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Is the taxpayer allowed an extension of time to rollover an eligible termination payment (ETP)?

No. The ETP had been put to an 'intervening purpose' not incidental to completing the rollover. It fails the tests that need to be satisfied before an ETP can be taken as having been immediately rolled over under the Income Tax Assessment Act 1936 (ITAA 1936).

The taxpayer received an ETP from their superannuation fund when their employer made the taxpayer redundant. The taxpayer completed the relevant section of the rollover notification form but the details the taxpayer wrote were those of their personal credit union. The payment was paid directly to the taxpayer's credit union by the superannuation fund on the basis of the instructions received. Some time after the payment was made, the taxpayer realised that the payment had been made directly to their personal credit union and sought to have the payment rolled over into a superannuation fund.

In the definition of 'qualifying eligible termination payment' under subsection 27A(12) of the ITAA 1936, an ETP qualifies for rollover relief from personal income tax if it is paid to a complying superannuation fund or approved deposit fund, a Retirement Savings Account or a provider of an eligible annuity immediately after it is made. Taxation Determination TD 96/36 looks at the circumstances which constitute an immediate payment to a rollover fund. One of the specific instances where a payment will not be considered to be an immediate payment to a rollover fund is where the funds are transferred under the instructions of the taxpayer to an account for the taxpayer or another party distinct from the originally nominated rollover fund.

The superannuation fund paid the ETP to the personal bank account of the taxpayer on the basis of the instructions received from the taxpayer. This means the payment could not be treated as a rollover. Additionally, since the payment was made in accordance with the instructions given by the taxpayer, an extension of time to make a rollover payment was not warranted.

The taxpayer was required to include the ETP as assessable income in the relevant year of income. If the taxpayer later deposited the payment into a rollover fund, the amount would be treated as personal contributions.