Private ruling: Transfer of benefits from a foreign superannuation fund
Date of advice: 5 August 2021
Published: October 2021
Ruling period: Income year ending 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Where your client has commenced a flexi-access drawdown from their foreign pension scheme, will a final payment from the scheme be treated in Australia as a lump sum payment pursuant to section 305-70 of the Income Tax Assessment Act 1997 ? | A1: Yes.

Relevant facts and circumstances: Your client is a member of a foreign pension plan (the Plan), a registered pension scheme overseas. Your client is a resident of Australia for income tax purposes. The Plan is a foreign superannuation fund. The Plan allows for flexi-access drawdown. In the 2019-20 income year your client took a single Pension Commencement Lump Sum representing 25% of their fund. In the 2019-20 income year your client also took a further amount, and subsequently declared that amount as assessable foreign source income in their 2019-20 income tax return. Your client intends to withdraw their remaining balance in the Plan in full, and then close their account. The final payment to your client will be made as a single lump sum.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 307-65 | Income Tax Assessment Act 1997 section 305-70 | Superannuation Industry (Supervision) Regulations 1994 subregulation 1.06(1) | Superannuation Industry (Supervision) Regulations 1994 subregulation 1.06(9A) Detailed reasoning | A superannuation lump sum is a superannuation benefit that is not a superannuation income stream benefit pursuant to section 307-65 of the Income Tax Assessment Act 1997 (ITAA 1997). The phrase 'income stream' was considered in the case of Tubemakers of Australia Ltd v Federal Commissioner of Taxation [1993] FCA 175 (Tubemakers case). In light of the Tubemakers case, the Commissioner considers the phrase 'income stream' refers to a series of periodic (including a series of annual) payments made from a member's interest in the superannuation fund over an identifiable period of time. A liability to make a single payment for one year would not constitute an income stream. | The series of periodic payments envisaged in the Tubemakers case would also need to satisfy the requirements of subregulation 1.06(1) and by extension, subregulation 1.06(9A) of the Superannuation Industry (Supervision) Regulations 1994 (SISR 1994). Subregulation 1.06(9A) of the SISR 1994 requires amongst other things, that the payment of the pension is made at least annually. | Whilst any interim or final payments from the Plan may be treated differently for tax purposes by the relevant overseas authority, under Australian law, a final one-off payment from the Plan in this case, does not constitute a series of periodic payments over an identifiable period. The final payment is considered a lump sum payment. | Accordingly, the lump sum payment is a lump sum payment to which subdivision 305-B of the ITAA 1997 will apply to determine the tax treatment. | Therefore, where your client receives a final payment from the Plan (as intended), section 305-70 applies to include the applicable fund earnings (if any) in respect of the lump sum received in their assessable income.


This ruling applies for the following period: