Private ruling: Deduction for personal superannuation contributions
Published: April 2014
Ruling period: Year ended 30 June 2013.
Date scheme commenced: 1 July 2012.

Ruling: Q1: Does the taxpayer satisfy the maximum earnings as an employee condition under section 290-160 of the Income Tax Assessment Act 1997 ? | A1: No.

Relevant facts and circumstances: The taxpayer is over 55 years of age. The taxpayer made personal superannuation contributions to a super fund before 30 June 2013 and intends to claim a deduction for the contribution for the year of 2012-13. The Super Fund is a complying superannuation fund. The contributions were made for the purpose of providing superannuation benefits for the taxpayer (or their dependants before or after their death). The taxpayer's income for the 2012-13 income year comprises of: • Salary & wages; • Lump sum A payment; • Reportable employer superannuation contributions; and • Other taxable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 26-55(2). | 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). | 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 Subsection 290-165(2). | Income Tax Assessment Act 1997 Section 290-170. | Income Tax Assessment Act 1997 Subsection 290-170(1). | Income Tax Assessment Act 1997 Subsection 290-170(2). | Income Tax Assessment Act 1997 Paragraph 290-170(2)(c)(iii). | Income Tax Assessment Act 1997 Section 290-175. | Income Tax Assessment Act 1997 Section 292-25. | Income Tax Assessment Act 1997 Section 292-25(2).

Reasons for decision: Summary: The taxpayer will not be able to claim a deduction for personal superannuation contribution made in the 2012-13 income year as the conditions of Section 290-160 of the Income Tax Assessment Act 1997 have not been satisfied. | Detailed Reasoning - Deduction for 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. According to the facts, the conditions in section 290-160 have not been met. This will be discussed in further detail below. | 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: • their assessable income for the income year; • their reportable fringe benefits (RFB) for the income year; and • the total of their reportable employer superannuation contributions (RESC) for the income year. This calculation is referred to as the 'maximum earnings test'. 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). Under subsection 12(1) of the SGAA, if a person is an employee at common law, that person is an employee under the SGAA. However, where a common law employment relationship is not established, subsection 12(3) of the SGAA extends the definition to classify as an employee a person who works under a contract that is wholly or principally for the labour of the person. Based on the information provided, the taxpayer is acting within the role of an employee. As such, the taxpayer is considered an employee for the purposes of the SGAA 1992. The taxpayer has advised that for the 2013-14 income year they received: • salary & wages; • Lump sum A payment; • Reportable employer superannuation contributions; and • Other taxable income. As the taxpayer's employment income contributed to more than 10% of the total assessable income and reportable employer superannuation contributions, the maximum earnings test as employee condition under section 290-160 will not be satisfied. | Detailed Reasoning - Conclusion:: As not all of the conditions for deductibility under section 290-150 of the ITAA 1997 have been satisfied in relation to the 2012-13 income year, the taxpayer is not entitled to claim a deduction for the personal superannuation contributions made to their nominated superannuation fund in the 2012-13 income year.