Private ruling: Timing of superannuation contributions
Published: December 2013
Ruling period: 2012-13 income year
Date scheme commenced: 1 July 2012.

Ruling: Q1: 1. Were the personal superannuation contributions for each member made in the 2012-13 income year? 2. Were the personal superannuation contributions for each member made in the 2013-14 income year? | A1: 1. No. 2. Yes.

Relevant facts and circumstances: 1. You are the trustee for a self-managed superannuation fund (the Fund). 2. The two members of the Fund had decided to transfer amounts in respect of each member from their personal bank account (PB account 1) during June 2013 as personal taxable contributions. 3. However, they wrongly deposited the amounts to another personal bank account (PB account 2) instead of to the Fund's bank account. 4. It was subsequently realised and immediately ratified by transferring the total amounts from their PB account 2 to the Fund's bank account in July 2013. 5. You lodged a private ruling application for the Fund to treat the amounts which were wrongly deposited to the members' PB account 2 and the subsequent transfer of the amounts from PB account 2 to the Fund's bank account as contributions made to the Fund in the 2012-13 income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-150. | Income Tax Assessment Act 1997 Subsection 290-150(1). | Income Tax Assessment Act 1997 Subsection 290-150(2). | Income Tax Assessment Act 1997 Subsection 290-150(3)

Reasons for decision: Summary: 6. The contributions were transferred to the Fund's bank account in July 2013 and therefore was received by the Fund after 30 June 2013. 7. The contributions were not made in the 2012-13 income year but in the 2013-14 income year as the contributions were not credited to the Fund's bank account until July 2013 which is in the 2013-14 income year. | Detailed Reasoning - Personal deductible superannuation contributions:: 8. 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). 9. While your question is about when a contribution is made and therefore not strictly about whether the members can claim a deduction for personal superannuation contributions, section 290-150 of the ITAA 1997 is still relevant. 10. A person can only claim a deduction for personal contributions made to a superannuation fund where all conditions under section 290-150 of the ITAA 1997 have been satisfied. 11. Section 290-150 of the ITAA 1997 states in part: (1) You can deduct a contribution you make to a superannuation fund, or an RSA, for the purpose of providing superannuation benefits for yourself (regardless whether the benefits are payable to your SIS dependants if you die before or after becoming entitled to receive the benefits). (2) However, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must also be satisfied for you to deduct the contribution. (3) You can deduct the contribution only for the income year in which you made the contribution. … 12. Subsection 290-150(3) of the ITAA 1997 clearly states that a taxpayer may only deduct contributions in the income year in which they are made. 13. Taxation Ruling TR 2010/1 entitled ' Income tax: superannuation contributions' sets out the Commissioner's view on contributions made to a superannuation fund, an approved deposit fund or a retirement savings account. 14. Item 2 of paragraph 13 of TR 2010/1 states that if funds are transferred by making an electronic transfer of funds to the superannuation provider then the contribution is made when the funds are credited to the superannuation provider's account. 15. In relation to when a superannuation contribution is made TR2010/1 goes on to state at paragraphs 182 and 183: 182. A superannuation contribution is made when the capital of the fund is increased. As explained in paragraphs 183 to 210 of this Ruling, the contribution may be made when an amount is received, or ownership of an asset is obtained or the fund otherwise obtains the benefit of an amount. | Detailed Reasoning - Contributions of funds: 183. A contribution of funds as cash or an electronic funds transfer, is made when the amount is received by the superannuation provider or credited to the relevant account. 16. As such, it is not until an amount is credited to a bank account of the superannuation provider that a contribution will be taken to be made. That is, a fund member is only taken to have made a contribution to their superannuation fund when the superannuation fund receives it. | Detailed Reasoning - Applying the law to your circumstances: 17. You have advised the members of the Fund intended to make a personal superannuation contribution in June 2013 but wrongly deposited the amounts into their own personal bank account instead of the Fund's bank account on that day. 18. As a result, the Fund did not receive the contributions until the mistake was realised and ratified in July 2013 when the amounts were transferred to the Fund's bank account. The contributions are considered to have been received by the Fund at that time as this was when the contributions were credited to the Fund's bank account. 19. Accordingly, the members' contributions were not made to the Fund in the 2012-13 income year but made in the 2013-14 income year. 20. The income tax provisions in the ITAA 1997 that applies to the deductibility of a personal superannuation contribution itself is quite specific and allows a deduction subject to satisfying the necessary legislative provisions in section 290-150 of the ITAA 1997. 21. In order to claim a deduction for a personal superannuation contribution in the 2012-13 income year, a person is required to make a contribution to a superannuation fund and the deduction is only deductible for the income year in which you make the contribution. 22. The ITAA 1997 does not contain a discretion that can be exercised by the Commissioner to allow a deduction for a year of income where the contributions are actually made in a later year of income 23. From the information provided, the contributions are considered to have been made to the Fund in the 2013-14 income year when the funds were credited to the Fund's bank account in July 2013.