Private ruling: Roll-over of superannuation benefits
Published: November 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: 1. Where a member of the Fund commutes their superannuation income stream can all or part of the amount of the commutation value of the income stream be rolled-over to another superannuation fund to purchase another superannuation income stream? 2. Does the roll-over count as a non-concessional contribution? Advice/Answers 1. Yes. 2. No.

Relevant facts and circumstances: The Fund is a complying self-managed superannuation fund. The Fund has two members. Member 1 is in accumulation mode. Member 2 is in receipt of a taxable account based superannuation income stream and a tax free account based superannuation income stream. The Fund's deed allows for roll-overs by members. The Fund's assets comprise of term deposits and cheque accounts. The Fund assets are segregated. Member 2 is considering rolling over an amount to another superannuation fund (the Receiving Fund).

Relevant legislative provisions: Income Tax Assessment Act 1997 section 280-35 | Income Tax Assessment Act 1997 subsection 295-190(1) | Income Tax Assessment Act 1997 subparagraph 291-25(2)(c)(ii) | Income Tax Assessment Act 1997 subparagraph 292-90(2)(c)(vi) | Income Tax Assessment Act 1997 section 306-10 | Income Tax Assessment Act 1997 section 307-65 | Income Tax Assessment Act 1997 subsection 307-70(1)

Reasons for decision: Summary: In this case the Fund is a complying self-managed superannuation fund. Member 2 is rolling over an amount to the Receiving Fund. Provided the Receiving Fund is a complying superannuation fund and the benefit is not a superannuation benefit of a kind specified in the regulations (which refers to benefits arising from the commutation of a superannuation income stream on death and superannuation lump sum benefits paid to a person with a terminal medical condition) Member 2 may roll-over all or part of the commutation value of their income stream. The Tax Office has provided a form and instructions for trustees of superannuation funds to rollover benefits for transactions occurring on or after 1 July 2013 (NAT 70944 - 03.2013 and NAT 70945 - 03.2013). However, a similar form that collects the same information may be used to satisfy the RBS requirement. Non-concessional contributions are generally contributions that are not included in the assessable income of a complying superannuation fund. Subparagraph 292-90(2)(c)(vi) of the ITAA 1997 specifically excludes a contribution that is a roll-over superannuation benefit from the definition of a non-concessional contribution. | Detailed Reasoning - Roll-over of superannuation benefits: Section 280-35 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a member can roll-over their superannuation benefits from one complying superannuation plan to another, or between different interests in the same plan. Section 306-10 of the ITAA 1997 provides that a superannuation benefit is a roll-over superannuation benefit if: (a) the benefit is a superannuation lump sum and a superannuation member benefit; and (b) the benefit is not a superannuation benefit of a kind specified in the regulations; and (c) the benefit satisfies any of the following conditions: (i) it is paid from a complying superannuation plan; (ii) it is an unclaimed money payment; (iii) it arises from the commutation of a superannuation annuity; and (d) the benefit satisfies any of the following conditions: (i) it is paid to a complying superannuation plan; (ii) it is paid to an entity to purchase a superannuation annuity from the entity. A superannuation lump sum is defined under section 307-65 of the ITAA 1997 as a superannuation benefit that is not a superannuation income stream benefit. A superannuation income stream benefit is defined under subsection 307-70(1) as a superannuation benefit specified in the regulations that is paid from a superannuation income stream. Therefore, a superannuation benefit is a roll-over superannuation benefit if the benefit is a superannuation lump sum, paid to its member, from one complying superannuation fund to another complying superannuation fund. As a roll-over benefit requires the benefit to be a lump sum, an existing income stream must first be commuted and then the relevant amount of the benefit can be rolled over to the new complying plan. Once the roll-over takes place, a new pension can commence in the original superannuation fund, or the new superannuation fund, (or both), based on the benefits remaining. In this case the Fund is a complying self-managed superannuation fund. Member 2 is rolling over an amount to the Receiving Fund. Provided the Receiving Fund is a complying superannuation fund and the benefit is not a superannuation benefit of a kind specified in the regulations (which refers to benefits arising from the commutation of a superannuation income stream on death and superannuation lump sum benefits paid to a person with a terminal medical condition) Member 2 may roll-over all or part of the commutation value of their income stream. | Detailed Reasoning - Completion of rollover benefits statement: Trustees of SMSFs must complete a Rollover benefits statement (RBS) when a roll-over superannuation benefit is paid to another superannuation fund after 1 July 2013. The RBS must be provided to the receiving superannuation fund within seven days of the roll-over payment and a statement provided to the member within 30 days of the roll-over payment. The Tax Office has provided a form and instructions for trustees of superannuation funds to rollover benefits for transactions occurring on or after 1 July 2013 (NAT 70944 - 03.2013 and NAT 70945 - 03.2013). However, a similar form that collects the same information may be used to satisfy the RBS requirement. | Detailed Reasoning - Roll-overs and concessional and non-concessional contributions: Generally, concessional contributions are contributions included in the assessable income of a complying superannuation fund. Usually a roll-over superannuation benefit is not included in the assessable income of a complying superannuation fund (section 295-160 of the ITAA 1997) and therefore is not a concessional contribution. However, item 2 of the table in subsection 295-190(1) of the ITAA 1997 will include in the assessable income of a complying superannuation fund a roll-over superannuation benefit to the extent that: (a) it consists of an element untaxed in the fund; and (b) is not an excess untaxed roll-over amount for the relevant member. An excess untaxed roll-over amount is the amount of a rolled over superannuation benefit that includes an amount that is an element untaxed in the fund and exceeds a person's untaxed plan cap amount for the relevant income year. The untaxed plan cap amount for the 2013-14 income year is $1,315,000. Where all or part of a roll-over superannuation benefit is included in the assessable income of a complying superannuation fund by virtue of item 2 of the table in subsection 295-190(1) of the ITAA 1997, it will not count as concessional contribution by virtue of subparagraph 291-25(2)(c)(ii). Non-concessional contributions are generally contributions that are not included in the assessable income of a complying superannuation fund. Subparagraph 292-90(2)(c)(vi) of the ITAA 1997 specifically excludes a contribution that is a roll-over superannuation benefit from the definition of a non-concessional contribution.