Private ruling: Payments from overseas fund
Published: March 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2010

Ruling: Q1: Are the payments you received from an overseas fund excepted income? | A1: Yes.

Relevant facts and circumstances: You are a resident of Australia. You are under the age of 18. Your parent was a member of a retirement scheme. On the death of a member, the scheme provides that if the deceased member leaves eligible children (subject to a maximum of four such children), an allowance shall be paid equal to one quarter of the spouse's pension. An eligible child for the purposes of this scheme is a child up to the age of 18 years or 21 if engaged in full-time education. You are receiving payments as an Eligible Child of the deceased member. The payments for each of you are paid into your surviving parent's bank account.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1936 Subsection 102AC(2). | Income Tax Assessment Act 1936 Subsection 102AE(2). | Income Tax Assessment Act 1936 Subsection 102AE(1). | Taxation Administration Act 1953 Section Sch1-12-80. | Superannuation Industry (Supervision) Act 1993 Section 10. | Commonwealth Employees Rehabilitation and Compensation Act 1988 Subsection 17(5)

Reasons for decision: Summary: Division 6AA of the Income Tax Assessment Act 1936 (ITAA 1936) provides that special rates of tax and a lower tax free threshold may apply to certain assessable income derived by a taxpayer under 18 years of age. However, where an amount of assessable income is 'excepted assessable income', it is excluded from these rules and taxed at normal rates. Employment income, including salary or wages, is excepted assessable income and is excluded from the special rates of tax. Periodic compensation payments in this context are generally considered salary and wages for these purposes ( Taxation Determination TD 92/133). In your situation, it is accepted that the periodic payments made to you are excepted assessable income and are not subject to tax at the special rates payable on income to which Division 6AA of the ITAA 1936 applies.

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