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

Ruling: Q1: Are you entitled to claim a deduction for personal superannuation contributions made in the 2010-11 income year? | A1: No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are under 55 years of age. You are self employed. You became a member of a complying superannuation fund (the Fund) a number of years ago. You made personal superannuation contributions to the Fund in the 2010-11 income year, and a number of prior income years. You claimed tax deductions for personal superannuation contributions in those prior income years. You set up your self managed superannuation fund (the SMSF) in the 2010-11 income year. In the last quarter of the 2010-11 income year, you requested a rollover of all your superannuation benefits from the Fund to the SMSF. The roll-over benefits statement from the Fund shows: · The name of the receiving fund · Start date of the service period · Tax-free component · Taxable component - Taxed Element The rollover cheque was posted to the SMSF and the benefit was credited to your SMSF account in the 2011-12 income year. You have not yet lodged your 2010-11 income tax return.

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 Section 290-155. | Income Tax Assessment Act 1997 Section 290-160. | Income Tax Assessment Act 1997 Section 290-165. | Income Tax Assessment Act 1997 Section 290-170. | Income Tax Assessment Act 1997 Subsection 290-170(1). | Income Tax Assessment Act 1997 Paragraph 290-170(2)(c). Summary | A deduction for personal superannuation contributions is not allowable to you in respect of the amount contributed to the Fund. | One condition for deductibility is that a person lodges a valid notice of intent to claim a deduction and that notice is acknowledged by the trustee of the superannuation fund. | Because the notice of intent to deduct condition has not been satisfied, you are not entitled to claim a deduction for personal superannuation contributions made in the 2010-11 income year. | In addition, once a payment is rolled-out from the Fund, the initial contribution loses its character as a contribution. Rolling the payment back from the SMSF to the Fund does not change the character from a tax-free component back into a contribution. For this reason, the roll-over can not be 'reversed'. | Detailed reasoning | Deductions for superannuation contributions | Subsection 290-150(1) of the Income Tax Assessment Act 1997 (ITAA 1997) allows a person to claim a deduction in respect of personal contributions made to a superannuation fund or retirement savings account (RSA) during an income year for the purpose of providing superannuation benefits for themselves, or their dependants after their death. | However, the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 must all be satisfied before a person can claim a deduction for the contributions made in that income year. These conditions are explained in detail in Taxation Ruling TR 2010/1 'Income Tax: superannuation contributions' (TR 2010/1). | Notice of intent to deduct conditions | One of these conditions, in section 290-170 of the ITAA 1997, is that the person making a contribution must provide a notice of intent to claim a deduction (the notice) to their superannuation fund. | In respect of the 2010-11 income year, that notice of intent must be given to the fund by the earlier of: | · 30 June 2012, or | · the day on which their 2010-11 income tax return is lodged. | Section 290-170 of the ITAA 1997 provides that a person wishing to claim a deduction must lodge the notice of intent with the fund to which they made the contribution. Consequently, you can only give the notice to the trustee of a complying superannuation fund (the Fund). | At the time a notice is given to a fund, you must still be a member of that fund and the fund must be holding the contribution. | In the 2010-11 income year, and before lodging a notice of intention to claim a tax deduction, your entire benefits were transferred from the Fund to the SMSF. A cheque was made by the Fund and deposited into your SMSF account at the beginning of the 2011-12 income year. | This transfer was a roll-over of those benefits from one fund to another. You have provided a copy of the roll-over statement setting out the elements of the payment rolled into the SMSF. | It should be noted that once a payment is rolled-out from the Fund, the initial contribution loses its character as a contribution. As a result, the initial contribution forms part of the tax-free component reported in the roll-over statement to the SMSF. | Rolling the payment back from the SMSF to the Fund does not change the character from a tax-free component back into a contribution. The trustee of the Fund will still be required to record the payment as a tax- free component rolled-in, and not a contribution. | For this reason, the roll-over can not be 'reversed'. | Consequently, the SMSF is not the fund who received the contribution and included the contributed amount as assessable income for the relevant year. Therefore, the SMSF is unable to accept the notice from you. | Since you rolled-out the contribution from the Fund as a tax-free component, the trustee of the Fund cannot accept any notices from you. Once benefits have been paid out it is also too late for the Fund to alter the components of that roll-over payment. | Accordingly, you have not and can no longer satisfy the notice requirement in paragraph 290-170(1)(c) of the ITAA 1997. | Discretion | Section 290-170 of the ITAA 1997 does not give to the Commissioner the power to exercise a discretion to allow a deduction where any of the requirements of this provision have not been satisfied, regardless of the reasons those requirements were not met, or the extent to which those reasons were beyond the taxpayer's control. | The Commissioner also has no discretion in the income tax legislation to allow a fund receiving a roll-over of superannuation monies to accept a notice in relation to contributions not made to that fund.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.