Private ruling: Deductibility of personal superannuation contributions
Date of advice: 17 December 2015
Published: March 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is the taxpayer eligible to claim a deduction under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) for a personal superannuation contribution made in the 20XX-YY income year? | A1: No

Relevant facts and circumstances: The taxpayer is over 65 years of age. The taxpayer satisfied the work test in the 20XX-YY income year. The taxpayer made a contribution to a complying superannuation fund (the Fund) during the 20XX-YY income year. Soon after making the contribution, the taxpayer left Australia for an overseas holiday. Soon after receiving the payment, the Fund sent a letter to the taxpayer advising that the Fund is required to confirm the number of hours the taxpayer worked per week. The taxpayer was asked to complete and sign an "Eligibility to Contribute Form." The letter further advised that the Fund is unable to hold monies for more than 30 days and that they will return the monies to their source if the relevant information is not provided within the time period. The taxpayer returned to Australia during the 20YY-ZZ income year. The taxpayer completed the form but was unable to send it back to the Fund immediately as it was the weekend. The taxpayer contacted the Fund on the following Monday to advise them of the circumstances but was informed that there was nothing the Fund could do as 30 days had elapsed. On the following Monday, the Fund sent the taxpayer a letter informing that they were unable to accept the contribution. A cheque representing the refund of the contribution was enclosed with the letter.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 290-C | Income Tax Assessment Act 1997 Section 290-150 | Income Tax Assessment Act 1997 Subsection 290-150(2) | Income Tax Assessment Act 1997 Subsection 290-150(3) | Income Tax Assessment Act 1997 Section 290-155 | Income Tax Assessment Act 1997 Subsection 290-160(1) | Income Tax Assessment Act 1997 Subsection 290-160(2) | Income Tax Assessment Act 1997 Subsection 290-165(2) | Income Tax Assessment Act 1997 Section 290-170

Reasons for decision: Summary: Based on the information provided, the taxpayer has not satisfied all of the conditions for claiming a deduction for the personal superannuation contribution in the 20XX-YY income year. | 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 under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997). Subsection 290-150(2) of the ITAA 1997 specifically states that: (2) However, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must also be satisfied for you 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. | Detailed Reasoning - Maximum earnings as an employee condition: Subsection 290-160(1) of the ITAA 1997 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 duties; (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). For those persons who fall under the requirements outlined above, subsection 290-160(2) of the ITAA 1997 prescribes that a deduction for personal contributions can only be claimed where the sum of their: • assessable income • reportable fringe benefits total and • reportable employer superannuation contributions attributable to the employment activities is less than 10% of the total of that person's assessable income, reportable fringe benefits total and reportable employer superannuation contributions. This calculation is referred to as the maximum earnings test. | Detailed Reasoning - Age-related condition: The condition under subsection 290-165(2) of the ITAA 1997 requires that the contribution be made no later than 28 days from the end of the month in which the person making the contribution turns 75 years of age. | Detailed Reasoning - Notice of intent to deduct conditions: Section 290-170 of the ITAA 1997 requires a person to provide a valid notice, in the approved form, of their intention to claim a deduction to the trustee of their superannuation fund. The notice must be given before the earlier of: a. the date that person lodges their income tax return for the income year in which the contributions were made; or b. the end of the income year following the year in which the contributions were made. In addition, that person must also have been given an acknowledgement of the notice by the trustee of the superannuation fund. | Detailed Reasoning - The taxpayer's case: According to the facts in the present case, the taxpayer was not able to satisfy all of the conditions outlined above. The contribution that was made in the 20XX-YY income year was not accepted by the Fund but instead was returned to the taxpayer. In addition, the condition under section 290-170 of the ITAA 1997 has not been met as the Fund has not provided the taxpayer with an acknowledgment of a valid notice. | Detailed Reasoning - Other relevant comments: The legislation in sections 290-150 to 290-170 of the ITAA 1997 is quite specific and clearly outlines the relevant conditions that must be satisfied before a deduction can be claimed. Furthermore, there is no discretion under subdivision 290-C of the ITAA 1997 or anywhere else in the tax legislation that would allow the Commissioner to alter the conditions for deducting personal superannuation contributions. If the taxpayer wishes, they may choose to contribute the amount that was refunded to them. If the taxpayer satisfies the relevant conditions, the taxpayer will be able to claim a deduction for the contribution. However, according to subsection 290-150(3) of the ITAA 1997, the deduction must necessarily be for the 20YY-ZZincome year since: (3) You can deduct the contribution only for the income year in which you made the contribution.