ATO Interpretative Decision
ATO ID 2001/802 (Withdrawn)
Superannuation
Superannuation, retirement and employment termination - 'Internal roll-over' or 'roll-back' of a superannuation pension within a superannuation fundFOI status: may be released
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Withdrawn as the Government has announced a change to the law that will have effect from 1 July 2001 - the Commissioner will administer the law consistent with the Government's announcement. See Minister for Revenue and Assistant Treasurer's Press Release.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is an internal roll-over, that is the stopping of a pension and returning to accumulation of savings within a superannuation fund, a roll-over of an eligible termination payment (ETP) as per subsection 27A(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
No. An internal roll-over is not an ETP as per subsection 27A(1) of the ITAA 1936.
Facts
The taxpayer has a self-managed superannuation fund and is currently in receipt of a pension from the fund.
The taxpayer has returned to work and is now considering a roll-back (ie. internal roll-over) of his pension entitlements within the same superannuation fund. That is, he wishes to stop his pension and return to accumulation of savings within the superannuation fund, with the view to commencing a new pension from the fund at a later date.
Reasons for Decision
'Roll-over' is defined in subsection 27A(1) of the Income Tax Assessment Act 1936 (ITAA1936) and means 'an application of section 27D in relation to an ETP'.
Section 27D of the ITAA 1936 may only be applied in relation to a 'qualifying eligible termination payment'. 'Qualifying eligible termination payment' is defined in subsection 27A(12) of the ITAA 1936. The definition is stated in part as follows;
'... an eligible termination payment made in relation to a taxpayer is a qualifying eligible termination payment if, immediately after the eligible termination payment is made, an amount is:
An 'internal roll-over' does not result in a payment from a superannuation fund and as such an ETP does not arise. The Commissioner has no discretion to treat an 'internal roll-over' as the roll-over of an ETP.
Sections 140M and 140Q of the ITAA 1936 set down superannuation and kindred benefits which must be reported for Reasonable Benefit Limits (RBLs) purposes. These are limited to certain ETPs, superannuation pensions, and annuities.
As an 'internal roll-over' does not result in the payment or rollover of an ETP, it is not a reportable event for RBL purposes. This may result in the full or partial loss of the superannuation pension rebate in respect of the new pension when it is commenced, as both the RBL value of the original pension and the new pension will be counted towards the RBLs of the recipient, and there will be no reduction of the value of the original pension under section 140ZP of the ITAA 1936.
Date of decision: 1 November 2001Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1936
subsection 27A(1)
subsection 27A(12)
section 27D
section 140M
section 140Q
section 140ZP
Keywords
Eligible termination payments
ETP rollover
Superannuation pension income
Reasonable benefit limits
ISSN: 1445-2782
| Date: | Version: | |
| 1 November 2001 | Original statement | |
| You are here | 11 September 2002 | Archived |