ATO Interpretative Decision
ATO ID 2002/91 (Withdrawn)
Superannuation
Reasonable benefit limits: Determination of an arm's length salary. Salary sacrifice.FOI status: may be released
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This ATO ID is withdrawn from the database because it contains a view in respect of Division 14 of Part III of the Income Tax Assessment Act 1936 and Part 5A of the Income Tax Regulations 1936 (the RBL provisions). The RBL provisions do not apply for the 2007-08 income year and later income years. This ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2006-07 income years.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Whether salary sacrifice arrangements reduce a taxpayer's arm's length salary?
Decision
Yes, salary sacrifice arrangements do reduce a taxpayer's arm's length salary.
Facts
The taxpayer applied for the determination of an arm's length salary.
Included in the application was a remuneration report which claimed that the taxpayer's arm's length salary should be valued at a rate higher than previously allowed.
The taxpayer's remuneration package consisted of actual salaries, employer superannuation contributions and fringe benefits for the requested three consecutive years. The taxpayer sacrificed significant amounts of salary for superannuation and fringe benefits in the requested three consecutive years.
Reasons for Decision
The nominal salary figures for the relevant three years were reduced by the same proportion as the taxpayer had sacrificed actual salary to superannuation and other fringe benefits. These amounts were deducted from the total salary package in order to arrive at a 'salary' as defined under subregulation 47(1) of the Income Tax Regulations 1936 (ITR 1936). Accordingly, salary sacrifice arrangements do reduce a taxpayer's arm's length salary.
Date of decision: 19 July 2001
Legislative References:
Taxation Administration Act 1953
Section 14ZL
Section 14ZQ
Section 14ZU
Paragraph 14ZW(1)(c)
Section 14ZY
Subregulation 47(1).
Subparagraph 47(3)(c)(ii).
Subregulation 47(3).
Subregulation 47(4).
Subregulation 53FA(1).
Subregulation 53FA(2).
Keywords
Salary sacrifice
Reasonable benefit limits
Transitional RBLs
Highest average salary
ISSN: 1445-2782
| Date: | Version: | |
| 19 July 2001 | Original statement | |
| You are here | 23 November 2007 | Archived |