| Disclaimer This edited version will be removed from the Database after 30 September 2025. If you believe the issues detailed in this edited version warrant retention in an alternative form, email publicguidance@ato.gov.au This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011477009438
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Deductions for an increased amount of superannuation lump sum death benefit (anti-detriment payments) to a deceased estate
Question 1
Can the Trustee of a Complying Superannuation Fund increase a superannuation lump sum paid because of the death of a member by the 'full' tax saving amount and be allowed a deduction in relation to that amount under section 295-485 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. The full deduction is allowable to the Trustee under section 295-485 of the ITAA 1997.
This ruling applies for the following period<s>:
Year ended 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commences on:
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The Fund is a complying superannuation fund and is an accumulation fund.
A member of the Fund dies.
The Trustee pays a lump sum death benefit to the estate of the deceased member
The executor of the deceased estate of the member advises the Fund that all of the lump sum death benefit will be paid to beneficiaries who are 'eligible dependants' (that is, a child, spouse or former spouse of the deceased member).
The Fund increases the lump by the full tax saving amount.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 274
Income Tax Assessment Act 1997 Subdivision 295-C
Income Tax Assessment Act 1997 Section 295-485.
Income Tax Assessment Act 1997 Subsection 295-485(1).
Income Tax Assessment Act 1997 Paragraph 295-485(1)(a).
Income Tax Assessment Act 1997 Subsection 295-485(3).
Income Tax Assessment Act 1997 Subsection 295-485(4).
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Question 1
Background
The text of section 295-485 of the ITAA 1997 is set out below.
295-485(1)
An entity that is a *complying superannuation fund, or a *complying approved deposit fund, and has been since 1 July 1988 (or since it came into existence if that was later) can deduct an amount under this section if:
(a) it pays a *superannuation lump sum because of the death of a person to the trustee of the deceased's estate or an individual who was a *spouse, former spouse or *child of the deceased at the time of death or payment; and
(b) it increases the lump sum by an amount, or does not reduce the lump sum by an amount (the tax saving amount) so that the amount of the lump sum is the amount that the fund could have paid if no tax were payable on amounts included in assessable income under Subdivision 295-C.
Note:
Paragraph (1)(b) has effect as if the reference to amounts included in assessable income under Subdivision 295-C included a reference to amounts included in assessable income under former section 274 of the Income Tax Assessment Act 1936: see section 295-485 of the Income Tax (Transitional Provisions) Act 1997.
295-485(2)
The fund can deduct the amount in the income year in which the lump sum is paid.
295-485(3)
The amount the fund can deduct is:
Tax saving amount
Low tax component rate
where:
low tax component rate is the rate of tax imposed on the *low tax component of the fund's taxable income for the income year.
Note:
The deduction is designed to compensate the fund for the tax payable on the contributions that are used to fund the lump sum.
295-485(4)
The amount the fund can deduct for a *superannuation lump sum paid because of the death of a person to the trustee of the deceased's estate is so much of the subsection (3) amount as is appropriate having regard to the extent to which individuals referred to in paragraph (1)(a) can reasonably be expected to benefit from the estate.
Eligible dependant receives all of superannuation lump sum
Where the Trustee for the Fund is advised by the executor of a deceased estate that eligible dependants will ultimately receive all of the superannuation lump sum paid out because of the death of the member then the operation of section 295-485 of the ITAA 1997 is straightforward.
The superannuation fund
§ increases the lump sum by the tax saving amount pursuant to paragraph 295-485(1)(b) of the ITAA 1997, and
§ calculates the deduction pursuant to subsection 295-485(3) of the ITAA 1997.
The fund can then claim a deduction for the amount calculated under subsection 295-485(3) of the ITAA 1997 and will not be required to reduce the amount of the deduction under subsection 295-485(4) of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
