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Edited version of private advice
Authorisation Number: 1052172561327
Date of advice: 16 November 2023
Ruling
Subject: Foreign fund - section 99B
Question
Will the exception in paragraph 99B(2)(a) of the Income Tax Assessment Act 1936 apply to the assets transferred from your parent's traditional Individual Retirement Account (IRA) into your inherited IRA?
Answer
Yes. The assets transferred from your parent's traditional IRA into your inherited IRA are considered corpus of the inherited IRA and the exception in paragraph 99B(2)(a) applies.
This ruling applies for the following period:
1 July 20XX to 30 June 20XX
The scheme commenced on:
August 20XX
Relevant facts and circumstances
You are a citizen of Country A
You are a tax resident and citizen of Australia.
Your parent was a citizen of Country A and tax resident for Country A tax purposes. They were not an Australian tax resident.
Your parent established a Country A traditional IRA (traditional IRA).
Your parent passed away in August 20XX.
You are one of the primary designated beneficiaries in your parent's traditional IRA.
The remaining interest in the traditional IRA is required to be distributed to the primary designated beneficiaries following the death of your parent.
The trustee of the traditional IRA has the sole discretion to determine the method for transferring or otherwise administering all assets in the traditional IRA or payments received into the traditional IRA.
When your parent passed away their interest in the traditional IRA was distributed equally to each of the primary designated beneficiaries, including yourself.
The trustee established a new IRA for you, referred to as an 'inherited IRA'.
Your share of the assets remaining in your parent's traditional IRA were transferred to your inherited IRA. You cannot make any contributions to the inherited IRA.
The assets transferred into the inherited IRA comprise cash, bonds, units in unit trusts and interests in mutual funds. The assets do not include any Australian real property or any beneficial interests in Australian real property.
Assumptions
The traditional IRA and inherited IRA are not foreign superannuation funds.
The inherited IRA is not a beneficiary of the traditional IRA.
Relevant legislative provisions
Income Tax Assessment Act 1936, section 99B
Income Tax Assessment Act 1936, paragraph 99B(2)(a)