Private ruling: Lump sum transfer from foreign superannuation fund
Date of advice: 24 January 2019
Published: May 2019
Ruling period: Income year ended 30 June 2018.
Date scheme commenced: 1 July 2017.

Ruling: Q1: Is any part of the benefit, transferred from an overseas fund to an Australian superannuation fund, assessable as applicable fund earnings under section 305-70 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: You migrated to Australia and became a resident for tax purposes in 20XX. You held an interest in a foreign superannuation fund (Fund A). In 2017, you transferred your entire interest in Fund A into a different foreign superannuation fund (The fund). A private ruling was issued by the Commissioner in respect of the transfer into The fund in which the amount of previously exempt fund earnings (PEFE) was determined. You have transferred funds out of The fund into other foreign superannuation funds. In the 2018 financial year, your entire remaining interest in The fund was received as a transfer into an Australian superannuation fund. There have been no contributions or amalgamations to The fund since you migrated to Australia, except for the initial transfer from Fund A.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 305-70 | Income Tax Assessment Act 1997 Section 305-75 | Income Tax Assessment Act 1997 Section 305-80

Reasons for decision: Summary: The amount of applicable fund earnings (AFE) in respect of the lump sum payment paid from The fund to your Australian fund is AMOUNT. This was the amount of PEFE when The fund was opened. It is added to any additional growth when funds are taken out and become assessable. As there was no additional growth in The fund it is just the above amount which is assessable. If the Australian fund is a complying superannuation fund you may choose for all or part of the AFE to be included in the assessable income of the superannuation fund. The superannuation fund will pay tax at a rate of 15%. Any amount of AFE you don’t make the choice for will be included in your assessable income and taxed at marginal rates.