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Edited version of your written advice
Authorisation Number: 1013024832714
Date of advice: 27 May 2016
Ruling
Subject: Lump Sum Superannuation Benefit
Question 1
Is the lump sum superannuation benefit included in your assessable income?
Answer
Yes
This ruling applies for the following periods:
Income year ended 30 June 2016
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You have been a resident of XY for a number of years.
You retired from your job based in XY after a number of years of service.
You applied to your superannuation fund to claim your superannuation benefit as a lump sum payment.
The lump sum was paid to you after your retirement and an amount was deducted as tax.
Income Tax Assessment Act 1936 Section 24C
Income Tax Assessment Act 1936 Section 24F
Income Tax Assessment Act 1936 Section 24G
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-10
Income Tax Assessment Act 1997 Section 6-15
Income Tax Assessment Act 1997 Section 6-20
Income Tax Assessment Act 1997 Section 960-505
Reasons for decision
In accordance with section 6-5 of the ITAA 1997 assessable income of Australian residents includes all ordinary income derived both in and outside Australia. Section 6-10 of the ITAA 1997 operates to include in assessable income of Australian residents all statutory income that is derived both in and outside Australia
Section 960-505 of the ITAA 1997 sets out the meaning of Australia for the purposes of the relevant legislation and subsection 960-505(1) includes XY. Therefore, for tax purposes XY resident individuals are Australian residents.
Sections 6-15 and 6-20 of the ITAA 1997 exclude certain amounts from assessable income as exempt income.
For residents of XY certain amounts are treated as exempt income under sections 24F and 24G of the Income Tax Assessment Act 1936 (ITAA 1936). To be exempt under section 24F the income must be derived from sources outside Australia. To be exempt under section 24G the income must be derived from sources in XY or from employment performed in XY.
As a resident of XY the exemption under section 24G would have applied to the income from your employment. This exemption does not extend to a superannuation benefit paid to a resident of XY. For the superannuation benefit to be exempt the source of the payment must be outside of Australia or from XY.
Taxation Ruling IT 2168 states that the source of such a payment is the location of the superannuation fund against which the payment is made, and not where the employee's services are performed. A payment from a superannuation fund charged against a superannuation fund that is established and controlled in Australia has its source in Australia.
Your superannuation fund was established in mainland Australia and the trustee of your superannuation fund is based in mainland Australia.
Therefore, the source of the payment from your superannuation fund is not outside Australia or XY.
Accordingly the exemptions under sections 24F and 24G of the ITAA 1936 do not apply to your superannuation lump sum payment. The superannuation lump sum benefit is included in your assessable income.