Hamilton v Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (QS2005/62 & QS2006/24)
Judgment date: 20 August 2007
Date published: 23 October 2007
Decision outcome: Favourable

Summary of decision:
Whether the applicant who elected to withdraw contributions and interest as a lump sum by commuting his entitlement to a non indexed pension and commenced receiving a CSS indexed pension on retirement is entitled to a rebate of tax and an Undeducted Purchase Price deductible amount in respect to the CSS indexed pension.

Overview of facts:
1. The applicant had been a contributing member of the Commonwealth Superannuation Scheme ("CSS") and resigned from the Commonwealth Public Service on 28 February 2001. | 2. The applicant commenced receiving a CSS indexed pension from ComSuper on 6 March 2001. | 3. The applicant elected to withdraw his personal contributions, his employer's productivity contributions and interest as a lump sum by commuting his entitlement to an unindexed pension. | 4. The applicant's CSS indexed pension is paid from the Consolidated Revenue Fund ("CRF"). | Issues decided by the tribunal | 1. Whether the applicant is entitled to a rebate of tax under subsection 159SM(1) of the Income Tax Assessment Act 1936 ("ITAA36") in relation to his CSS indexed pension for the income year ended 30 June 2001? No - Justice Downes found the indexed pension was not 'in effect, funded' from a complying superannuation fund so would not treat it as such under s159ST of the ITAA36 as the applicant had already benefited from an equivalent taxation concession when he received his lump sum. | 2. Whether the applicant is entitled to an UPP deductible amount under subsection 27H(2) of the ITAA36 in respect to his CSS indexed pension for the income year ended 30 June 2001? No, as the applicant had received a taxation concession in respect of the whole of the UPP when he elected to commute his unindexed pension to a lump sum, he was not entitled to a UPP in relation to his indexed pension. | Tax Office view of Decision • Decision aligns with the Commissioner's view that the applicant was not entitled to: • a rebate of tax as his indexed pension is paid from the CRF and is not 'in effect' funded from a complying superannuation fund; or • an UPP as the applicant had taken his personal contributions, his employer's productivity contributions and interest as a lump sum. • Decision is consistent with the taxation treatment of recipients of CCS indexed pensions prior to 1 July 2007 | • Decision aligns with the Commissioner's view that the applicant was not entitled to: • a rebate of tax as his indexed pension is paid from the CRF and is not 'in effect' funded from a complying superannuation fund; or • an UPP as the applicant had taken his personal contributions, his employer's productivity contributions and interest as a lump sum. • Decision is consistent with the taxation treatment of recipients of CCS indexed pensions prior to 1 July 2007

Issues decided:
1. Whether the applicant is entitled to a rebate of tax under subsection 159SM(1) of the Income Tax Assessment Act 1936 ("ITAA36") in relation to his CSS indexed pension for the income year ended 30 June 2001? No - Justice Downes found the indexed pension was not 'in effect, funded' from a complying superannuation fund so would not treat it as such under s159ST of the ITAA36 as the applicant had already benefited from an equivalent taxation concession when he received his lump sum. 2. Whether the applicant is entitled to an UPP deductible amount under subsection 27H(2) of the ITAA36 in respect to his CSS indexed pension for the income year ended 30 June 2001? No, as the applicant had received a taxation concession in respect of the whole of the UPP when he elected to commute his unindexed pension to a lump sum, he was not entitled to a UPP in relation to his indexed pension. Tax Office view of Decision • Decision aligns with the Commissioner's view that the applicant was not entitled to: • a rebate of tax as his indexed pension is paid from the CRF and is not 'in effect' funded from a complying superannuation fund; or • an UPP as the applicant had taken his personal contributions, his employer's productivity contributions and interest as a lump sum. • Decision is consistent with the taxation treatment of recipients of CCS indexed pensions prior to 1 July 2007 • Decision aligns with the Commissioner's view that the applicant was not entitled to: • a rebate of tax as his indexed pension is paid from the CRF and is not 'in effect' funded from a complying superannuation fund; or • an UPP as the applicant had taken his personal contributions, his employer's productivity contributions and interest as a lump sum. • Decision is consistent with the taxation treatment of recipients of CCS indexed pensions prior to 1 July 2007

ATO view of decision:

Administrative treatment:
Implications on current Public Rulings & Determinations | Not applicable

Legislative references: Income Tax Assessment Act 1936 (ITAA36) 27A 27AB 27B 27C 27H 159SA 159SJ 159SM 159ST 267 Superannuation Act 1976 17 26 40 45 59 60 61 64 65 110P 112 136 137 138 Superannuation Industry (Supervision) Act 1993 40 45
Case references: Cooper Brooks (Wollongong) Pty Ltd v FC of T (1981) 147 CLR 297 81 ATC 4292 11 ATR 949 Harris v C of T (2002) 125 FCR 46 2002 ATC 4659 50 ATR 410 Investment Trust v Commissioner of Stamps (SA) (1979) 145 CLR 330 79 ATC 4429 10 ATR 97 Project Blue Sky Incorporated v Australian Broadcasting Authority (1998) 194 CLR 355 Austin v Commonwealth of Australia (2003) 215 CLR 185 2003 ATC 4042 51 ATR 654
Subject references: Superannuation Commonwealth Superannuation Scheme standard early retirement pension pension paid out of Consolidated Revenue Fund undeducted purchase price entitlement to rebate