Private ruling: Excess contributions tax - timing of a concessional contribution
Published: May 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are the contributions to be counted as concessional contributions in the 2012-13 income year? Advice/Answers Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 292-25 | Income Tax Assessment Act 1997 Subsection 292-25(2) | Income Tax Assessment Act 1997 Subsection 292-25(3) | Income Tax Assessment Regulation 1997 Regulation 292-25.01(2) | Income Tax Assessment Regulation 1997 Regulation 292-25.01(4) | Superannuation Industry (Supervision) Regulations 1994 Division 7.2 | Superannuation Industry (Supervision) Regulations 1994 Subregulation 7.08(2)

Reasons for decision: Detailed Reasoning - Summary of decision: As the contributions are allocated under the regulations to you in the 2012-13 income year, they are to be included as concessional contributions in that year. | Detailed Reasoning - Detailed reasoning: Subsection 292-25(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a contribution is a concessional contribution if it is made in the financial year to a complying superannuation plan 'in respect of you' and it is included in the assessable income of the superannuation provider. A contribution is made 'in respect of you' when it is made for the purpose of providing superannuation benefits for you. As indicated in paragraph 7 of Taxation Ruling TR 2010/1 Income tax: superannuation contributions this requires an objective determination of the contributor's purpose. Therefore, a contribution does not cease to be made to provide superannuation benefits for a particular person merely because the trustee does not immediately allocate it to the member. Subsection 292-25(3) of the ITAA 1997 also includes in concessional contributions an amount allocated in accordance with the conditions specified in the regulations. Subregulation 292-25.01(2) of the Income Tax Assessment Regulations 1997 (ITAR) provides that an amount is allocated in a way covered by subsection 292-25(3) of the ITAA 1997 if the amount has been allocated under Division 7.2 of the Superannuation Industry (Supervision) Regulations 1994 (SISR) and is an assessable contribution. Division 7.2 of the SISR provides rules for the allocation of contributions to members. Subregulation 7.08(2) of the SISR requires a trustee who receives a contribution in a month in relation to an accumulation interest to allocate the contribution to a member of the fund: · within 28 days after the end of the month; or · if it is not reasonably practicable to allocate the contribution to the member of the fund within 28 days after the end of the month - within such longer period as is reasonable in the circumstances. Subregulation 292-25.01(4) of the ITAR 1997 provides that amounts allocated from reserves are also treated as being allocated in a way covered by subsection 292-25(3) of the ITAA 1997 unless an exclusion in subregulation 292-25.01(4) of the ITAR 1997 applies. However, subregulation 292-25.01(4) of the ITAR 1997 does not apply to an amount that is covered by subregulation 292-25.01(2) of the ITAR 1997. As the unallocated contributions account maintained by the Fund consists only of contributions that are to be made to you and the amount to be allocated to your accumulation account will be from contributions made in respect of you subregulation 292-25.01(2) of the ITAR 1997 is the more specific regulation. Where a contribution is made to a fund in respect of a particular member and is subsequently allocated to the member under Division 7.2 of the SISR the application of the above provisions appears to result in the concessional contribution being counted as a concessional contribution twice: · once under subsection 292-25(2) of the ITAA 1997 when the contribution is received by the fund; and · a second time under subsection 292-25(3) of the ITAA 1997 when it is allocated to the member. Case law provides that unless there is a clear intention to tax an amount twice, an interpretation should be adopted which avoids double taxing: Dixon J in Executor Trustee and Agency Company of South Australia Ltd v Federal Commissioner of Taxation (1932) 48 CLR 26. Further, the Explanatory Statement to Income Tax Assessment Amendment Regulations 2007 (No. 3) which introduced regulation 292-25.01 of the ITAR shows there is a clear intention not to include a contribution in concessional contributions twice The Explanatory Statement to Income Tax Assessment Amendment Regulations 2007 (No. 3) states: This approach will not result in double counting against the concessional contributions cap as contributions that are allocated directly to a reserve when made will only be counted against the contributions cap when allocated to a member. It is considered the intent declared by this statement demonstrates that these contributions are intended to be included in concessional contributions when they are allocated under the SISR. In this case, you receive salary from the Employer. The Employer will deduct amounts from your salary in the 2011-12 income year. The amounts to be deducted as a concessional deduction from your salary will be deposited into the Fund's unallocated contributions account. The trustee of the Fund will not apply the amounts to your accumulation account until the 2012-13 income year. Consequently, as the contributions are allocated under SISR to you in the 2012-13 income year, they are to be included as concessional contributions in that year.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | You are a member of a superannuation fund (the Fund).