ATO Interpretative Decision
ATO ID 2001/179 (Withdrawn)
Superannuation
In-specie payment from a Self Managed Superannuation fundFOI status: may be released
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Withdrawn pending consultation with the Australian Prudential Regulation Authority. This decision as ben reissued as ATO ID 2002/698.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Are there any limitations contained in the Superannuation Industry (Supervision) Act 1993 (SISA) that restricts a Self Managed Superannuation Fund (SMSF) from paying a member's benefit "in-specie" rather than in cash?
Decision
No. There are no limitations in SISA that prohibit a member's benefits being paid "in-specie".
Facts
The taxpayer is the sole member of a self-managed superannuation fund.
The taxpayer is over 55 and wished to cease gainful employment and withdraw benefits from the fund.
Part of the assets of the fund includes a property. The taxpayer wished to transfer this property to himself as part of his member benefits.
The trust deed requires that the trustee receive an acknowledgment from the Commissioner of Taxation that such a transfer would not cause the fund to lose its status as a complying superannuation fund.
Reasons for Decision
The Superannuation Industry (Supervision) Act 1993 (SISA) and the accompanying regulations provide rules on when and how a member's benefit may be paid from a superannuation fund. These rules ensure that a member's benefit is only paid in accordance with the payment and preservation standards and the superannuation fund's rules.
The transfer of property to a member in satisfaction of the member's benefit is not prevented by SISA. The Insurance and Superannuation Commission (the forerunner to the Australian Prudential & Regulatory Authority) issued Superannuation Circular No I.C. 2, which, in part, addresses this issue. Paragraph 9 of the circular provides that if the governing rules of a fund so provide, member's benefits are permitted to paid "in-specie" or in "cash". However, the trustees must be able to substantiate the value of the relevant asset for SISA and taxation purposes.
"In-specie" payments cannot, however, (see paragraph 10 of Superannuation Circular No I.C. 2) be made where the payment relates to financial hardship or compassionate grounds.
Subsection 27A(8) of the Income Tax Assessment Act 1936 (ITAA) provides that where a transfer of property has been made to a person for the purposes of making an eligible termination payment, the transfer is deemed to be payment of an amount equal to the value of the property immediately before the transfer.
Date of decision: 18 June 2001
Legislative References:
Superannuation Industry (Supervision) Act 1993
The Act
subsection 27A(8)
Other References:
Superannuation Circular No I.C. 2
Keywords
Distributions in-specie
Complying superannuation funds
Superannuation provider - accumulation benefits
Self managed superannuation funds
SIS payment standards
ISSN: 1445-2782
| Date: | Version: | |
| 18 June 2001 | Original statement | |
| You are here | 27 September 2001 | Archived |