Private ruling: a deduction for personal superannuation contributions
Published: October 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you able to claim a deduction for personal superannuation contributions made in the 2010-11 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You are currently working overseas as a volunteer for an Australian volunteer group in an overseas country. You sold your business. You made a personal superannuation contribution (the contribution amount) to your superannuation fund (the Fund), a complying superannuation fund, in the relevant income year. You became aware that the contribution amount was put into your member account as an employer contribution (salary sacrifice) instead of a deductible personal superannuation contribution for the relevant income year. You attempted to contact the Fund by email on three occasions and also via their website to rectify this error prior to 30 June 2012 but ultimately received notification from the Fund that you need to send your request to them by facsimile. You were unable to do so as you are located in a very remote rural area in the overseas country where a facsimile machine is not available. You asked your tax agent to contact the Fund regarding this correction. The Fund provided a response to your tax agent by email which stated: · there was a correction pending on your member account as requested by you to change the contribution amount from employer contributions to non-concessional contributions. · the Fund had attempted to contact you to confirm if the change request is because you want to claim a tax deduction and whether you had lodged your relevant year income tax return as the Fund would not be able to process a section 290 notice of intent to claim a tax deduction if your relevant year income tax return was already lodged. Your tax agent responded to the Fund to advise that your relevant year income tax return had not been lodged as your tax agent was awaiting the Fund's confirmation that the correction on the contribution amount had been made as per your request. Your tax agent also sent a notice of intent to claim a deduction form to the Fund for the contribution amount in respect of the relevant income year. Subsequent further requests were made by your tax agent to the Fund to confirm that the pending correction (as above) had been made and to verify whether the Fund had acknowledged your notice of intent to claim the contribution amount as a deduction in your relevant year income tax return. The Fund provided your tax agent (by email) with the following details of the internal action taken by their contributions team with regard to your correction request: · there was a correction pending on your request in relation to the contribution amount · the note on your member account was that the correction was awaiting confirmation regarding your relevant year income tax return. · that the correction will be able to be completed, however the cut off to process a notice of intent to claim request has passed for the relevant financial year. · the correction was subsequently completed for the contribution amount · the contribution amount was posted as a salary sacrifice contribution and the correction was done to treat the contribution amount as a member voluntary contribution. Your tax agent advised your income details for the relevant income year. Your tax agent contacted the Fund again regarding whether the correction made on the contribution amount meant the Fund had acknowledged your notice of intent to claim the deduction for the relevant income year. Your tax agent subsequently advised the following in email: · the Fund has not acknowledged your notice of intent to claim the deduction in respect of the contribution amount prior to 30 June 20XX as they did not receive the notice of intent to claim in the correct format by 30 June 20XX. · they have allocated the contribution amount as a member voluntary contribution at this stage.

Relevant legislative provisions: Section 290-150 of the Income Tax Assessment Act 1997 | Subsection 290-150(1) of the Income Tax Assessment Act 1997 | Subsection 290-150(2) of the Income Tax Assessment Act 1997 | Subsection 290-150(3) of the Income Tax Assessment Act 1997 | Section 290-155 of the Income Tax Assessment Act 1997 | Section 290-160 of the Income Tax Assessment Act 1997 | Section 290-165 of the Income Tax Assessment Act 1997 | Section 290-170 of the Income Tax Assessment Act 1997 | Subsection 290-170(1) of the Income Tax Assessment Act 1997 | Subsection 290-170(3) of the Income Tax Assessment Act 1997 | Section 12 of the Superannuation Guarantee (Administration) Act 1992

Reasons for decision: Summary: You are not eligible to claim a deduction for the personal superannuation contributions made for the relevant income year as you did not meet all of the conditions for claiming the deduction as required by subsection 290-150(2) of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Personal deductible superannuation contributions:: A person can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves,(or their dependants after their death) under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997). However, the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 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 of the fund in which the contribution is made. In this case, on the basis of the information provided, the contribution amount was made your superannuation fund (the Fund) which is a complying superannuation fund. Therefore, this requirement is satisfied. | Detailed Reasoning - Maximum earnings as an employee condition:: The condition in section 290-160 of the ITAA 1997 requires that if a taxpayer is engaged in any activities that result in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA), then less than 10% of the total of the following must be attributable to those activities: o their assessable income for the income year, o their reportable fringe benefits total for the income year o the total of their reportable employer superannuation contributions for the income year Subsection 290-160(1) states: This section applies if: (a) in the income year in which you make the contribution, you engage in any of these activities: (i) holding an office or appointment; (ii) performing functions or appointment; (iii) engaging in work; (iv) doing acts or things; and (b) the activities result in you being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that Act had not been enacted). Subsection 290-160(2) requires that your income is less than 10% of: · the total of your assessable income for the income year, · your reportable fringe benefits for the income year; and · the total of your reportable employer superannuation contributions for the income year. Based on the information as provided by your tax agent in respect of your income for the relevant income year, you meet the requirement of the subsection 290-160(2) of the ITAA 1997. | 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. Based on the information provided, you meet this age-related condition. | Detailed Reasoning - Notice of intent to deduct conditions:: Section 290-170 of the ITAA 1997 requires a person to provide a valid notice of their intention to claim the deduction to the trustee of their 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; 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 notice by the trustee of the superannuation fund. Subsection 290-170(1) states: 290-170(1) To deduct the contribution, or 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 acknowledgement of receipt of the notice. A notice will be valid as long as the following conditions apply: · the notice is in respect of the contributions; · the notice is not for an amount covered by a previous notice; · at the time when the notice is given: o you are a member of the fund or the holder of the retirement savings account (RSA); o the trustee or RSA provider 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); o the trustee or RSA provider has not begun to pay a superannuation income stream based on the contribution; or · before the notice is given: o a contributions splitting application has not been made in relation to the contribution; and; o the trustee or RSA provider to which you made the application has not rejected the application. From the information provided, the contribution amount was made in the relevant income year and you have not lodged your income tax return for the relevant income year. Therefore the notice of intent to claim the deduction in respect of the contribution amount was required to be given to your superannuation fund in the approved form by 30 June 20XX, that is, by the end of the income year following the year in which the contribution was made in accordance with subsection 290-170(1) of the ITAA 1997. Your tax agent advised that your superannuation fund has confirmed that they have not acknowledged your intent to claim the deduction in respect of the contribution amount prior to 30 June 20XX as they did not receive the notice of intent to claim the deduction in the correct format by 30 June 20XX. Therefore you have not met the condition requirement of subsection 290-170(1) of the ITAA 1997 in order to be eligible to claim the deduction. It is noted that you had difficulties in contacting your superannuation fund whilst you were working overseas. However, in order to claim the deduction for the contribution amount, all of the conditions as required by subsection 290-150(2) must be satisfied including the condition in subsection 290-170(1) as explained above. In addition, the ITAA 1997 does not contain a legislative provision which would permit the Commissioner to exercise a discretion to disregard or remove the notice requirement of subsection 290-170(1) in order to allow your claim for the deduction. Consequently, on the basis of the information you are not eligible to claim the deduction for the contribution amount made to the Fund in your income tax return for the relevant income year.

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