ASFA differs on ATO income stream ruling
The Association of Superannuation Funds of Australia (ASFA) has taken issue with an Australian Taxation Office (ATO) ruling on superannuation income streams, arguing that they do not necessarily cease on the death of a member.
In a submission lodged with the ATO last week, ASFA argues that despite the death of a member, a superannuation income stream still exists pending determination of the beneficiaries who are to receive some or all of the superannuation interest, and the form in which it is to be received.
"We do not agree that a superannuation income stream ceases when there is no longer a member who is entitled, or a dependent beneficiary of a member who is automatically entitled to be paid a superannuation income stream from a superannuation interest that supports a superannuation income stream," it said.
The ASFA submission said, in general terms, once an income stream commenced, it believed the income stream continued to exist under the Superannuation Industry (Supervision) Act regulations until such time as it was commuted to a lump sum or ceased to exist because the amount in the relevant interest had been completely exhausted.
The ASFA submission also warns the ATO be careful in determining the date from which its final ruling should apply, stating that the trustees of superannuation funds would experience considerable practical difficulties in complying with the ruling, particularly if it was retrospective to 1 July 2007.
"The ATO interpretation as outlined in the Draft Ruling differs significantly from that adopted by virtually all trustees of superannuation funds and other pension providers in their administration of pension products," the submission said.
AUTHOR
Mike Taylor
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