Taxation Law Assignment: Analysis of Piper's Taxation and Retirement

This taxation law assignment examines the tax implications for Piper, a sessional lecturer, regarding her foreign retirement fund and its transfer to an Australian bank account. The assignment addresses the potential tax liabilities associated with the transfer, emphasizing that any amount transferred from the foreign fund is to be included in Piper's taxable income and taxed at the marginal tax rate. It explores strategies to mitigate tax obligations, including estate planning and tax planning, such as re-contribution strategies to lower the assessable component and utilizing the super account for income streams after retirement. The assignment highlights the importance of considering age, tax-free portions, and the potential tax offsets available. It also references key sources on financial competence, superannuation, and post-retirement policies, providing a comprehensive analysis of Piper's tax situation.

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION LAW
Table of Contents
Answer to question 3:.................................................................................................................2
References:.................................................................................................................................5

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Answer to question 3:
As stated by the Australian taxation office the superannuation represents the money
that a taxpayer has kept it aside during their working life so that they can use it during
retirement. As stated within the Australian taxation law, any amount that a taxpayer has
transferred from the foreign retirement fund might attract tax liability1. On the basis of the
rules of the foreign super fund rules, a taxpayer may be considered eligible to transfer the
retirement amount to;
a. A complying superannuation fund in Australia
b. Transfer themselves
A taxpayer may have to pay the tax on the all the amounts in the fund or to some parts
of the funds. If an individual taxpayer transfers the amount to the complying Australian super
fund, the amount would normally count inside their contribution caps and they may also have
to pay taxes on the excess amount of contributions. If the lump sum amount from the foreign
retirement fund is paid to the taxpayer, then the taxable amount of the payment and any kind
of applicable fund earnings is required to be included in their taxable earnings and will also
be taxed on the basis of the marginal tax rate2. In addition to this, any sum relating to the
foreign retirement funds that is transferred and exceeds the amount which was vested to the
taxpayer during the time of transfer, then in such a situation the taxpayer is under obligation
of including in their personal taxable income.
1 Chant, Warren, Mano Mohankumar, and Geoff Warren. "MySuper: a new landscape for
default superannuation funds." CIFR Paper 020 (2014).
2 Sneddon, Thomas, et al. "Superannuation drawdown behaviour." JASSA 2 (2016): 42.

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The current case facts obtained suggest that Piper is looking forward to her
investment that she has made in the retirement annuity and transferring the cash to her
Australian bank account. Piper here is advised that any amount that she will be receiving
from her foreign fund transfer at the time of transfer should be included in her personal
taxable income. The earnings will be will be taxed for Piper on the basis of the marginal tax
rate3.
However, to legitimately lower the tax liability re-consideration strategy can be
undertaken by Piper. As Piper is aging below 60 she may be required to pay tax on the lump
sum withdrawal on their super fund. There are certain number of ways that Piper is
recommended to adopt as this will be useful in lowering her tax liability.
Estate Planning:
On the death of the taxpayer, the taxable component can be paid to the super account
to someone that may be treated as the non-tax dependent under the taxation laws. By making
use of the re-contribution strategy Piper can lower her assessable component of their
retirement benefit as this will help in lowering the tax that is payable by the non-tax
dependent on the beneficiaries.
Tax Planning:
As Piper is presently ages under 60, she can start using the money in their super
account to pay within the income stream when she retires. Additionally, the taxable
3 Bateman, Hazel, et al. "Financial competence, risk presentation and retirement portfolio
preferences." Journal of Pension Economics & Finance 13.1 (2014): 27-61.

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component of the income stream will be taxed based on marginal rate and will be eligible for
15% tax offset as well4. The tax free portion can be used by Piper for lowering her tax bill.
4 Productivity Commission. "Superannuation policy for post-retirement." (2015).

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References:
Bateman, Hazel, et al. "Financial competence, risk presentation and retirement portfolio
preferences." Journal of Pension Economics & Finance 13.1 (2014): 27-61.
Chant, Warren, Mano Mohankumar, and Geoff Warren. "MySuper: a new landscape for
default superannuation funds." CIFR Paper 020 (2014).
Productivity Commission. "Superannuation policy for post-retirement." (2015).
Sneddon, Thomas, et al. "Superannuation drawdown behaviour." JASSA 2 (2016): 42.