ATO Interpretative Decision

ATO ID 2002/482 (Withdrawn)

Superannuation

Superannuation, retirement & employment termination: Eligible termination payment (ETP) used to acquire a business
FOI status: may be released

This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is taxation relief available to a taxpayer who uses their eligible termination payment (ETP) to acquire a business?

Decision

No. As none of the ETP was rolled over into a 'superannuation fund' or 'approved deposit fund', there is no taxation relief available to the taxpayer under the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The taxpayer had been retrenched and was paid an ETP. The taxpayer used the entire amount of the ETP to purchase a business. None of the ETP was rolled over into a superannuation fund or approved deposit fund.

Reasons for Decision

The taxation of ETPs is prescribed by Subdivision AA of Division 2 of Part III of the ITAA 1936. An ETP can comprise a number of components which are taxed in varying ways. A taxpayer is only able to defer the payment of tax on some components of an ETP if the ETP has been rolled over in accordance with section 27D of the ITAA 1936. If the ETP has not been rolled over there is no other provision in the ITAA 1936 that would allow taxation relief to the taxpayer in respect of the ETP. Accordingly, as no taxation relief is available in respect of the ETP the taxpayer was required to include in assessable income those components of the ETP as calculated under sections 27B of the ITAA 1936 and section 27C of the ITAA 1936.

Date of decision: 26 May 1997

Legislative References:
Income Tax Assessment Act 1936
   subdivision AA of Division 2 of Part III
   section 27B
   section 27C
   section 27D

Other References:
Previously released as CDS10252

Keywords
Eligible termination payments
ETP rollover
Approved deposit funds

Business Line: Superannuation

Date of publication: 30 April 2002

ISSN: 1445-2782

history

	Date:	Version:
	26 May 1997	Original statement
You are here	19 June 2009	Archived

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