Private ruling: Tax offset – lump sum in arrears – deceased estate
Date of advice: 21 February 2018
Published: June 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Estate be entitled to a lump sum in arrears tax offset for the 2017 financial period even though the lump sum relates to income that the client was entitled to prior to their date of death? | A1: No. Section 159ZRA of the Income Tax Assessment Act 1936 (ITAA 1936) specifies the conditions which must be satisfied by a taxpayer for entitlement to the lump sum payment in arrears rebate. Subsection 159ZRA(2) states that: The rebate is only available to a natural person (otherwise than in the capacity of a trustee).

Relevant facts and circumstances: Prior to the client’s date of death the taxable income (excluding income in arrears) was under the income threshold. The gross lump sum in arrears (untaxed element) with tax withheld was paid to the Estate in the 2017 financial period. According to your records the client satisfies the 10% test. Should the client have received the full superannuation entitlement for each financial period prior to the date of death, no tax would have been payable, as the taxable income was below the minimum threshold for each year.