This Determination, released on Wed 9.4.2014, sets out the circumstances in which a bank account of a complying superannuation fund is a “segregated current pension asset” under s 295-385 of the ITAA 1997. The application of the definition to a bank account is a key requirement for a self-managed superannuation fund (SMSF) to qualify for a tax exemption on certain income (including realised net capital gains) derived from current pension assets using the segregated method.
Where a bank account includes “sub accounts” that record, maintain and report all transactions and balances on a sub-account basis, the Commissioner accepts that a sub-account held for the relevant sole purpose may be a segregated current pension asset under s 295-385. The Commissioner’s interpretation applies to actual sub-accounts (which are formally maintained by a bank) and also to informal or notional sub-accounts (where proper accounting records are maintained by other non-bank parties, eg a trustee of a superannuation fund).
To this end, the Tax Office has altered its previous view in Draft Determination TD 2013/D7 (withdrawn on 11 December 2013) where it had ruled that money standing to the credit of a bank account was incapable of being segregated due to a bank account being a single chose in action.
DATE OF EFFECT: The Determination applies both before and after its date of issue.
[LTN 68, 9/4/14]