Issue
What is the taxpayer's unused undeducted purchase price (UUPP) on commutation of their superannuation pension?
Decision
The UUPP on commutation of their superannuation pension is ascertained in accordance with the definition set out in subsection 27A(1) of the Income Tax Assessment Act 1936 (ITAA 1936)
Facts
The taxpayer received a pension from a superannuation fund.
The pension commenced after 1 July 1994.
The pension was not purchased using any ETP rolled-over amounts.
The taxpayer commuted their pension to a lump sum.
There was an amount of undeducted purchase price when the pension commenced.
There where amounts of undeducted purchase price claimed as deductible amounts against the pension income prior to its commutation.
Reasons for Decision
The taxpayer's superannuation pension is assessable to tax under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) as the term 'annuity' is defined in subsection 27H(4) to include a superannuation pension.
'Unused undeducted purchase price' (UUPP) and 'undeducted purchase price' (UPP) are defined in subsection 27A(1) of the ITAA 1936.
As the taxpayer's pension was not purchased using any Eligible Termination Payment (ETP) rolled-over amounts, the taxpayer's UUPP for the purpose of subsection 27A(1) is 'so much of the undeducted purchase price of the.......superannuation pension as has not been excluded from the assessable income of any taxpayer of any year of income......under section 27H.'
Accordingly, the UUPP is the UPP at the time the pension commenced less the amounts subsequently claimed as deductible amounts against the pension.