ATO Interpretative Decision
ATO ID 2002/763 (Withdrawn)
Income Tax
Assessability of Orphan PensionFOI status: may be released
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This ATO ID contains a view in respect of section 27H of the Income Tax Assessment Act 1936 (ITAA 1936). That section has been amended for the 2007-08 income year and later income years. It will no longer apply to pensions payable by superannuation funds. This ATO ID is therefore withdrawn as it does not reflect the amendments made to section 27H of the ITAA 1936. This ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2006-2007 income years.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the orphan pension the taxpayer receives from a deceased parent's superannuation fund assessable under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes. The orphan pension the taxpayer receives from a deceased parent's superannuation fund is assessable under section 27H of the ITAA 1936.
Facts
The taxpayer receives fortnightly payments of an orphan pension from a superannuation fund as a result of the death of a parent.
The superannuation fund is administered by ComSuper.
The taxpayer is a full time tertiary student. The orphan pension will continue to be paid until the taxpayer turns 25 years of age, or completes full time education.
Reasons for Decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) includes in assessable income ordinary income derived directly or indirectly from all sources during the income year.
Periodical payments from superannuation funds are generally regarded as income according to ordinary concepts, and are therefore assessable as ordinary income under section 6-5 of the ITAA 1997.
However, section 10-5 of the ITAA 1997 lists a number of provisions which vary or replace the rules that would otherwise apply for certain kinds of ordinary income. One such provision is section 27H of the ITAA 1936. Under this provision, annuities including superannuation pensions (reduced by any deductible amount in respect of their purchase price) are specifically included in assessable income.
Accordingly, the taxpayer's orphan pension received from the superannuation fund, less any deductible amount in respect of the purchase price, is assessable under section 27H of the ITAA 1936.
Date of decision: 2 May 2002Year of income: Year ending 30 June 2002
Legislative References:
Income Tax Assessment Act 1936
section 27H
section 6-5
section 10-5
Keywords
Annuities and superannuation
Assessable income test
Superannuation
Undeducted purchase price
ISSN: 1445-2782
| Date: | Version: | |
| 2 May 2002 | Original statement | |
| You are here | 1 February 2008 | Archived |
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