Superannuation: Undeducted Purchase Price (Netherlands)

Can the taxpayer apply the 25% rate outlined in Taxation Determination TD 2000/46 to calculate the deductible amount for the Undeducted Purchase Price (UPP) of a pension paid by a Netherlands body other than the Sociale Verzekeringbank (SVB)?

No. The 25% method outlined in Taxation Determination TD 2000/46 cannot be used in respect of the particular pension that the taxpayer receives.

The taxpayer receives a pension from a body which is a part of a government department of the Netherlands. The pension is not paid by the SVB (the body that pays pensions under the Netherlands' social security system).

The taxpayer is not able to provide documentary evidence to establish the total of the personal contributions made towards the purchase of the pension.

The deductible amount in respect of the UPP of an annuity or superannuation pension (including foreign pensions) is calculated in accordance with section 27H of the Income Tax Assessment Act 1936 (ITAA 1936).

A deductible amount equal to 25% of the gross pension, is available in respect of old age, widows, widowers and orphans pensions paid by the Netherlands' SVB to residents of Australia. This is set out in Taxation Determination TD 2000/46.

In this case, as the pension is paid by a body other than the SVB, Taxation Determination TD 2000/46 does not apply. No deductible amount can be claimed by the taxpayer in respect of the pension unless the taxpayer can obtain sufficient documentary evidence to enable calculation of the deductible amount in accordance with subsection 27H(2) of the ITAA 1936.