ATO Interpretative Decision

ATO ID 2005/112 (Withdrawn)

Superannuation

Self Managed Superannuation Funds - SIS payment standards
FOI status: may be released

This ATO ID is a simple restatement of the law and does not contain an interpretative decision. Further, the provision of the Superannuation Industry (Supervision) Regulations 1994 considered in the ATO ID has been substituted by a new provision with effect from 1 July 2007.

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

Status of this decision: Decision Withdrawn 30 April 2010

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, a member of a superannuation fund, required to cash out his benefit in accordance with regulation 6.21 of the Superannuation Industry (Supervision) Regulations 1994 (SIS regulations) once he attains age 65, where the taxpayer was not gainfully employed for at least 240 hours in the previous financial year?

Decision

Yes. The taxpayer, a member of a superannuation fund, is required to cash out his benefit in accordance with regulation 6.21 of the SIS regulations as soon as practicable after attaining age 65 as the taxpayer was not gainfully employed for at least 240 hours in the previous financial year.

Facts

The taxpayer turns 65 early in the financial year.

The taxpayer has benefits in a regulated self managed superannuation fund.

The taxpayer is not currently employed and was not gainfully employed in the previous financial year.

Reasons for Decision

The simplified cashing rules were introduced by the Superannuation Industry (Supervision) Amendment Regulations 2004 (No. 4) 2004 No. 148 and are effective from 1 July 2004.

Under regulation 6.21(1)(a) of the SIS regulations member's benefits, that are not post-65 employer-financed benefits, must be cashed if the member:

•: has attained age 65 but not age 75; and
•: is not gainfully employed to at least a part-time equivalent level.

The taxpayer has not been employed since attaining the age of 65 so none of the benefits in the fund will be post-65 employer-financed benefits.

Under SIS regulation 6.21(6), 'gainfully employed at a part-time equivalent level' is defined to mean 'gainfully employed for at least 240 hours during the financial year that ended on the last occurring 30 June'.

The taxpayer turns 65 early in the financial year. The taxpayer is not treated as being gainfully employed to at least a part time equivalent during the financial year because he was not gainfully employed for at least 240 hours in the immediately previous financial year. Any member benefits must be cashed as soon as practicable after attaining the age of 65.

The term 'cashed' is not defined in the Superannuation Industry (Supervision) Act 1993 or in the SIS regulations. However, the term has been interpreted in a manner that is consistent with its ordinary meaning where cashing necessarily involves the actual payment of the cash, assets or other consideration for the benefit of the beneficiary. The use of the term within the SIS regulations indicates that in order to be 'cashed', the benefits need to be paid out of the superannuation system.

Note: Regulation 6.21(1)(a) of the SIS regulations is subject to Modification Declaration No 24 registered on 6 May 2005. This provides for a transitional period from 1 July 2004 to 30 June 2005, during which time trustees are not required to compulsorily cash benefits in accordance with regulation 6.21(1)(a).

Date of decision: 1 April 2005

Legislative References:
Superannuation Industry (Supervision) Regulations 1994
   Reg 6.21
   Reg 6.21(1)(a)
   Reg 6.21(6)

Keywords
Retirement income entities
Self managed superannuation funds
SIS gainful employment
SIS part time employment
SIS payment standards
Superannuation

Business Line: Superannuation

Date of publication: 6 May 2005

ISSN: 1445-2782

history

	Date:	Version:
	1 April 2005	Original statement
You are here →	30 April 2010	Archived

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