In this way, once finalised, it will replace the comments within existing Taxation Ruling TR 93/17 insofar as that ruling deals with these apportionment issues. It is proposed to have application from the first income year of entities that commences on or after 1 July 2014.
TR 93/17 also deals with broader issues in respect of the deductibility of expenses incurred by a superannuation entity, and a further draft Ruling to replace TR 93/17 on these broader issues is scheduled for issue for comment on 12 March 2014.
The issues dealt with by both draft Rulings are critical to the taxation affairs of all superannuation entities, large or small, as they go to the heart of whether certain expenses are deductible in whole or in part. The question of apportionment is of particular importance to superannuation entities that derive exempt income, for example investment income relating to current pension liabilities.
Unlike TR 93/17, TR 2013/D7 provides five separate examples as to how apportionment may work in a range of circumstances, and to this extent, it may provide the industry with greater clarity as to the methodologies for apportionment that the Australian Taxation Office (ATO) will accept. However, the examples also indicate that the ATO may be retreating from previous positions taken, including the extent to which successor fund transfers are taken into account in apportionment calculations.
All funds deriving exempt income will need to review their present approach to apportionment, to ensure it continues to be appropriate after 1 July 2014.