TRIS payments taxed as lump sums … and tax free under low rate cap amount

If someone is between preservation age and 60, generally TRIS payments are taxable. However, reg 995-1.03 suggests that there’s a way for them to be treated as a lump sum … this can make the amounts tax free under the low rate cap amount.
A recent article suggests that the ATO have issued a private binding ruling confirming that this is possible, even if the TRIS is comprised entirely of preserved benefits.
For taxpayers who are interested in pursuing this, they should strongly consider obtaining a private binding ruling.

Why should taxpayers obtain a private binding ruling?

There is conflicting materials as to whether it’s possible for a TRIS payment to be treated as a lump sum.
The ATO were asked this question in 2009. Their response suggested that the ATO don’t allow this strategy.
Further, even if one taxpayer receives a positive private binding ruling, no other taxpayer can rely on it.
Also, the explanatory statement that accompanied reg 995-1.03 stated that ‘[a]n amount which a person elects to take as a lump-sum does not count against the minimum draw down requirements.’

Instructing DBA Lawyers to draft private binding rulings

DBA Lawyers can draft private binding rulings in this regard for taxpayers or their tax agent to submit to the ATO.
Where we are engaged by Friday 29 January 2016, we will charge $3,000 including GST for each private binding ruling for each taxpayer.
To engage DBA Lawyers please contact:

• Bryce Figot (email: [email protected] direct: 03 9092 9406) or
• William Fettes (email: [email protected] direct: 03 9092 9418).

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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.