Private ruling: Superannuation deduction
Published: November 2014
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you eligible to claim a deduction for personal superannuation contributions made to a complying fund? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-150 | Income Tax Assessment Act 1997 Section 290-155 | Income Tax Assessment Act 1997 Section 290-160 | Income Tax Assessment Act 1997 Section 290-165 | Income Tax Assessment Act 1997 Section 290-170 | Income Tax Assessment Act 1997 Section 26-55 | Superannuation Guarantee (Administration) Act 1992 Section 12

Reasons for decision: Detailed Reasoning - Personal deductible superannuation contributions: You can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for yourself under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997). However, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must also be satisfied for the person to claim the deduction. | 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 in which you made the contribution. In your case, you make personal superannuation contributions to a complying superannuation fund. Therefore the complying superannuation fund condition is satisfied. | Detailed Reasoning - Maximum earnings as an employee condition: Where a person is engaged in activities during the income year that would make them an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA) then they will need to satisfy the 10% rule in order to claim a deduction for their personal superannuation contributions (section 290-160 of the ITAA 1997). As highlighted in paragraph 58 of Taxation Ruling TR 2010/ 1 Income tax: superannuation contributions, those persons who have not engaged in an 'employment' activity in the income year in which they make a contribution, such as persons who although receiving workers' compensation payments are not employed at any time during the year, are not subject to the maximum earnings test. In your case, you ceased employment with an employer on grounds of permanent incapacity. Since then you have not been engaged in activities that would make you an employee for the purposes of the SGAA. As you are not an employeee, section 290-160 of the ITAA 1997 is not relevant in your circumstances and does not apply. | 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 you turn 75 years of age. You satisfy the age-related conditions. | Detailed Reasoning - Notice of intent to deduct conditions: Section 290-170 of the ITAA 1997 requires you to provide a valid notice of your intention to claim the deduction to the trustee of the superannuation fund. The notice must be given before the earlier of: • the date you lodge 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; or • the end of the income year following the year in which the contribution was made. In addition, you must also have been given an acknowledgement of the valid notice by the trustee of the superannuation fund. In your case, the trustee of the Fund will be provided a valid written notice which states your intention to claim a deduction for personal superannuation contributions being made in the relevant income year and the trustee will provide you without delay a notice acknowledging receipt of your notice prior to you lodging your income tax return. Therefore, the notice of intent to deduct conditions under section 290-170 of the ITAA 1997 will be satisfied. | Detailed Reasoning - Deduction limits: Your allowable deduction for personal superannuation contributions 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 year's tax losses and any deductions for farm management losses) from your assessable income. Thus a deduction for personal superannuation contributions cannot add to or create a loss. For the 2014-15 financial year the concessional contributions cap is $35,000 for all individuals. Contributions over the cap are subject to excess contributions tax. Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions claimed as a tax deduction. | Detailed Reasoning - Conclusion: As you satisfy all the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 you are entitled to claim a deduction for concessional (personal) superannuation contributions made provided the deduction does not add to or create a tax loss.

Relevant facts: Your last employment activity was terminated on grounds of permanent incapacity. | You will not be engaged in any eligible employment activity that would give rise to yourself being treated as an employee. | You receive workers compensation payments due to your incapacity. | The compensation is reported in your income tax return. | You are a member of a complying self-managed superannuation fund. | You make a contribution to the Fund each year. | You provide the trustee of the Fund with a valid notice in the approved form of your intention to claim a deduction for the personal contributions made in the income year, and the trustee acknowledges this notice prior to the lodging of your income tax return. | You are under 75 years of age.