire to obtain a positive opinion under regulation 9.31 of the Superannuation Industry (Supervision) Regulations.
Date of decision: 21 February 2002Year of income: year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1936
Section 273A
Section 282B
Subsection 267(1)
Section 45 Superannuation (Industry) Supervision Regulations
Regulation 9.31
Related Public Rulings (including Determinations)
IT 2617
ATO Interpretive Decision ATO ID 2001/13
Keywords
Exempt income of superannuation funds - actuary certificate
Segregated current pension assets
Date reviewed: 25 March 2014
ISSN: 1445-2782
| Date: | Version: | |
| 21 February 2002 | Original statement | |
| You are here → | 11 April 2014 | 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).
