Issue
Whether an allocated pension paid to the taxpayer, who is both the trustee and member of a superannuation fund, a rebatable superannuation pension under section 159SJ of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
An allocated pension paid to the taxpayer who is both the trustee and member of a superannuation fund is a rebatable superannuation pension provided it is paid to the taxpayer in his or her capacity as a member of the fund.
Facts
There are two members of a complying superannuation fund. The two members are also trustees. Allocated pensions are paid to the members/trustees.
Reasons For Decision
A superannuation pension is a 'rebatable superannuation pension' as defined in section 159SJ (ITAA 1936) where it is paid from a retirement savings account or fund which satisfies paragraph (a) of that definition. However, it will not qualify as rebatable superannuation pension if it is paid to a person in their capacity as the trustee of the relevant fund.
The explanatory memorandum relating to the Taxation Laws Amendment (Superannuation) Bill 1992 explains that this condition is necessary because annuity policies vested in the trustee of a superannuation fund are included in the definition of 'superannuation pension' so that payments under such policies in respect of fund members are treated as pensions, not annuities. The exclusion in paragraph (b) of the definition of rebatable superannuation pension ensures that payments under such policies to the trustee of the applicable fund are not rebatable to the trustee.
Where a pension is paid from the fund to a person in their capacity as a member of the fund and not in their capacity as trustee of the fund, the pension will be a rebatable superannuation pension under subsection 159SJ(1) (ITAA 1936).