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Edited version of private advice
Authorisation Number: 1052259092630
Date of advice: 6 June 2024
Ruling
Subject: Section 99B
Question 1
Will interest and earnings amounts you receive when you make an early withdrawal from your overseas retirement account be included in your assessable income under section 99B of the ITAA 1936?
Answer
Yes. The amounts derived by the overseas retirement account as income will be assessable. Amounts returned to you as corpus will not be subject to income tax.
Question 2
Are you entitled to receive a foreign income tax offset for the additional tax penalty you pay on early withdrawals from your overseas retirement account?
Answer
Yes. To the extent that the additional tax is calculated in relation to amounts that are taxable in Australia under section 99B of the ITAA 1936.
This private ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 2024
Relevant facts and circumstances
You are a permanent resident of Australia and an Australian resident for tax purposes.
From 20XX-20XX and 20XX -20XX, you lived and worked overseas. You are not, and have at no point been, a citizen or permanent resident of the other country.
Whilst living and working overseas you contributed to deferred compensation savings plans, and when you moved jobs the balances of the savings plans were rolled over into a retirement account.
Withdrawals from the account, can be made before retirement age.
The account will continue to derive income from its investments in various forms such as interest and or dividends, whilst the account remains open.
The account will remain a non-resident trust as none of its trustees are Australian residents for taxation purposes.
You intend to make early withdrawals from your account over the next few years.
Withdrawals you make from the account will be subject to income tax in the overseas country at the time of withdrawal. Early withdrawals from the account attract a tax penalty, calculated as an increase in tax payable on the amount included in your assessable income.
Assumptions
It is assumed that the account is not a 'foreign superannuation fund' for Australian tax purposes.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 99B(1)
Income Tax Assessment Act 1936 subsection 99B(2)
Income Tax Assessment Act 1997 subsection 295-95(2)
Income Tax Assessment Act 1997 subsection 305-70(2)
Income Tax Assessment Act 1997 subsection 995-1(1)