Private ruling: Applicable fund earnings
Date of advice: 6 February 2026
Published: 23 March 2026
Ruling period: Period ended 30 June 20XX
Date scheme commenced: XXXX

Ruling: Q1: Is any part of the lump sum payment received by you from the Fund assessable as applicable fund earnings under section 305-70 of the ITAA 1997? | A1: The applicable fund earnings are $XXX

Relevant facts and circumstances: The taxpayer received a lump sum payment from a foreign superannuation fund. The taxpayer became an Australian resident for tax purposes on XXXX. There were no post-residency contributions to the taxpayer's foreign pension funds. There was no foreign fund transferred from another foreign fund to the taxpayer's foreign pension funds since the taxpayer became an Australian resident for tax purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 305-70 | Income Tax Assessment Act 1997 section 305-75 | Income Tax Assessment Act 1997 section 960-50 Other relevant documents | ATO ID 2015/7: Foreign currency translation rules in working out 'applicable fund earnings' under section 305-75 of the ITAA 1997. | ATO ID 2012/49: Superannuation lump sum paid from a foreign superannuation fund to an Australian resident at the same time as an annuity commenced: applying section 305-75 of the ITAA 1997.

Reasons for decision: Detailed Reasoning - Applicable fund earnings: When a person receives a lump sum from a foreign superannuation fund more than six months after they became an Australian resident, then broadly, the earnings on their foreign superannuation during the period when they were a resident of Australia is included in their assessable income as 'applicable fund earnings' under section 305-70 of the ITAA 1997. The applicable fund earnings amount is worked out in relation to a lump sum paid from a foreign superannuation fund, under either subsection 305-75(2) or subsection 305-75(3) of the ITAA 1997. Subsection 305-75(2) of the ITAA 1997 applies where the person was an Australian resident at all times during the period to which the lump sum relates. Subsection 305-75(3) of the ITAA 1997 applies where the person was not an Australian resident at all times during the period to which the lump sum relates. For subsection 305-75(2) and subsection 305-75(3) of the ITAA 1997, the period to which the lump sum relates is the period during which funds are accumulated in a particular foreign superannuation fund for a member that has a relation to the superannuation lump sum paid by that fund. That is consistent with other parts of those subsections, which also focus on the foreign superannuation fund from which the lump sum is paid. In this case, your interest in the fund to which the lump sum relates, was established before you became an Australian resident. As you were not an Australian resident at all times during the period, subsection 305-75(3) of the ITAA 1997 will apply. Subsection 305-75(3) of the ITAA 1997 states, if you become an Australian resident after the start of the period to which the lump sum relates (but before you receive it), the amount of your applicable fund earnings is the amount (not less than zero) worked out as follows: a) work out the total of the following amounts: i. the amount in the fund that was vested in you just before the day (the start day ) you first became an Australian resident during the period; ii. the part of the payment that is attributable to contributions to the fund made by or in respect of you during the remainder of the period; iii. the part of the payment (if any) that is attributable to amounts transferred into the fund from any other foreign superannuation fund during the period; b) subtract that total amount from the amount in the fund that was vested in you when the lump sum was paid (before any deduction for foreign tax); c) multiply the resulting amount by the proportion of the total days during the period when you were an Australian resident; d) add the total of all previously exempt fund earnings (if any) covered by subsections (5) and (6). | Detailed Reasoning - Foreign currency conversion: The foreign currency translation rules for lump sums paid by foreign superannuation funds are explained in ATO Interpretative Decision ATO ID 2015/7: Foreign currency translation rules in working out 'applicable fund earnings' under section 305-75 of the ITAA 1997 (ATO ID 2015/7). For the purposes of working out your applicable fund earnings in relation to a superannuation lump sum under section 305-75 of the ITAA 1997, the correct rule for translating foreign currency into Australian dollars is the rule described in Item 11 of the table in subsection 960-50(6) of the ITAA 1997 (as modified by regulation 960-50.01(1) of the Income Tax Assessment (1997 Act) Regulations 2021 ). This means that the exchange rate at which it is reasonable to translate amounts into Australian currency for the purposes of section 305-75 of the ITAA 1997, is the exchange rate applicable at the time of receipt of the relevant superannuation lump sum directly by you or your complying superannuation fund. Specifically, under subsection 960-50(4) of the ITAA 1997, each amount or component that is denoted in a foreign currency must be translated into an Australian dollar equivalent first before any calculations are undertaken. | Detailed Reasoning - Calculation of your applicable fund earnings: As you became a member of the Fund before you became a resident of Australia, the applicable fund earnings on this lump sum will be worked out in accordance with subsection 305-75(3) of the ITAA 1997. Table 1: Before you became a resident of Australia | Detailed Reasoning - A: Amount in Fund vested in the taxpayer on the day just before the residency date XXX $XXX | Detailed Reasoning - B: Part of the lump sum from contributions into the Fund XXX $XXX | Detailed Reasoning - C: Part of the lump sum from amounts transferred from other foreign funds XXX $XXX | Detailed Reasoning - D: A + B + C (Calculated as per the step outlined in paragraph 305-75(3)(a) of the ITAA 1997) XXX $XXX | Detailed Reasoning - E: Amount in the Fund vested in the Taxpayer when the lump sum was paid (date of receipt) XXX $XXX | Detailed Reasoning - F: E −D (Calculated as per the step outlined in paragraph 305-75(3)(b) of the ITAA 1997) XXX $XXX | Detailed Reasoning - G: The proportion of the total days during the period from the residency date (start day) to the date of receipt, of which the Taxpayer was an Australian resident 100% 100% | Detailed Reasoning - H: Previously exempt fund earnings (if any) XXX XXX | Detailed Reasoning - I: Applicable fund earnings = (F × G) + H (Calculated as per the steps outlined in paragraphs 305-75(3)(c) and 305-75(3)(d) of the ITAA 1997) XXX XXX This applicable fund earnings is an exempt fund earnings which occur where an amount in a foreign super fund is transferred to another foreign super fund before being received in Australia. These earnings would not otherwise be included and are set aside until the lump sum is transferred to you, or your complying Australian super fund. When you transferred the fund into Australian superfund, any amounts in pound sterling are translated into Australian dollars using the exchange rate applicable on the date of receipt. Table 2: Exempt fund earnings | Detailed Reasoning - Description: Amount in GBP ( £pound;) | Detailed Reasoning - A: Part of the lump sum from contributions into the UK Fund (18 June 2018) XXX XXX | Detailed Reasoning - B: Part of the lump sum from amounts transferred from other foreign funds XXX XXX | Detailed Reasoning - C: A + B (Calculated as per the step outlined in paragraph 305-75(2)(a) of the ITAA 1997) XXX XXX | Detailed Reasoning - D: Amount in the UK Fund vested in the Taxpayer when the lump sum was paid (date of receipt) on 2 September 2025 XXX XXX | Detailed Reasoning - E: D − C (Calculated as per the step outlined in paragraph 305-75(2)(b) of the ITAA 1997) XXX XXX | Detailed Reasoning - F: Previously exempt fund earnings (if any) XXX XXX | Detailed Reasoning - G: Applicable fund earnings = E + F (Calculated as per the steps outlined in paragraph 305-75(2)(c) of the ITAA 1997) XXX XXX Subsection 305-70(2) of the ITAA 1997 states that only so much of the lump sum as equals the applicable fund earnings is included in assessable income. Therefore, the assessable income will be limited to the amount of the lump sum in any case where the lump sum is less than the applicable fund earnings. Accordingly, the 'applicable fund earnings' amount in respect of the lump sum payment transferred from the Fund on XXX is GBP XXX or AUD XXX.