Private ruling: Foreign income
Published: December 2013

Ruling: Ruling | In view of privacy and commercial in-confidence issues in respect of this private ruling, the following summary is provided. | The Commissioner ruled that: | · the Protection Payments received by the Trustee of a Superannuation Fund will not be assessable under section 230-15 of the Income Tax Assessment Act 1997 (ITAA 1997). | · the Protection Payments received by the Trustee will not be assessable under section 6-5 of the ITAA 1997. | · the totality of rights conferred to the Trustee in relation to an Individual Contract is a CGT asset under section 108-5 of the ITAA 1997. | · the date the relevant capital gains tax (CGT) asset (being the totality of rights referred to above in relation to an Individual Contract) is acquired under section 109-5 of the ITAA 1997 is taken to be the date that an Individual Contract is created. | · the receipt of a Protection Payment by the Trustee that is referrable to a particular Individual Contract is a CGT event C2 which happens to that CGT asset for the purposes of section 104-25 of the ITAA 1997. | · the cessation of an Individual Contract that has resulted from the lapse, expiration or other early termination of the capital investment protection will give rise to CGT Event C2 and is considered to be a full disposal of a CGT asset. | · Protection Fees paid by the Trustee that are referrable to a particular Individual Contract form part of the CGT cost base under section 110-25 of the ITAA 1997 for the CGT asset that is representative of the Trustee's rights under that Individual Contract. | · the Protection Fee paid under a particular Individual Contract will not be included in the reduced cost base, as defined in section 110-55 of the ITAA 1997, of the CGT asset that is representative of the Trustee's rights under that Individual Contract. | · section 115-5 of the ITAA 1997 will apply to discount any capital gain that arises to the Trustee upon the occurrence of a Payment Event under the terms of the new agreement provided that the Trustee's rights under an Individual Contract were acquired at least 12 months before the CGT event. | · the adoption of the new agreement will not result in any capital gain or capital loss under any CGT event. | · the new agreement will not have any effect on the acquisition date for the purposes of Division 109 and Division 115 of the ITAA 1997 in relation to the contractual rights of the Trustee under the original agreement and the acquisition date of those contractual rights will be the date that the Trustee entered into each underlying arrangement to provide a capital investment protection to a member of the Superannuation Fund.