1 Is the withdrawal of the Member's account that was requested shortly before their death but will be paid after their death in a lump sum, a superannuation member benefit under subsection 307-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
1 No, the payment from the Member's account is a superannuation death benefit under subsection 307-5(4) of the ITAA 1997. This private ruling applies for the following period: Income year ending 30 June 20XX Income year ending 30 June 20XX The scheme commenced on: 1 July 20XX
This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect, and you cannot rely on it. The fact sheet has more information about relying on your private ruling. 1 The Member was over 65 years of age and eligible to withdraw the funds in their superannuation account. 2 On XX/XX/XXXX the Fund received an application for withdrawal of the balance of funds in full as a lump sum. The forms were submitted online. 3 The Member passed away on XX/XX/XXXX. On the same day the Fund sent a member statement to the Member. The balance within the fund on XX/XX/XXXX included a taxable component of $XXXXXX and a tax-free component of $XXXXXX. The Member nominated you and X other beneficiaries to receive the funds following the death of the Member.
4 On XX/XX/XXXX the Fund commenced the withdrawal payment process. As one of the first steps in the process, the Fund rang the Member's mobile number for the purpose of verifying the withdrawal request but there was no answer. A message was left asking for a call back to discuss the withdrawal request. The Fund also sent an email to the Member's email address advising that they attempted to call to discuss the recent withdrawal application and requested the Member to call back to discuss outstanding requirements. 5 On XX/XX/XXX the Fund once again attempted to contact the Member's mobile number to verify the withdrawal request. You answered the call and advised the Fund that the Member had passed away. The Fund then informed you that the withdrawal must be treated as a death benefit rather than a member withdrawal. You were dissatisfied with this decision noting that the Fund did not complete the payment in X business days. You were also dissatisfied that the Fund did not disclose the process of having to contact the Member before making the payment.
6 While the Fund provides that withdrawals are 'typically processed within X (business) days', it took them longer to commence the process. You therefore made a complaint to the Fund in relation to the timeframe. The Fund provided you the below complaint outcome: • There was adequate disclosure that the Fund may contact members to verify instructions or request additional information. While the fund aims to meet the X business days timeframe, it is not guaranteed that the timeframe is achieved. • Pursuant to relevant legislation and guidance, they are of the view that the benefit should be paid as a death benefit. 7 As of XX/XX/XXXX, the Fund had not paid any amounts from the Member's account to the Member or to the beneficiaries due to the disagreement relating to the classification of the payment.
Income Tax Assessment Act 1997 Division 301 Income Tax Assessment Act 1997 Division 302 Income Tax Assessment Act 1997 section 307-5 Income Tax Assessment Act 1997 section 307-65 Income Tax Assessment Act 1997 section 307-70 Income Tax Assessment Act 1997 subsection 995-1(1) Income Tax Assessment (1997 Act) Regulations 2021 Regulation 307-70.01 Income Tax Assessment (1997 Act) Regulations 2021 Regulation 307-70.02 Superannuation Industry (Supervision) Regulations 1994 Regulation 1.06 Superannuation Industry (Supervision) Regulations 1994 Regulation 6.12 Superannuation Industry (Supervision) Regulations 1994 Regulation 6.20 Superannuation Industry (Supervision) Regulations 1994 Regulation 6.21 Superannuation Industry (Supervision) Regulations 1994 Schedule 1 to the Table in Part 1 Detailed