Superannuation: Undeducted Purchase Price (Italy)

Whether the taxpayer is entitled to a deductible amount under section 27H ( Income Tax Assessment Act 1936 (ITAA)) in relation to a pension paid from Italy by the Instituto Nazionale della Previdenza Sociale (INPS)

The taxpayer is entitled to a deductible amount under section 27H ( Income Tax Assessment Act 1936 (ITAA)) in relation to a pension paid from Italy by the Instituto Nazionale della Previdenza Sociale (INPS)

The taxpayer receives two pensions from the INPS. One pension is a reversionary pension which commenced after 1 July 1983 paid on the death of the taxpayer's spouse. The other pension is paid to the taxpayer on the taxpayer's retirement. The taxpayer provided evidence from INPS of the purchase price component of both pensions.

The taxpayer is entitled to a deductible amount on both pensions. The amount of any annuity, including a superannuation pension, derived by the taxpayer during a year of income is included in the assessable income of the taxpayer. The taxpayer is then entitled to have part of the pension (a portion of the undeducted purchase price) excluded from their assessable income for each year in which the pension is paid (section 27H (ITAA 1936)). The undeducted purchase price is calculated in accordance with the guidelines published in Taxation Ruling IT 2554.