Edited version of private advice

Authorisation Number: 1052330849979

Date of advice: 27 November 2024

Ruling

Subject: Superannuation - lump sum payments

Question 1

Is the taxable component of the superannuation lump sum payments (the payments) you received from your superannuation funds for the CCYY-YY and CCYY-YY income years assessable income under section under section 301-20 and 301-35 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes.

Question 2

If a superannuation lump sum with a taxable component was received from your superannuation fund in the CCYY-YY income year is the taxable component to be included in your assessable income?

Answer 2

Yes, up until you reach 60 years of age.

This ruling applies for the following periods:

30 June CCYY, 30 June CCYY and 30 June CCYY

Relevant facts and circumstances

This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect, and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Your DOB is DD MM CCYY.

Your preservation age is X.

You provided copies for the following superannuation lump sum payment summaries:

Table 1: Taxable components for superannuation funds

You had not met your preservation age when you received the payments in the above table for the CCYY-YY and CCYY-YY income years.

You had reached your preservation age for the payments you received in the CCYY-YY and CCYY-YY income years.

Relevant legislative provisions

Income Tax Assessment Act 1997 Division 301

Income Tax Assessment Act 1997 section 307-120

Income Tax Assessment Act 1997 section 301-5

Income Tax Assessment Act 1997 section 301-15

Income Tax Assessment Act 1997 subsection 301-20(1)

Income Tax Assessment Act 1997 section 301-30

Income Tax Assessment Act 1997 subsection 301-35(1)

Reasons for decision

Summary

The taxable components of the payment received by you in the CCYY-YY and CCYY-YY income years are assessable income under section 301-20 and 301-35 of the ITAA 1997. You did not provide any evidence of superannuation lump sum payments received in the CCYY-YY income year.

Detailed reasoning

The taxation of superannuation member benefits paid from complying superannuation funds are set out in Division 301 of the ITAA 1997.

In accordance with section 307-120 of the ITAA 1997, a superannuation lump sum benefit will generally comprise of:

•                     a tax free component; and

•                     a taxable component which may include:

-                    an element taxed in the fund, and/or

-                    an element untaxed in the fund.

Section 301-1 of the ITAA 1997, this division sets out the tax treatment of superannuation benefits received by members of complying plans. This treatment varies depending on the age of the member when they receive the benefit.

Section 301-5 of the ITAA 1997, this division applies to superannuation member benefits paid from complying plans etc.

Tax free component

Section 301-15 of the ITAA 1997 states if you are under 60 but have reached preservation age when you receive a superannuation lump sum, the tax-free component of a superannuation benefit is not assessable and not exempt income.

Section 301-30 of the ITAA 1997 states if you are under your preservation age when you receive a superannuation benefit, the tax free component is not assessable income and not exempt income.

Taxable component

Subsection 301-20(1) of the ITAA 1997 states if you are under 60 years but have reached your preservation age when you received a superannuation lump sum, the taxable component of the lump sum is assessable income.

Section 301-35(1) of the ITAA 1997 states if you are under your preservation age when you receive a superannuation lump sum payment, the taxable component of the lump sum is assessable income.

Conclusion

We consider the taxable component of your payments you received for the CCYY-YY and CCYY-YY income years are assessable income.

For the CCYY-YY, and CCYY-YY income years you were under 60 and had reached your preservation age. If you are between your preservation age and 60 years old and receive super benefits that include a taxable component, it is assessable income and you must include it in your tax return. You did not provide any evidence of superannuation lump sum payments received in the CCYY-YY income year.