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Edited version of private ruling
Authorisation Number: 1011857016280
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Ruling
Subject: Capital gains tax - non complying fund and transition to retirement pension
Question 1: Is a non-complying superannuation fund entitled to the capital gains tax (CGT) discount?
Answer: Yes.
Question 2: Is the non-complying superannuation fund entitled to an exemption from tax on pension asset income?
Answer: No.
This ruling applies for the following period
30 June 2010
The scheme commenced on
1 July 2011
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 superannuation fund (SF) was made non-complying for the 200X-0X income tax year and has since been assessed as non-complying.
The members of SF wish to wind up the fund and have disposed fund assets that have been held for a number of years.
The SF has made a capital gain on the disposal of the assets.
All the members of the SF have been in the transition to retirement during the current income tax year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 115-100
Income Tax Assessment Act 1997 Section 295-5
Income Tax Assessment Act 1997 Section 295-10
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: Is a non-complying superannuation fund entitled to the CGT discount?
Most superannuation funds are constituted as trusts. They have a trustee, a trust deed, trust property which is made up of the fund's investments and members who are beneficiaries.
The discount percentage rate for a capital gain made by a trust other than a trust that is complying superannuation fund is 50%. The discount percentage for a capital gain made by a complying superannuation fund is 33 1/3%.
As no separate discount percentage has been specified for superannuation funds that are not complying superannuation funds, the relevant discount percentage for these funds is 50%, being the discount percentage that applies for a trust.
Question 2: Is the non-complying superannuation fund entitled to an exemption from tax on pension asset income?
The exemption on income and capital gains made in respect of segregated asserts only applies to complying superannuation funds. As the fund is non-complying no exemption is available.