Private ruling: Withdrawal and recontribution of superannuation benefits
Published: January 2013
Ruling period: Income year ending 30 June 2013
Date scheme commenced: During the income year ending 30 June 2013


Relevant facts and circumstances: The Fund is a self managed superannuation fund. The Fund has X members who are also trustees of the Fund. A member is under 65years of age and has retired from the workforce. A member is over 65 and is retired and in receipt of a pension. Sometime in 20YY, the trustees of the Fund sold a WRAP account belonging to the Fund. A financial advisor with the bank advised the trustees of the Fund that they may pay the proceeds of the sale directly into the trustees' personal account and hold it there until they open a term deposit in the name of the Fund. As advised, the trustees paid the relevant amount into their personal bank account. Subsequently, the trustees contacted the Australian Taxation Office to seek advice regarding their action. The trustees were advised that they have contravened section 52 of the Superannuation Industry (Supervision) Act 1993 and they should rectify this contravention by transferring the money to an account held in the name of the Fund as soon as practicable. A few days later, the trustees opened a term deposit in the name of the Fund and transferred the relevant amount to that account. The trustees state that it was never their intention to pay member benefits but simply to hold the money in the trustees'/members' personal account until a term deposit in the name of the Fund could be opened.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 307-5 | Income Tax Assessment Act 1997 Subsection 307-5(1) | Income Tax Assessment Act 1997 Subsection 307-15(2) | Superannuation Industry (Supervision) Regulations 1997 Subregulation 5.01(1) | Superannuation Industry (Supervision) Regulations 1997 Subregulation 5.01(2) | Superannuation Industry (Supervision) Regulations 1997 Subregulation 1.03(1)

Reasons for decision: Summary: Is the payment of an amount from a superannuation fund (the Fund) to the members' personal account a superannuation benefit for the purposes of Income Tax Assessment Act 1997 (ITAA 1997)? Yes. Is the repayment of the same amount to the Fund a contribution for the purposes of the ITAA 1997? Yes | Detailed Reasoning - This ruling applies for the following period:: Income year ending 30 June 2013 | Detailed Reasoning - The scheme commenced on:: During the income year ending 30 June 2013 | Detailed Reasoning - Relevant facts and circumstances: The Fund is a self managed superannuation fund. The Fund has X members who are also trustees of the Fund. A member is under 65years of age and has retired from the workforce. A member is over 65 and is retired and in receipt of a pension. Sometime in 20YY, the trustees of the Fund sold a WRAP account belonging to the Fund. A financial advisor with the bank advised the trustees of the Fund that they may pay the proceeds of the sale directly into the trustees' personal account and hold it there until they open a term deposit in the name of the Fund. As advised, the trustees paid the relevant amount into their personal bank account. Subsequently, the trustees contacted the Australian Taxation Office to seek advice regarding their action. The trustees were advised that they have contravened section 52 of the Superannuation Industry (Supervision) Act 1993 and they should rectify this contravention by transferring the money to an account held in the name of the Fund as soon as practicable. A few days later, the trustees opened a term deposit in the name of the Fund and transferred the relevant amount to that account. The trustees state that it was never their intention to pay member benefits but simply to hold the money in the trustees'/members' personal account until a term deposit in the name of the Fund could be opened. | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1997 Section 307-5 Income Tax Assessment Act 1997 Subsection 307-5(1) Income Tax Assessment Act 1997 Subsection 307-15(2) Superannuation Industry (Supervision) Regulations 1997 Subregulation 5.01(1) Superannuation Industry (Supervision) Regulations 1997 Subregulation 5.01(2) Superannuation Industry (Supervision) Regulations 1997 Subregulation 1.03(1) | Detailed Reasoning - Superannuation benefits: Section 307-5 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out payments that are/are not superannuation benefits. Item 1 in the table contained in subsection 307-5(1) of the ITAA 1997 lists various types of superannuation benefits and, as far as relevant, provides that a payment made by a superannuation fund to a person because the person is a superannuation fund member is a superannuation benefit. In accordance with subsection 307-15(2) of the ITAA 1997, a payment is made to a person if it is made: (a) for that person's benefit; or (b) to another person or to an entity at the person's request. In this case, the trustees paid an amount from the Fund to the trustees'/members' personal account. From that point, the paid amount was available to the members to use as they wished. That is, the payment was made from the Fund for the benefit of the members. Therefore, the payment from the Fund to the members' personal account is a superannuation benefit in accordance with subsection 307-5(1) of the ITAA 1997. | Detailed Reasoning - Contributions: The ITAA 1997 does not define the term 'contribution', therefore it is necessary to ascertain the meaning of a 'contribution' to a superannuation fund having regard to the context and underlying purpose of the legislative provisions in which the term appears. The Commissioner of Taxation (the Commissioner) sets out his view on the meaning of 'contribution' in Taxation Ruling TR 2010/1. The Commissioner considers that in the superannuation context, a contribution is anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general. 1 A superannuation fund's capital is most commonly increased by transferring funds to the superannuation provider and, as a general rule, the contribution will be made when the funds are received by the superannuation provider. In this case, the transfer from the members' personal account to the Fund was made for the benefit of one or both members of the Fund, therefore, the transfer of the relevant amount to the Fund is a contribution for the purposes of the ITAA 1997.

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