Private ruling: Request for a determination of the deductible amount of UPP.
Date of advice: 23 June 2015
Published: June 2015
Ruling period: 2012-13 financial year | 2013-14 financial year
Date scheme commenced: 1 February 2013

Ruling: Q1: Are you entitled to a deductible amount in respect of your foreign pension? | A1: Yes, your annual deductible amount and your part year deductible amount has been determined in accordance with subsection 27(2) of the Income Tax Assessment Act 1936 (ITAA 1936).

Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes. You have provided a copy of your Insurance Resume to assist the Commissioner in determining the amount of your personal contributions You currently receive 100% of the pension and on your death it reverts to your spouse. The residual capital value of the pension is nil. Your pension is paid on a monthly basis.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 27H | Income Tax Assessment Act 1936 Subsection 27H(2) | Income Tax Assessment Act 1936 Subsection 27H(3) | Income Tax Assessment Act 1936 Subsection 27H(4) | Income Tax Assessment Act 1997 Section 960-50 - currency translation | Income Tax Regulations 1936 Regulation 9 | Income Tax Assessment Regulations 1997 Regulation 960-50.01 - currency translation

Reasons for decision: Summary: The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the deductible amount. It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics. The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable. The annual deductible amount is calculated using the following formula: A (B - C) D A = relevant share of the pension payable to you B = is the amount of the UPP of the pension, C = is the residual capital value (if any), D = is the relevant number The factors for determining the life expectancy are: 1. the date when the pension first became payable, and 2. your age when the pension commenced, and 3. your spouse's age when the pension commenced. The relevant number used to calculate the deductible amount of a superannuation pension that is payable to a person (the original pensioner) for life and on the death of that person is payable to another person for their life (the reversionary pensioner) will be the greater of the life expectancies of the original and reversionary pensioners. By putting your information into the above formula, your annual and part year deductible amount is obtained. | Detailed Reasoning - This ruling applies for the following periods:: 2012-13 financial year 2013-14 financial year | Detailed Reasoning - The scheme commenced on:: 1 February 2013 | Detailed Reasoning - Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes. You have provided a copy of your Insurance Resume to assist the Commissioner in determining the amount of your personal contributions You currently receive 100% of the pension and on your death it reverts to your spouse. The residual capital value of the pension is nil. Your pension is paid on a monthly basis. | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1936 Section 27H Income Tax Assessment Act 1936 Subsection 27H(2) Income Tax Assessment Act 1936 Subsection 27H(3) Income Tax Assessment Act 1936 Subsection 27H(4) Income Tax Assessment Act 1997 Section 960-50 - currency translation Income Tax Regulations 1936 Regulation 9 Income Tax Assessment Regulations 1997 Regulation 960-50.01 - currency translation