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Ruling

Subject: Superannuation income stream - payment after age 60

Questions

Are superannuation income stream payments made from the fund included as assessable income when paid after the recipient has reached age 60 years?

If the superannuation fund income stream payments are to be included as assessable income of the recipient, can a 10 percent tax offset be claimed in respect of the superannuation income stream payments?

Advice/Answers

Yes.

Yes.

This ruling applies for the following period

Year ending 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

You are over 60 years of age.

You received benefits from an untaxed source.

In the 2010-11 income year you received pension payments which comprised a taxable component - untaxed element.

Relevant legislative provisions

Income Tax Assessment Act 1997 Division 301

Income Tax Assessment Act 1997 Section 301-10

Income Tax Assessment Act 1997 Section 301-100

Income Tax Assessment Act 1997 Section 307-5

Income Tax Assessment Act 1997 Subsection 307-5(1)

Reasons for decision

Summary of decision

You are over 60 years of age and receive pension benefits from an untaxed source.

The element untaxed in the fund is included in your assessable income. However, you are entitled to a tax offset equal to 10% of the taxable component of the benefit.

Detailed reasoning

Section 307-5 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out amounts which are superannuation benefits. Generally, an amount which is paid to a person from a superannuation fund because they are a fund member is a superannuation benefit by virtue of subsection 307-5(1) of the ITAA 1997.

Payments made to a person from a superannuation fund will generally comprise:

· a tax-free component; and

· a taxable component which may include:

· an element taxed in the fund; and/or

· an element untaxed in the fund.

Superannuation funds will calculate these components for each benefit that is paid. The taxation of superannuation member benefits paid from complying superannuation funds are set out in Division 301 of the ITAA 1997.

Section 301-10 of the ITAA 1997 states:

If you are 60 years or over when you receive a superannuation benefit, the benefit is not assessable income and is not exempt income.

However, any element untaxed in the fund is taxed in accordance with Division 301-C of the ITAA 1997.

Section 301-100 of the ITAA 1997 applies to those over 60 years and states:

If you are 60 years or over when you receive a superannuation income stream benefit, the element untaxed in the fund of the benefit is assessable income.

You are entitled to a tax offset equal to 10% of the element untaxed in the fund of the benefit.

In this case, you are over 60 years of age and receive benefits from an untaxed source.

The element untaxed in the fund is included in your assessable income. However, you are entitled to a tax offset equal to 10% of the taxable component of the benefit.

In the 2010-11 income year you received pension payments which comprised a taxable component - untaxed element. You correctly included this amount in your 2010-11 income tax return and you correctly claimed a tax offset amount.