Private ruling: Deductibility of personal superannuation contributions
Date of advice: 22 September 2017
Published: February 2018
Ruling period: Income year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the Taxpayer entitled to claim a deduction for personal superannuation contributions made under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: The Taxpayer was employed for part of the income year. Subsequently, the Taxpayer received personal services income paid to an ABN. The Taxpayer made superannuation contributions during the income year. The Taxpayer’s income from employment was more than 10% of their total assessable income, fringe benefits and reportable employer superannuation contributions for the income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-150 | Income Tax Assessment Act 1997 Section 290-160

Reasons for decision: Summary: The Taxpayer has not satisfied the ‘maximum earnings test’ as specified in section 290-160 of the ITAA 1997. The Taxpayer will not be able to claim a deduction for personal superannuation contributions as not all of the necessary conditions have been satisfied. | Detailed Reasoning - Deduction for personal superannuation contributions: A person must satisfy the conditions in section 290-150 of the ITAA 1997 before they can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves. Subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 must also be satisfied. | Detailed Reasoning - Maximum earnings as employee condition: Relevantly, subsection 290-160(1) of the ITAA states that the maximum earnings as an employee condition applies if: (a) in the income year in which you make the contribution, you engage if any of these activities: (i) holding an office or appointment; (ii) performing functions or duties; (iii) engaging in work; (iv) doing acts or things; and (b) the activities that result in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA). As the Taxpayer was engaged in employment during the income year, the ‘maximum earnings’ test under section 290-160 of the ITAA 1997 will apply. Subsection 290-160(2) of the ITAA 1997 states: To deduct the contribution, less than 10% of the total of the following must be attributable to the activities: (a) your assessable income for the year; (b) your *reportable fringe benefits total for the income year; (c) the total of your *reportable employer superannuation contributions for the income year. *To find definitions of asterisked terms, see the Dictionary, starting at section 995-1 As more than 10% of the Taxpayer’s assessable income was attributable to employment activities, this condition will not be satisfied. The Taxpayer will not be able to claim a deduction for the personal superannuation contributions made.