Private ruling: Transition to retirement income stream
Date of advice: 20 July 2016
Published: August 2016
Ruling period: Income year ended 30 June 2016 | Income year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Will the facts of this arrangement enliven Part IVA of the Income Tax Assessment Act 1936 ? | A1: No.

Relevant facts and circumstances: A person (the Taxpayer) is, or will be shortly, receiving a benefit (the Benefit) from a superannuation interest that is supporting a superannuation income stream from a complying superannuation fund. The superannuation income stream from which the Benefit is, or will be, paid satisfies the definition of an 'account based pension' under subregulation 1.03(1) of the Superannuation Industry (Supervision) Regulations 1994 (SISR) and under all other relevant provisions of superannuation law. The superannuation income stream from which the Benefit is, or will be, paid also meets the definition of a 'transition to retirement income stream' (TRIS) in subregulation 6.01(2) of the SISR. The capital supporting the superannuation income stream from which the Benefit is, or will be, paid is comprised substantially or entirely of preserved benefits. The superannuation income stream from which the Benefit is, or will be, paid is comprised substantially or entirely of taxable component. The conditions to which the superannuation income stream is (or will shortly be) subject to allow for the variation of the amount of the Taxpayer's benefit payments in a year in circumstances other than: • the indexation of the Benefit under the rules of the product; • the application of the family law splitting provisions; • the commutation of the Benefit (including commutation to pay a surcharge liability); or • the payment of an assessment of excess contributions tax. The superannuation income stream from which the Benefit is, or will be, paid at all relevant times allows the amount of the Benefit to be anywhere between at least 4% of the relevant account balance and no more than 10% of the relevant account balance. The Taxpayer will elect under regulation 995-1.03 of the ITAR 1997, before each Benefit is paid, that the Benefit is not to be treated as a superannuation income stream benefit.

Relevant legislative provisions: Income Tax Assessment Act 1936 Part IVA

Reasons for decision: Summary: Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) is a general anti-avoidance provision that gives the Commissioner the power to cancel a 'tax benefit' that has been obtained in connection with a scheme to which Part IVA applies and it can be concluded that the arrangement, or any part of it, was entered into or carried out by any person for the dominant purpose of obtaining the tax benefit. The Commissioner has considered the circumstances of your case and will not apply Part IVA of the ITAA 1936 to the arrangement described in this case.

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