Superannuation, retirement and employment termination: Currency exchange rates - the assessable amount under section 27CAA of the Income Tax Assessment Act of 1936 (ITAA 1936).

What exchange rates should be used to calculate the 'gross amount', 'accumulated entitlement' and 'additional contributions' under section 27CAA of the ITAA 1936?

The individual components of the assessable amount are not converted in Australian currency. Rather, the total assessable amount under section 27CAA of the ITAA 1936 is calculated in the foreign currency. The assessable amount is then converted into Australian currency using the following exchange rates: (a) Where the total assessable amount is remitted to Australia in the year that it arises - on the day on which it is remitted. (b) Where part of the assessable amount is remitted to Australia in the year that it arises - on the day on which it is remitted. (c) In any other case - at the end of that year.

The taxpayer received a lump sum payment from an eligible non-resident non-complying superannuation fund. The gross amount, accumulated entitlement and additional contributions all arise on dates with different exchange rates.

Section 27CAA of the ITAA 1936 does not give any guidance on the exchange rates to use - nor does the Explanatory Memorandum for the act that inserted section 27CAA into the Income Tax Assessment Act 1936 (ITAA 1936).

However, section 20 of the ITAA 1936 provides the rules for converting income derived in overseas currency into Australian currency.

Subsection 20(3) of the ITAA 1936 applies to payments received from superannuation funds. It is the total amount of income that is converted using the applicable exchange rate, rather than converting each component of that income separately.