Private ruling: Tax treatment of superannuation benefits
Date of advice: 12 April 2016
Published: June 2016
Ruling period: Income year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are superannuation benefits received by you from an Australian superannuation fund when you are 60 years or over assessable income in Australia? | A1: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are under 60 years of age and an Australian citizen. You have not been a resident of Australia for tax purposes for a number of years, and are currently a resident of an overseas country. Whilst residing in Australia, you became a member of an Australian complying superannuation fund (the Fund). You intend to withdraw your benefits from the Fund once you reach the age of 60 and you intend to remain a non-resident.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 301 | Income Tax Assessment Act 1997 Section 301-10. | Income Tax Assessment Act 1997 Section 301-95. | Income Tax Assessment Act 1997 Section 301-100.

Reasons for decision: Summary: If you are 60 years or over when you receive a superannuation benefit from the Fund, no tax will be payable on the tax free component and the taxable component - element taxed in the fund of the benefit. However, tax will be payable on the taxable component - element untaxed in the fund (if any) of the benefit. | Detailed Reasoning - Detailed reasoning: The tax treatment of superannuation benefits received by members of complying superannuation funds is set out in Division 301 of the Income Tax Assessment Act 1997 (ITAA 1997) and varies depending on the type of benefit received; the components of the benefit; and the age of the member when they receive it. A superannuation benefit may be a superannuation lump sum or a superannuation income stream benefit and may have two components: a 'tax free component' and a 'taxable component'. The taxable component of a superannuation benefit may comprise of: an element taxed in the fund ; and element untaxed in the fund . These components attract different tax treatment. | Detailed Reasoning - The tax free component: Section 301-10 of the ITAA 1997 states if you are 60 years or over when you receive a superannuation benefit, it is not assessable income and is not exempt income. That is, it is tax free. Therefore, if you receive your superannuation benefit from the Fund (as a lump sum or an income stream) once you reach age 60, no tax will be payable on the tax free component of your benefit. | Detailed Reasoning - Taxable component - element taxed in the fund: In accordance with section 301-10 of the ITAA 1997, the taxable component - element taxed in the fund is also not assessable income and is not exempt income if you are 60 years or over when you receive a superannuation benefit. | Detailed Reasoning - Taxable component - element untaxed in the fund: Where a person aged 60 or over receives a superannuation benefit with a taxable component that contains an element untaxed in the fund, the tax treatment depends on whether the benefit is a lump sum or an income stream. In accordance with section 301-95 of the ITAA 1997, if you are 60 years or over when you receive a superannuation lump sum, the taxable component is taxed as follows: • the element untaxed in the fund is assessable income; • a tax offset applies to ensure that tax payable is not greater than 15% up to the untaxed plan cap amount; and • the top marginal rate applies to any amount above the untaxed plan cap amount. If you are aged 60 or over when you receive a superannuation income stream, section 301-100 of the ITAA 1997 applies as follows: • the element untaxed in the fund is assessable income; and • you are entitled to a tax offset equal to 10% of the element untaxed in the fund of the benefit.