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Edited version of your written advice
Authorisation Number: 1051192045894
Date of advice: 16 February 2017
Ruling
Subject: Death benefit
Question 1
Is the payment received from the superannuation fund a superannuation death benefit as defined in section 307-5 of the Income Tax Assessment Act 1997?
Answer
Yes
This ruling applies for the following periods:
Income year ended 30 June 20YY
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The member was the sole director and member of the Fund.
On a date in 20XX, instructions were given to the Taxpayer's bank to terminate the Fund's term deposit and to transfer the balance into the personal account of the member as soon as possible.
Due to the legislative requirements regarding redemption, the transfer did not go through until 30 days after the instructions were given.
Within that 30-day period, the member passed away.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 307-5
Income Tax Assessment Act 1997 Section 302-195
Income Tax Assessment Act 1997 Section 302-200
Reasons for decision
Summary
The payment is a superannuation death benefit as defined in section 307-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
Detailed reasoning
Superannuation death benefits
Division 302 of the ITAA 1997 sets out the taxation arrangements that apply to the payment of superannuation death benefits. These arrangements depend on whether the person that receives the superannuation death benefit is a dependant of the deceased and whether the amount is paid as a lump sum superannuation death benefit or a superannuation income stream death benefit.
In Section 307-5(1) of the ITAA 1997, a superannuation death benefit is defined as “a payment to you from a superannuation fund, after another person's death, because the other person was a fund member.”
In this instance, the payment was made from the Fund to the member's estate after their death because they were a fund member.
This was the case despite the fact that the instruction to make the payment occurred prior to their death.
Conclusion
All of the requirements which are set out in section 307-5(1) of the ITAA 1997 have been satisfied in this case. Consequently it is considered that the payment is a superannuation death benefit.