| Disclaimer This edited version has been archived due to the length of time since original publication.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 written advice
Authorisation Number: 1012826948841
Date of advice: 22 June 2015
Ruling
Subject: The Undeducted Purchase Price (UPP) of your foreign pension
Question
Are you entitled to a deductible amount in respect of the undeducted purchase price (UPP) of your foreign pension?
Ruling
Yes, your annual deductible amount has been calculated in accordance with subsection 27H of the Income Tax Assessment Act 1936 (ITAA 1936).
Reasons for Decision
The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the deductible amount.
It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics.
The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable.
The annual deductible amount is calculated using the following formula:
|
|
A = relevant share of the pension payable to you (if all the pension is payable to you then A = 1)
B = is the amount of the UPP of the pension,
C = is the residual capital value (if any),
D = is the relevant number.
This ruling applies for the following period:
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commenced on:
On or after 1 July 1983
Relevant facts and circumstances
This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above.
You are resident of Australia for income tax purposes.
You receive a pension from a retirement fund established and managed outside Australia.
You have provided evidence from the fund to assist the Commissioner in determining the amount of your personal contributions.
Your assessable income includes your pension income.
Your pension became payable on or after 1 July 1983.
All the pension is payable to you.
Your pension is payable for life.
The residual capital value of the pension is nil.
Your pension is paid on a monthly basis.
Assumptions
No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 27H
Income Tax Assessment Act 1936 Subsection 27H(2)
Income Tax Assessment Act 1936 Subsection 27H(3)
Income Tax Assessment Act 1936 Subsection 27H(4)
Income Tax Assessment Act 1997 Section 960-50 - currency translation
Income Tax Regulations 1936 Regulation 9
Income Tax Assessment Regulations 1997 Regulation 960-50.01
Other references:
Taxation Determination TD 2006/17
Taxation Determination TD 2006/54