Private ruling: Deductibility of Personal Superannuation Contributions
Published: June 2013
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can your client lodge a notice of intent to claim personal superannuation contributions under section 290-170 of the Income Tax Assessment Act 1997 (ITAA 1997) where the contributions have been rolled over to another superannuation fund? | A1: No. | Q2: Is your client entitled to claim a deduction for personal superannuation contributions under section 290-150 of the ITAA 1997 for the 20YY-ZZ income year? | A2: No.

Relevant facts and circumstances: During the 20XX-YY income year, your client made several superannuation contributions into his superannuation fund (Fund 1): Fund 1 is a complying superannuation fund. During the 20YY-ZZ income year, your client rolled his full superannuation fund balance in Fund 1 to another complying superannuation fund (Fund 2). Your client intended to claim a deduction for the contributions made in the 20XX-YY income year. Your client provided a written notice to Fund 2, stating his intention to claim a deduction in the 20XX-YY income year in respect of his contributions. However, Fund 2 did not accept your client's written notice to allow him to claim a deduction in the 20YY income year. Your client has not lodged his 20YY income tax return. Your client is a sole trader whose assessable income for the 20XX-YY income year did not include any exempt income or fringe benefits.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-170 | Income Tax Assessment Act 1997 Subsection 290-170(2) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: The notice that your client submitted to Fund 2 is invalid and the successor fund provisions do not apply. As the conditions in section 290-170 of the ITAA 1997 have not been satisfied, your client will not be able to claim a deduction for his personal contributions made in the 2011-12 income year. | Detailed Reasoning - Detailed reasoning: Deductions for personal superannuation contributions A person must satisfy the conditions in section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) before they can claim a deduction in respect of personal contributions made for the purpose of providing superannuation benefits for themselves, or their dependants after their death. Further, subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must all be satisfied before the person can claim a deduction for the contributions made in that income year. These conditions are explained in detail in Taxation Ruling TR 2010/1 (TR 2010/1) titled 'Income Tax: superannuation contributions' . In your client's case, the relevant condition to be examined is outlined in section 290-170 of the Income Tax Assessment Act 1997 (ITAA 1997). Notice of intent to deduct conditions Section 290-170 of the ITAA 1997 states in part: To deduct the contribution, or a part of the contribution: (a) you must give to the trustee of the fund or the RSA provider a valid notice, in the approved form, of your intention to claim the deduction; and (b) the notice must be given before: (i) if you have lodged your income tax return for the income year in which the contribution was made on a day before the end of the next income year - the end of that day; or (ii) otherwise - the end of the next income year; and (c) the trustee or provider must have given you an acknowledgment of receipt of the notice. The notice is not valid if at least one of these conditions is satisfied: (a) the notice is not in respect of the contribution; (b) the notice includes all or a part of an amount covered by a previous notice; (c) when you gave the notice: (i) you were not a member of the fund or the holder of the RSA; or (ii) the trustee or RSA provider no longer holds the contribution; or (iii) the trustee or RSA provider has begun to pay a superannuation income stream based in whole or part on the contribution; Subsections (1) to (4) and section 290-180 apply as if: (a) references in those provisions to the fund or RSA were references to a successor fund; and (b) references in those provisions to the trustee or RSA provider were references to the trustee or RSA provider of the successor fund; if (c) after making your contribution, all of the superannuation interest to which the notice relates is transferred to the successor fund; and (d) you have not previously given a valid notice under this section to any superannuation provider in relation to the contribution. Fund and RSA impediments In respect of paragraph 290-270(2)(c) of the ITAA 1997, a notice will be invalid where the trustee or RSA no longer holds the contribution. This may occur where a taxpayer has rolled over their superannuation benefits which include the contribution to another superannuation fund. In the facts, you stated that your client rolled over his full superannuation fund balance from Fund 1 to Fund 2 during the 20XX-YY income year. You also stated that during the 20XX-YY income year, your client provided a notice to the trustee of Fund 2 stating his intention to claim tax deductions in respect of the personal contributions made in the 20XX-YY income year. During the same income year, your client was advised by the trustee of Fund 2 that they could not provide written confirmation that your client could deduct the personal contributions made. Accordingly, the notice your client provided to Fund 2 is considered to be invalid in this instance. To be valid, the notice needed to be lodged to the trustee of Fund 1 before the monies were rolled over. Application to successor funds In respect of subsection 290-170(5) of the ITAA 1997, the Commissioner has expressed his view in Taxation Ruling TR 2010/1 titled: 'Income Tax: superannuation contributions'. In paragraph 276, the following is stated: 276. A superannuation provider will no longer hold a contribution if a member's interest in the fund has been transferred to a successor fund. The member cannot give a notice of intention to deduct to the trustee of the fund that accepted the member's contribution after the person's interest has been transferred from that fund. However, a valid notice can be given to the trustee or RSA provider of a successor fund on or after 17 November 2010 if all of the member's interest to which the notice relates has been transferred to the successor fund and the member has not previously given a valid notice to any superannuation provider in relation to the contribution. In other words, subsection 290-175(5) of the ITAA 1997 allows members of the original superannuation fund to provide a deduction notice on or after the 17 November 2010 to the successor superannuation fund for contributions made to the original fund after 1 July 2011. After making the contribution, all of the member's superannuation interest in the original fund must be transferred to the successor fund and the member must not have previously provided a valid notice to any superannuation provider in relation to the contribution. The 'successor fund' is defined in subsection 995-1(1) of the ITAA 1997 as: successor fund, in relation to a transfer of a superannuation interest of a member of a superannuation fund, or a holder of an *RSA, (the original fund ) means a superannuation fund or RSA that satisfies the following conditions: (a) the fund or RSA confers on the member or holder equivalent rights to the rights that the member or holder had under the original fund in respect of the interest; (b) before the transfer, the *superannuation provider of the fund or RSA has agreed with the superannuation provider of the original fund that the fund or RSA will confer on the member or holder equivalent rights to the rights that the member or holder had under the original fund in respect of the interest. Ordinarily, a 'successor fund transfer' would involve bulk transfers of members in one superannuation fund another, usually at instigation of the trustee rather than the member. In your client's case, the rollover of personal contributions from Fund 1 to Fund 2 does not meet the definition of a 'successor fund transfer' as it represents an ordinary superannuation rollover where a member elects to have their benefits moved from one complying superannuation entity to another complying superannuation entity. Accordingly, subsection 290-170(2) of the ITAA 1997 does not apply in your client's case. In conclusion, the notice that your client submitted to Fund 2 is invalid and the successor fund provisions do not apply. Therefore, as the conditions in section 290-170 of the ITAA 1997 have not been satisfied, your client will not be able to claim a deduction for his personal contributions made in the 20XX-YY income year.