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Tax office tipped to release new ruling

The ATO will release a public ruling on a transition to retirement income stream (TRIS) strategy involving payments being taxed as a lump sum, Colonial First State has predicted.

News Miranda Brownlee 21 January 2016
— 1 minute read

Speaking to AccountantsDaily's sister title SMSF Adviser, Colonial First State executive manager Craig Day said that following the issue of a private binding ruling by the ATO last year, allowing the use of this strategy, it is likely the tax office will now be dealing with a large number of private binding ruling (PBR) requests on the same issue.


Mr Day said the ATO will be considering how it can efficiently respond to all these requests and will look to release further guidance to clarify the issue rather than having to deal with a large number of PBR requests separately.

“I would expect a clarification in the form of a ruling from the commissioner,” said Mr Day.

While the ATO released information last week highlighting the potential problems and ramifications of the strategy, Mr Day said this does not represent an ATO position on it.

The information stated, among other things, that “electing for a TRIS payment to be treated as a super lump sum for income tax purposes may affect the amount of the SMSF’s exempt current pension income for an income year and whether particular fund assets are segregated current pension assets”.

“What this appears to say is that the ATO has identified that as a potential issue but [they] don’t have a position on it yet,” said Mr Day.

“Until this issue is clarified it would be prudent, if you wanted to implement this strategy, to seek your own private binding ruling.”

He also warned that if the ATO concludes that treating TRIS payments as a super lump sum for income tax purposes does affect the amount of exempt current pension income, then this could also impact a fund’s ability to claim exempt current pension income where they have taken a commutation out of the fund.

“It’s completely different to this [TRIS] strategy but where they’ve actually commuted and taken a lump sum and elected for it to be taken as a lump sum that would also appear to be impacted by what they’re saying,” Mr Day said.

The ATO will have to take this into consideration when it formalises its view, he added.

Tax office tipped to release new ruling
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