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Edited version of private advice
Authorisation Number: 1052372467384
Date of advice: 17 March 2025
Ruling
Subject: Capital gains tax
Question 1
Can you and your spouse disregard the capital gain you made from the compensation for financial loss incurred because of financial advice paid direct to you as the superannuation fund member?
Answer 1
Yes.
Based on the information provided to the Commissioner the amount is capital and relates to the super account.
An exemption is provided under section 118-305 of the Income Tax Assessment Act 1997 (ITAA 1997) for any capital gain or loss made from a CGT event happening in relation to a right to an allowance, annuity or capital amount payable out of a superannuation fund or an asset of a superannuation fund.
Any CGT will be exempt on the amount received as compensation by you.
Question 2
Is XX% of the compensatory interest paid direct to you and your spouse's joint bank account, as part of a compensation payment for financial loss on a superannuation fund treated as assessable income?
Answer 2
Yes.
Based on the information provided to the Commissioner, XX% of the amount paid to you and your spouse's joint bank account, as compensatory interest is part of your assessable income. Interest is assessable under section 6-5 of the ITAA 1997 as ordinary income. This amount must be declared in your tax return when received by you.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You and your spouse received a compensation payment in relation to your super account.
The compensation related to financial advice given by a former adviser.
You received an amount as compensatory interest.
The compensation related to your superannuation fund.
This fund was in your sole name.
The compensation was paid directly to you and your spouse into a joint bank account.
Your spouse was required to sign the settlement deed.
Your spouse is the nominated beneficiary of your super fund.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 118-305