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Edited version of your written advice
Authorisation Number: 1051340794653
Date of advice: 21 February 2018
Ruling
Subject: Tax offset – lump sum in arrears – deceased estate
Question
Will the Estate be entitled to a lump sum in arrears tax offset for the 2017 financial period even though the lump sum relates to income that the client was entitled to prior to their date of death?
Answer
No.
Section 159ZRA of the Income Tax Assessment Act 1936 (ITAA 1936) specifies the conditions which must be satisfied by a taxpayer for entitlement to the lump sum payment in arrears rebate.
Subsection 159ZRA(2) states that:
The rebate is only available to a natural person (otherwise than in the capacity of a trustee).
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
Prior to the client’s date of death the taxable income (excluding income in arrears) was under the income threshold.
The gross lump sum in arrears (untaxed element) with tax withheld was paid to the Estate in the 2017 financial period.
According to your records the client satisfies the 10% test.
Should the client have received the full superannuation entitlement for each financial period prior to the date of death, no tax would have been payable, as the taxable income was below the minimum threshold for each year.