Private ruling: Deductibility of personal superannuation contributions
Date of advice: 27 July 2015
Published: July 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction in respect of personal superannuation contributions for the 2014-15 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: You were employed for a period of time during the 2014-15 income year and received the following payments in respect of this employment: • Gross salary payments; • An amount salary sacrificed to superannuation; and • Unused leave and loading. You then ended your employment and became self-employed. You received income from your period of self-employment for the 2014-15 income year. You intend to make personal contributions to a complying superannuation fund, and claim a deduction for the 2014-15 income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-150. | Income Tax Assessment Act 1997 Section 290-160. | Income Tax Assessment Act 1997 Subsection 290-160(1). | Income Tax Assessment Act 1997 Subsection 290-160(2).

Reasons for decision: Summary: You will not satisfy the maximum earnings as an employee test under section 290-160 of the ITAA 1997 as more than 10% of your total assessable income, reportable fringe benefits total and reportable employer superannuation contributions are attributable to your 'employment' activities. Accordingly, you are not eligible to claim a deduction for personal superannuation contributions made in the 2014-15 income year as you will not satisfy all the conditions under section 290-150 of the ITAA 1997. | Detailed Reasoning - Personal superannuation contributions: In accordance with section 290-150 of the ITAA 1997, a person who makes contributions to a superannuation fund for the purpose of providing superannuation benefits for themselves, can claim a deduction for contributions in the income year the contributions are made. However, to deduct the contributions, the person must satisfy a number of conditions. Relevant to the present case is the maximum earnings as employee condition set out in section 290-160. Subsection 290-160(1) of the ITAA 1997 operates to apply the maximum earnings as an employee condition only if, in the income year in which the contribution is made, the person is engaged in any of the following activities (paragraph 290-160(1)(a)): • holding an office or appointment (for example, a director of a company); • performing functions or duties; • engaging in work; • doing acts or things; and the activities result in that person being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA). In this case, you were employed during the 2014-15 income year which makes you an employee for the purposes of the SGAA in the 2014-15 income year. Therefore the maximum earnings as an employee condition will apply to you. Subsection 290-160(2) of the ITAA 1997 prescribes that a deduction for personal contributions can only be claimed where the sum of your: • assessable income; • reportable fringe benefits total; and • reportable employer superannuation contributions; attributable to your 'employment' activities is less than 10% of the total of your assessable income, reportable fringe benefits total and reportable employer superannuation contributions. In this case, the amount attributable to your 'employment' activities comprised of your: • Gross salary payments; • An amount salary sacrificed to superannuation; and • Unused leave and loading. The total amount for you in the 2014-15 is comprised of your: • Self-employment income; • Gross salary payments; • An amount salary sacrificed to superannuation; and • Unused leave and loading. More than 10% of your total assessable income, reportable fringe benefits total and reportable employer superannuation contributions are attributable to your 'employment' activities. Therefore, you will not satisfy the maximum earnings as an employee condition under section 290-160 of the ITAA 1997. | Detailed Reasoning - Conclusion: Accordingly, you are not eligible to claim a deduction for personal superannuation contributions made in the 2014-15 income year as you will not satisfy all the conditions under section 290-150 of the ITAA 1997.