| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012445888402
Ruling
Subject: Assessable income - derivation
Question
In the circumstances described, will the superannuation benefit be derived for income tax purposes in the relevant year?
Answer
Yes
This ruling applies for the following periods
Year ending 30 June 2013
The scheme commences on
1 July 2012
Relevant facts and circumstances
You propose to close your self-managed superannuation fund account on day, date 20XX.
On this date the interest and final balance will be calculated and the bank will write a cheque to you for the balance of the closed account.
You propose that the cheque be held in the bank's vault over the weekend.
On day, date you propose to deposit the cheque into your account.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources in or out of Australia during the income year.
Subsection 6-5(4) of the ITAA 1997 provides that in working out whether a taxpayer has derived an amount of ordinary income and when it is derived, a taxpayer is taken to have received the amount when it is applied or dealt with in any way on their behalf or as directed by them.
Taxation Ruling TR 98/1 provides that under the receipts method, income is derived when it is received either actually or constructively under subsection 6-5(4) of the ITAA 1997.
The Explanatory Memorandum to the Income Tax Assessment Bill 1996 confirms that an amount is treated as having been received under subsection 6-5(4) of the ITAA 1997 as soon as the taxpayer gets a benefit from it.
A taxpayer may be paid an amount of income by cheque, or into a taxpayer's bank account. These are treated as methods of payment that are recognised as forms of actual payment.
By accepting a cheque which is regarded as payment of the benefit, you are at liberty to bank it or apply it as you wish. The benefit arises at the time when the cheque is handed to you.
Derivation cannot be deferred by, for example, not banking a pay cheque (see Tilley v The Official Receiver (1960) 103 CLR 529). A cheque represents a written instrument that embodies a right to be paid and is generally regarded as payment of cash unless and until it has been presented and refused. Therefore, holding a cheque in a bank's vault over the weekend at your direction will not defer derivation.
Therefore, you will be taken to have derived the superannuation payment amount for the purposes of section 6-5 of the ITAA 1997 on the date the cheque is drawn and handed to you as you will have received a benefit from the payment being applied or dealt with on your behalf.