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PBR for tax-free TRIS recommended

Taxpayers interested in making their transition-to-retirement income stream (TRIS) payments tax free by treating them as a lump sum have been warned by an expert SMSF lawyer to obtain a private binding ruling (PBR) before pursuing the strategy.

If someone is between preservation age and 60, generally TRIS payments are taxable.

However, regulation 995-1.03 under the Superannuation Industry (Supervision) Regulations suggests there was a way for them to be treated as a lump sum, which in turn can make the amounts tax free under the low rate cap amount.

DBA Lawyers director Bryce Figot said a recent article suggested the ATO has issued a PBR confirming the strategy was possible.

However he added there had been conflicting material as to whether a TRIS payment could be treated as a lump sum.

“The ATO were asked this question in 2009,” Figot said.

“Their response suggested that the ATO don’t allow this strategy.

“Further, even if one taxpayer receives a positive PBR ruling, no other taxpayer can rely on it.”

In addition, Figot said the explanatory statement that accompanied reg 995-1.03 stated “an amount which a person elects to take as a lump sum does not count against the minimum drawdown requirements”.

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