ATO Interpretative Decision
ATO ID 2003/1151 (Withdrawn)
Income Tax
Restructure/resettlement of superannuation fund (from statute to deed based) - application of section 26BBFOI status: may be released
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This ATO ID 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.
Status of this decision: Decision Withdrawn 2 July 2010
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Do the changes to the operation of the taxpayer superannuation fund result in the creation of a new eligible entity, for the purposes of Part IX of the Income Tax Assessment Act 1936 (ITAA 1936), such that any taxable gain is crystallised under section 26BB of the ITAA 1936?
Decision
No. The execution of the specified changes to the operation of the taxpayer superannuation fund, by the taxpayer, does not result in a taxable gain being crystallised under section 26BB of the ITAA 1936.
Facts
The taxpayer superannuation fund ('the fund') is a superannuation scheme established by Act of Parliament ('the fund Act'), with a board as trustee. The rules of the scheme are also contained in the fund Act. The fund is a complying fund for the purposes of the ITAA 1936.
Legislation was enacted to enable the fund to be regulated under the Superannuation Industry (Supervision) Act 1993, and a proprietary company was established to act as trustee (the new trustee). The new trustee has adopted a trust deed replicating, as far as possible, the benefit provisions contained in the fund Act, as well as other provisions. The fund Act has been repealed and the investments and liabilities of the fund transferred to the new trustee.
Notwithstanding the changes made, the taxpayer eligible entity has continued intact, and no new eligible entity has been created. The assets of the fund have been held by the trustees on behalf of the same eligible entity and its members, at all relevant times.
Reasons for Decision
Section 26BB of the ITAA 1936 relevantly provides:
26BB(1) [Definitions]
In this section:
"dispose" , in relation to a security, means sell, transfer, assign or dispose of in any way the security or the right to receive payment of the amount or amounts payable under the security; ...
26BB(2) [Disposal or redemption of traditional security]
Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
Paragraphs 48 to 60 of Taxation Ruling TR96/14, in considering the status of debt forgiveness, provide guidance on how the concept of disposal applies in the context of section 26BB. TR94/16 makes clear the Commissioner's view that forgiveness of a debt does not necessarily constitute the disposal of an underlying security for the purposes of section 26BB because, inter alia, the terms 'dispose' and 'disposal' in that context refer to acts which result in some alienation of the relevant security or right to payment from the holder (paragraphs 56 to 58).
In the present case, the fund has continued as a single eligible entity notwithstanding the changes that have been made. Accordingly the changes in question do not result in a disposal for the purposes of section 26BB, in the sense of an alienation of the security or right to payment, as the assessable income remains that of the one continuing eligible entity notwithstanding the change of trustee.
Date of decision: 20 October 2003Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
section 26BB
Part IX
Case References:
Commissioner of Taxation v. Commercial Nominees of Australia Ltd
[2001] HCA 33
2001 ATC 4336
47 ATR 220
Related Public Rulings (including Determinations)
Taxation Ruling TR 96/14
ATO ID 2003/1147
ATO ID 2003/1148
ATO ID 2003/1149
ATO ID 2003/1150
ATO ID 2003/1152
Keywords
Banking, finance & securities
Complying superannuation funds
Financial instruments
Part IX taxation of superannuation entities
Public sector superannuation funds
Securities
Superannuation
Traditional securities
Trust resettlements
ISSN: 1445-2782
| Date: | Version: | |
| 20 October 2003 | Original statement | |
| You are here → | 2 July 2010 | Archived |
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