Private ruling: Concessional contributions
Published: February 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Does the amount appearing on a rollover benefits statement, where the transferring fund is a defined benefit fund, count towards your concessional contributions cap? | A1: No. | Q2: Does the amount appearing on a rollover benefits statement, where the transferring fund is a hybrid fund, count towards your concessional contributions cap? | A2: No.

Relevant facts and circumstances: You are between 55 and 65 years old. You are an employee and currently a member of a defined benefit fund (DB Fund). In the 2013 income year, an amount was rolled over from the DB Fund to your personal fund (a complying superannuation plan). The rollover benefits statement provided in respect of this rollover shows an element untaxed in the fund. In the 2013 income year, an amount was rolled over from a hybrid fund to your personal fund. The rollover benefits statement provided in respect of this rollover shows an element taxed in the fund.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 291 | Income Tax Assessment Act 1997 Subdivision 291-B | Income Tax Assessment Act 1997 Section 291-25 | Income Tax Assessment Act 1997 Subdivision 291-C | Income Tax Assessment Act 1997 Section 291-165 | Income Tax Assessment Act 1997 Section 295-160 | Income Tax Assessment Act 1997 Subsection 295-190(1) | Income Tax Assessment Act 1997 Section 306-10 | Income Tax (Transitional Provisions) Act 1997 section 291-20. | Regulation 995-1.04 Income Tax Assessment Regulations 1997

Reasons for decision: Summary: The roll-over benefits transferred from the DB Fund and the hybrid fund are not concessional contributions. Any salary sacrifice payments, as well as any notional taxed contributions that may be calculated in respect of your defined benefit interests are concessional contributions and will need to be taken into account when calculating your concessional contributions cap for the 2013-14 income year. | Detailed Reasoning - Concessional contributions: Generally, concessional contributions are contributions included in the assessable income of a complying superannuation plan and include: · compulsory employer contributions; · salary sacrifice payments; · contributions allowed as an income tax deduction, such as superannuation contributions made by the self-employed; · some amounts allocated from a fund reserve; and · notional taxed contributions if you are a member of a defined benefit fund. Under paragraph 291-25(2)(c) of the Income Tax Assessment Act 1997 (ITAA 1997), concessional contributions do not include: · transfers from foreign superannuation funds; · roll-over superannuation benefits that consist of an element untaxed in the fund that does not exceed the untaxed roll-over amount for that individual; and · a contribution made to a constitutionally protected fund. A roll-over superannuation benefit is generally a superannuation lump sum and a superannuation member benefit, paid from a complying superannuation plan to another complying superannuation plan. A roll-over superannuation benefit is not included in the assessable income of a complying superannuation plan (section 295-160 of the ITAA 1997) and therefore is not a concessional contribution. However, it is important to note that in relation to your specific circumstances, paragraph 291-25(2)(c) of the ITAA 1997 provides that a contribution will not be a concessional contribution as long as the roll-over superannuation benefit does not consist of an element untaxed in the fund that exceeds the 'untaxed plan cap amount'. The untaxed plan cap amount for the 2013-14 income year is $1,315,000. If the untaxed element exceeds the untaxed plan cap (in the income year the roll-over occurs), the originating fund should withhold tax at the top marginal rate plus Medicare levy from the excess, before releasing the roll-over benefit to your fund. In your case, the roll-over benefit from the defined benefit fund is not a concessional contribution. This is because your element untaxed in the fund is not equal to, or in excess of, your untaxed plan cap amount. As the DB Fund is a defined benefit fund, any notional taxed contributions for a financial year in respect of a defined benefit interest are treated as concessional contributions. Consequently, there may be notional taxed contributions in respect of your interest in the DB Fund for the income year. These notional taxed contributions, (if any), are concessional contributions and must also be taken into account for the purposes of your concessional contributions cap. If you require further information in relation to notional taxed contributions in respect of your interest in the DB Fund, please contact the DB Fund, as it is only the DB Fund that can assist you in this matter. Similarly, as the hybrid superannuation fund contains both accumulation and defined benefit components, there may be notional taxed contributions in respect of your defined benefit interest in the hybrid fund that will count towards your concessional contributions cap. Again, it is only the hybrid fund that can advise you whether there are any notional taxed contributions in respect of your membership in this fund. You mentioned in your request that you had been advised that the DB Fund is a constitutionally protected fund (CPF). Please be aware that CPFs are funds established by a State Act, or a specified provision of a State Act, mentioned in Schedule 4 the Income Tax Assessment Regulations. As the DB Fund is a Commonwealth Scheme, it is not a fund established under a relevant State Act. The DB Fund, is therefore, not a CPF. To summarise, in your case, the roll-over benefit amounts from the defined benefit fund and the hybrid fund are not concessional contributions and therefore do not count towards your concessional contributions cap. Any salary sacrifice amounts, as well as any notional taxed contributions that may be calculated in respect of your defined benefit interest in the DB Fund and the hybrid fund will need to be taken into account when calculating your concessional contributions cap for the 2013-14 income year.