Issue
Is a superannuation pension, paid to a taxpayer under the provisions of the Military Superannuation Benefits Act 1991 , included in the taxpayer's assessable income under section 27H of the Income Tax Assessment Act 1936 ('ITAA 1936')?
Decision
Yes. The taxpayer's superannuation pension, paid under the provisions of the Military Superannuation Benefits Act, is included in the taxpayer's assessable income under section 27H of the ITAA 1936.
Facts
The taxpayer is in receipt of a superannuation pension (invalidity class B) paid from the Department of Veterans' Affairs.
The taxpayer's pension became payable subsequent to 1 July 1983.
The taxpayer's superannuation pension is paid under the provisions of the Military Superannuation Benefits Act.
Reasons for Decision
Section 27H of the ITAA 1936 includes in a taxpayer's income the amount of any annuity derived by a taxpayer during the year of income. In the case of an annuity that is purchased, the amount is reduced by the deductible amount calculated in accordance with that section.
An annuity is defined to include a 'superannuation pension' (subsection 27H(4) of the ITAA 1936).
Section 6-20 of the Income Tax Assessment Act 1997 (ITAA 1997) states that an amount is 'exempt income' if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law.
Division 51 of the ITAA 1997 provides that certain items of income are exempt from tax. However, section 55-5 of the ITAA 1997 states that any amounts or pensions paid under certain listed Acts or provisions will not be exempt.
The Military Superannuation and Benefits Act is one of the Acts listed in section 55-5 of the ITAA 1997 and therefore any amount or pension paid under that Act will not be exempt.
Consequently, the superannuation pension the taxpayer receives is not exempt from tax and will be included in the taxpayer's assessable income under section 27H of the ITAA 1936.