| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1051437446368
Although the outcome of this edited version remains unchanged, the reasoning in this record is no longer up to date.
Our current view and the factors we consider are published on our website at QC 42473 or QC 45254.
Date of advice: 5 October 2018
Ruling
Subject: Superannuation benefit
Question
Was the payment made by the deceased taxpayer's (the Deceased) pension provider, a superannuation benefit defined in subsection 307-5(1) Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
The Deceased was living in a high care facility and had not been capable of managing their own affairs for some years.
The Deceased had granted an Enduring Power of Attorney in 2010 and the attorney managed their affairs.
The Deceased had been in receipt of an account based pension (i.e. a pension complying with regulation 1.06(9A) (a) of the Superannuation Industry (Supervision) Regulations 1994 from a superannuation fund (the Fund).
In early 2018, the Deceased’s financial advisers (the Advisers) advised the Deceased’s attorneys to withdraw the full balance of the Deceased’s pension, close the pension account and deposit the remainder of the deceased’s pension balance into the deceased’s bank account. The attorneys agreed to do so and this withdrawal process commenced in early 2018.
You have provided email correspondence between the attorneys and the Advisers and the Adviser’s instructions to the Fund to withdraw close and payout the Deceased pension.
The Deceased died subsequent to this in 2018
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 302-A
Income Tax Assessment Act 1997 Section 307-5.
Income Tax Assessment Act 1997 Subsection 307-5(1)
Income Tax Assessment Act 1997 Section 307-15.
Reasons for decision
Summary
Summary
The payments made by the Fund to the Deceased’s nominated savings account are superannuation member benefits paid by the Fund to the Deceased. Upon receipt by the Deceased, these payments lose their character of superannuation member benefits and simply become money which is part of the Deceased’s estate to be distributed to the Deceased’s beneficiaries in accordance with their wishes.
The payments made by the Fund to the Deceased’s nominated savings account are not superannuation death benefits for the purposes of Subdivision 302-A of the ITAA 1997.
Detailed reasoning
Subsection 995-1(1) of the ITAA 1997 states that a 'superannuation death benefit' has the meaning given by section 307-5 of the ITAA 1997.
Superannuation benefits are defined in section 307-5 of the ITAA 1997. In accordance with Item 1 of the table in subsection 307-5(1) of the ITAA 1997 a superannuation member benefit is a payment to you from a superannuation fund because you are a fund member;
Superannuation death benefit is defined in subsection 307-5(4) of the ITAA 1997 as being a payment described in Column 3 of the table in subsection 307-5(1). A superannuation death benefit is described in Column 3 of Item 1 of the table in subsection 307-5(1) as:
… A payment to you from a superannuation fund, after another person’s death, because the other person was a fund member.
Section 307-15 of the ITAA 1997 applies for the purposes of determining whether a payment is made to you, or received by you, and states:
A payment is treated as being made to you, or received by you, if it is made:
a) for your benefit; or
b) to another person or to an entity at your direction or request.
In this case, the payments were made by the Fund to the Deceased’s nominated savings account as requested by the Advisors. As such, they are superannuation member benefits paid by the Fund to the Deceased.
Upon receipt by the Deceased, these payments lose their character of superannuation member benefits and simply become money which is part of the Deceased’s estate to be distributed to the Deceased’s beneficiaries in accordance with their wishes.
Therefore, the payments made by the Fund to the Deceased’s nominated savings account are not superannuation death benefits for the purposes of subdivision 302-A of the ITAA 1997.