Issue
Is a partial distribution of surplus funds from a non-resident superannuation fund to a former member of the fund assessable to the resident taxpayer under section 27CAA of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes. The partial distribution of surplus funds from a 'non-resident non-complying superannuation fund' to its former member is assessed to the resident taxpayer under section 27CAA of the ITAA 1936, being a lump sum payment from an 'eligible non-resident superannuation fund' as defined in section 6E of the ITAA 1936.
Facts
The taxpayer was a member of a non-resident superannuation fund. Under the fund's superannuation scheme, the fund made certain surplus fund payments to former members of the fund. The taxpayer, after leaving the scheme became a resident of Australia.
Reasons for Decision
A payment from an 'eligible non-resident non-complying superannuation fund' that does not qualify as an 'exempt resident foreign termination payment' or an 'exempt non-resident foreign termination payment' is included in assessable income under section 27CAA of the ITAA 1936. The amount included in the taxpayer's assessable income is the amount by which the gross amount of the payment that was properly payable to the taxpayer on the day the payment was made (before any deduction was made) exceeds the amount worked out using the formula in paragraph 27CAA(1)(c) of the ITAA 1936.
The payment made to the taxpayer does not satisfy the definition of an 'exempt resident foreign termination payment' or an 'exempt non-resident foreign termination payment' in subsection 27A(1) of the ITAA 1936.
The payment is not an 'eligible termination payment' (ETP) as defined in subsection 27A(1) of the ITAA 1936, as paragraph 27A(1)(ma) of the ITAA 1936 specifically excludes a payment from a 'non-resident non-complying superannuation fund' from being an ETP.