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Edited version of your private ruling
Authorisation Number: 1012580402319
Ruling
Subject: The recognition of the ABC Trust as a PST
Question 1
For so long as the ABC Trust is a pooled superannuation trust (PST), will any distribution of income be free from tax in the hands of X as unit holder, in accordance with section 295-105 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
For so long as the ABC Trust is a PST, will any gain or loss on disposal of units in the ABC Trust by A (as trustee of X) be ignored for income tax purposes under section 6-5 and section 8-1, in accordance with section 295-85(2) of the ITAA 1997, and for capital gains tax purposes, in accordance with section 118-350 of the ITAA 1997?
Answer
Yes.
Question 3
For so long as the ABC Trust is a PST, will X be permitted to transfer liability for tax in respect of contributions to the ABC Trust in accordance with the rules and limits contained in section 295-260 of the ITAA 1997?
Answer
Yes
Question 4
Are the tax consequences for X of the ABC Trust being recognised as a PST the result of a declaration or the giving of a notice expressly provided for by the ITAA 97, being the notice given by APRA in accordance with section 48 of the Superannuation Industry (Supervision) Act 1993, and therefore not tax benefits for the purposes of Part IVA of the Income Tax Assessment Act 1936?
Answer
Yes
This ruling applies for the following periods:
The year ended 30 June 2014, and each subsequent income year.
The scheme commences on:
Relevant facts and circumstances
1. ABC Trust was established as a unit trust in 199X with X, Y and Z as unit holders.
2. Y and Z redeem their units in the ABC Trust leaving X, a superannuation fund, the sole unit holder.
3. The ABC Trust has carried forward losses.
4. ABC Trust then proposes a transaction under which it will become a pooled superannuation trust.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 177C
Income Tax Assessment Act 1936 section 177CB
Income Tax Assessment Act 1936 section 177D
Income Tax Assessment Act 1997 section 118-350
Income Tax Assessment Act 1997 section 295-5
Income Tax Assessment Act 1997 section 295-85
Income Tax Assessment Act 1997 section 295-260
The Superannuation Industry (Supervision) Act 1993 section 10
The Superannuation Industry (Supervision) Act 1993 section 40
The Superannuation Industry (Supervision) Act 1993 section 48
The Superannuation Industry (Supervision) Act 1993 section 52
Reasons for decision
Question 1
Section 295-105 of the Income Tax Assessment Act 1997 (ITAA 1997), states that the assessable income of a complying superannuation fund, complying approved deposit fund or pooled superannuation trust (PST) does not include amounts derived by the entity because it holds units in a PST.
Therefore, X as the holder of the units and a superannuation fund in itself will not include in its assessable income, amounts derived because it holds units in the ABC Trust from the time the ABC Trust becomes a PST.
Question 2
Section 6-5 of the ITAA 1997 and section 8-1 of the ITAA 1997 should not apply to gain or loss on disposal by A, as trustee of X of units in the ABC Trust. Further, section 118-350 of the ITAA 1997 will apply to disregard a capital gain or loss in relation to A as trustee for X, disposing of units in the ABC Trust.
Question 3
In accordance with section 295-260 of the ITAA 1997, the superannuation provider in relation to a complying superannuation fund (the transferor) may reduce the amount that would otherwise be included in the fund's assessable income for an income year under Subdivision 295-C by agreement with another entity (the transferee) in which it holds investments.
Question 4
Based on the facts and circumstances it has been determined that Part IVA does not apply.