Private ruling: Deductibility of personal superannuation contribution
Published: January 2015
Ruling period: Income year ending 30 June 2014.
Date scheme commenced: 1 July 2013.

Ruling: Q1: Will an amount of X of personal contribution you make to your superannuation fund in the 2013-14 income year be considered tax deductible? | A1: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Due to ill health you ceased all employment in the 2012-13 income year. In the 2013-14 income year you received a payment which was a salary continuance insurance. You have made a personal contribution of X to a superannuation fund in the 2013-14 income year. You have also submitted the notice of intent (dated 2013-14 income year) to deduct to this superannuation fund, which it has acknowledged.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 26-55(2). | Income Tax Assessment Act 1997 Section 290-150. | Income Tax Assessment Act 1997 Subsection 290-150(2). | Income Tax Assessment Act 1997 Section 290-155. | Income Tax Assessment Act 1997 Section 290-160. | Income Tax Assessment Act 1997 Subsection 290-160(1). | Income Tax Assessment Act 1997 Paragraph 290-160(1)(a). | Income Tax Assessment Act 1997 Paragraph 290-160(1)(b). | Income Tax Assessment Act 1997 Subsection 290-160(2). | Income Tax Assessment Act 1997 Section 290-165. | Income Tax Assessment Act 1997 Subsection 290-165(2). | Income Tax Assessment Act 1997 Subsection 290-170.

Reasons for decision: Summary: The amount X of personal contribution you made to the Fund in the 2013-14 income year would be considered tax deductible. | Detailed Reasoning - Detailed reasoning: A person can claim a deduction for a personal superannuation contribution made to a complying superannuation fund or retirement savings account (RSA), for the purpose of providing superannuation benefits for themselves under section 290-150 of the ITAA 1997. However, the conditions listed under section 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: • Where applicable, you must not exceed the 'maximum earnings as employee condition'. • Where the contribution is made to a superannuation fund, the fund must be complying in the financial year that the contribution was made. • You must satisfy the age related conditions. • You must have given a valid notice of intent to the superannuation fund or RSA provider in the approved form by the required time and received acknowledgment from the fund. | Detailed Reasoning - Complying superannuation fund condition: The condition in section 290-155 of the ITAA 1997 requires that where the contribution is made to a superannuation fund, it must be made to a complying superannuation fund for the income year of the fund in which you made the contribution. In this instance, you made personal contributions to a complying superannuation fund. Therefore, you will satisfy this condition. | Detailed Reasoning - Maximum earnings as an employee condition: 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) of the ITAA 1997): • 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). You were not engaged in any form of work in the 2013-14 income year, therefore section 290-160 of the ITAA 1997 does not apply to you in that income year. | Detailed Reasoning - Age-related conditions: Under subsection 290-165(2) of the ITAA 1997, the ability to claim a deduction ceases for contributions that are made after 28 days from the end of the month in which the person making the contribution turns 75 years of age. As you were under age 75 during the 2013-14 income year you satisfy the age-related conditions. | Detailed Reasoning - Notice of intent to deduct conditions: Section 290-170 of the ITAA 1997 provides that you must give to the trustee of the Fund (the Fund Trustee) a valid notice, in the approved form, of their intention to claim a deduction in respect of the contribution In accordance with subsection 290-170(1) of the ITAA 1997, the notice must be given to the Fund Trustee by the earlier of the date of your income tax return being lodged or the end of the income year following the year in which the contribution was made. In addition, subsection 290-170(3) of the ITAA 1997 requires the Fund Trustee to acknowledge your notice without delay. In accordance with subsection 290-170(2) of the ITAA 1997, a notice will be valid as long as the following conditions are satisfied: • the notice is in respect of the contribution; • the notice is not for an amount covered by a previous notice; • at the time when the notice is given: i. the Taxpayer is a member of the fund; ii. the Fund Trustee holds the contribution (for example, a notice will not be valid if a partial roll-over of the superannuation benefit which includes the contribution covered in the notice has been made); iii. the Fund Trustee has not begun to pay a superannuation income stream based on the contribution; or • before the notice is given: i. a contributions splitting application has not been made in relation to the contribution; and; ii. The Fund trustee has not rejected the application. You have advised that a valid notice had been provided to the Fund Trustee of your intention to claim a deduction in respect of the proposed personal contributions. As you lodged a valid notice of intent with the Fund Trustee before your income tax return for the 2013-14 income year was lodged, and the trustee duly acknowledged your notice, the conditions under section 290-170 of the ITAA 1997 are satisfied. | Detailed Reasoning - Deduction limited by amount specified in notice: Section 290-175 of the ITAA 1997 states that the deduction cannot be more than the amount covered by the notice given under section 290-170 of the ITAA 1997. | Detailed Reasoning - Deduction limits: The allowable deduction is limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions (excluding previous years' tax losses and any deductions for farm management losses) from a taxpayer's assessable income. Therefore a deduction for personal superannuation contributions cannot add to, or create, a loss. | Detailed Reasoning - Conclusion: As you satisfy all the required conditions in Subdivision 290-C of the ITAA 1997, you can claim a deduction in the 2013-14 income year for a personal contribution of X you made to the Fund in that income year.