Private ruling: Superannuation benefit
Date of advice: 5 October 2018
Published: November 2018
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Was the payment made by the deceased taxpayer's (the Deceased) pension provider, a superannuation benefit defined in subsection 307-5(1) Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: The Deceased was living in a high care facility and had not been capable of managing their own affairs for some years. The Deceased had granted an Enduring Power of Attorney in 2010 and the attorney managed their affairs. The Deceased had been in receipt of an account based pension (i.e. a pension complying with regulation 1.06(9A) (a) of the Superannuation Industry (Supervision) Regulations 1994 from a superannuation fund (the Fund). In early 2018, the Deceased’s financial advisers (the Advisers) advised the Deceased’s attorneys to withdraw the full balance of the Deceased’s pension, close the pension account and deposit the remainder of the deceased’s pension balance into the deceased’s bank account. The attorneys agreed to do so and this withdrawal process commenced in early 2018. You have provided email correspondence between the attorneys and the Advisers and the Adviser’s instructions to the Fund to withdraw close and payout the Deceased pension. The Deceased died subsequent to this in 2018

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 302-A | Income Tax Assessment Act 1997 Section 307-5. | Income Tax Assessment Act 1997 Subsection 307-5(1) | Income Tax Assessment Act 1997 Section 307-15.

Reasons for decision: Summary: The payments made by the Fund to the Deceased’s nominated savings account are superannuation member benefits paid by the Fund to the Deceased. Upon receipt by the Deceased, these payments lose their character of superannuation member benefits and simply become money which is part of the Deceased’s estate to be distributed to the Deceased’s beneficiaries in accordance with their wishes. The payments made by the Fund to the Deceased’s nominated savings account are not superannuation death benefits for the purposes of Subdivision 302-A of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Subsection 995-1(1) of the ITAA 1997 states that a 'superannuation death benefit' has the meaning given by section 307-5 of the ITAA 1997. Superannuation benefits are defined in section 307-5 of the ITAA 1997. In accordance with Item 1 of the table in subsection 307-5(1) of the ITAA 1997 a superannuation member benefit is a payment to you from a superannuation fund because you are a fund member; Superannuation death benefit is defined in subsection 307-5(4) of the ITAA 1997 as being a payment described in Column 3 of the table in subsection 307-5(1). A superannuation death benefit is described in Column 3 of Item 1 of the table in subsection 307-5(1) as: … A payment to you from a superannuation fund, after another person’s death, because the other person was a fund member. Section 307-15 of the ITAA 1997 applies for the purposes of determining whether a payment is made to you, or received by you, and states: A payment is treated as being made to you, or received by you, if it is made: a) for your benefit; or b) to another person or to an entity at your direction or request. In this case, the payments were made by the Fund to the Deceased’s nominated savings account as requested by the Advisors. As such, they are superannuation member benefits paid by the Fund to the Deceased. Upon receipt by the Deceased, these payments lose their character of superannuation member benefits and simply become money which is part of the Deceased’s estate to be distributed to the Deceased’s beneficiaries in accordance with their wishes. Therefore, the payments made by the Fund to the Deceased’s nominated savings account are not superannuation death benefits for the purposes of subdivision 302-A of the ITAA 1997.