ATO Interpretative Decision

ATO ID 2004/174

Superannuation

Superannuation: Superannuation pension rebate
FOI status: may be released

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

How is the superannuation pension rebate calculated?

Decision

The superannuation pension rebate is ascertained in accordance with the formula found in subsection 159SM(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The taxpayer receives a pension from a complying superannuation fund.

The superannuation fund has never been a 'constitutionally protected fund'.

The superannuation fund is a taxed superannuation fund.

The taxpayer is aged 55 years or older.

Reasons for Decision

Subsection 159SM(1) of the ITAA 1936 details the entitlement to a superannuation pension rebate. It states:

Subject to subsection (2), for each rebatable 27H amount included in a taxpayer's assessable income of a year of income in respect of a rebatable superannuation pension, the taxpayer is entitled to a rebate of tax in the taxpayer's assessment for the year of income worked out using the following formula:
Reduced 27H amount x Rebatable proportion of pension x 15%

where:

"Reduced 27H amount" is the rebatable 27H amount, reduced by the total of the amounts specified in notices under section 159SS given in relation to payments of the pension during the year of income (other than payments made before the taxpayer's 55th birthday).

Subsection 159SM(2) states:

The taxpayer is not entitled to a rebate for a rebatable 27H amount included in the taxpayer's assessable income of a year of income in respect of a rebatable superannuation pension if the applicable fund in relation to the superannuation pension is not a taxed superannuation fund in relation to the year of income of the fund that corresponds with the year of income of the taxpayer.

The payments must be made from a fund that is a 'taxed' superannuation fund in relation to the year of income of the fund that corresponds with the relevant year of income of the taxpayer (subsections 159SJ(1) and 159SM(2) of the ITAA 1936).

A superannuation fund that is an eligible superannuation fund will only qualify as a taxed superannuation fund if it is a resident fund in relation to the relevant year of income (subsection 27A(1) of the ITAA 1936). A fund that is a constitutionally protected fund, within the meaning of Part IX of the ITAA 1936, in the relevant year of income, is not a taxed superannuation fund.

An eligible superannuation fund in relation to a year of income means a fund that is a complying fund, or a non-complying fund, for that year of income (subsection 267(1) of the ITAA 1936).

When payments are made from a complying superannuation fund that is not a constitutionally protected fund they are made from a 'taxed' fund. Subsection 159SM(3) of the ITAA 1936 states that if the fund was a constitutionally protected fund on the first day of the period to which the pension relates then the taxpayer is not entitled to any rebate.

Where the payments are made from a complying fund, that is not and has never been a constitutionally protected fund, the formula in subsection 159SM(1) of the ITAA 1936 can be applied to calculate the amount of the taxpayer's rebate.

Date of decision: 17 November 2003

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   Subsection 27A(1)
   Section 27H
   Subsection 159SJ(1)
   Subsection 159SM(1)
   Subsection 159SM(2)
   Subsection 159SM(3)
   Section 159SS
   Subsection 267(1)

Keywords
Annuities & superannuation pensions
Rebatable superannuation pensions
Rebates
Superannuation
Superannuation pensions
Superannuation, retirement & employment termination

Business Line: Superannuation

Date of publication: 24 February 2004

ISSN: 1445-2782

history

	Date:	Version:
You are here	17 November 2003	Original statement
	19 June 2009	Archived

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