Private ruling: Deductibility of Personal Super Contributions
Date of advice: 1 December 2017
Published: April 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to claim a deduction for personal superannuation contributions made in the 2016-17 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: You are under the age of 75. You are permanently disabled and have not been able to work for many years. You have made personal superannuation contributions to a complying superannuation fund (the Fund) in the 2016-17 income year and intend to claim a deduction for the contributions made. Your income for the 2016-17 income years mainly comprises income protection payments. You did not receive any reportable fringe benefits or make any reportable superannuation contributions to a complying superannuation fund in the 2016-17 income year. You have provided a written notice to the Fund stating your intention to claim a deduction in respect of your contributions for the 2016-17 income year. You have received an acknowledgement notice issued by the trustee of the Fund acknowledging your intention to claim a deduction for the 2016-17 income year. A deduction for the proposed contribution will not add to or create a loss for you in the 2016-17 income year.

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 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. Summary | You can claim a deduction for superannuation contribution you made in the 2016-17 as all the conditions of Section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) are satisfied. Detailed reasoning | Deduction for personal deductible superannuation contributions | A person must satisfy the conditions in section 290-150 of the ITAA 1997 before they 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). | Subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 must also 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 (TR 2010/1) ‘Income tax: superannuation contributions’ . | You have made a personal contribution under the concessional contributions cap to the Fund in the 2016-17 income year. | 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 in which the contribution is made. | In this case, you made personal superannuation contributions to the Fund. As the Fund is a complying superannuation fund, this requirement is satisfied. | 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’. | Taxation Ruling TR 2010/1 outlines the Commissioner’s view of the requirements to be satisfied for a deduction of superannuation contributions. Amongst other things, the Commissioner discusses the operation of the maximum earnings as an employee condition. Paragraph 58 states that: | Those persons who have not engaged in an 'employment' activity in the income year in which they make a contribution, such as persons who although receiving workers' compensation payments are not employed at any time during the year, are not subject to the maximum earnings test. | The facts provided show that for the 2016-17 income year you: | ● were not employed in any capacity; | ● mainly received income protection payments; | ● did not receive any income from an employer, receive any RFB or make any RESC payments. | Based on the information provided, you were not engaged in any ‘employment activities’ during 2016-17 income years that would make you an employee for the purposes of the SGAA. | Accordingly, your income protection payments will not be subject to the maximum earnings test, and section 290-160 of the ITAA 1997 will not apply to you in determining the deductibility of your personal superannuation contributions for 2016-17 income year. | Age-related condition | Under subsection 290-165(2) of the ITAA 1997, the ability to claim a deduction ceases for contributions that are made after 28 days from the end of the month in which the person making the contribution turns 75 years of age. | As you are under the age of 75 in the 2016-17 income year, you satisfy the age-related condition in section 290-165 of the ITAA 1997. | Notice of intent to deduct conditions | Subsections 290-170(1) and (2) of the ITAA 1997 set out the notice and validity requirements which must be satisfied to claim a deduction for superannuation contributions. | Subsection 290-170(1) of the ITAA 1997 requires a valid notice of intent to claim a deduction in the approved form be provided to the superannuation or RSA provider. The notice must be provided before the taxpayer lodges his or her income tax return for the year or within 12 months of the end of the income year if the taxpayer had not lodged his or her return by that time. The trustee must also acknowledge receipt of the notice. | Subsection 290-170(2) of the ITAA 1997 requires the following conditions to be satisfied for a notice of intent to deduct to be valid: | a) the notice is not in respect of the contribution; | b) the notice includes all or a part of an amount covered by a previous notice; | c) when you gave the notice: | (i) you were not a member of the fund or the holder of the * RSA; or | (ii) the trustee or * RSA provider no longer holds the contribution; or | (iii) the trustee or RSA provider has begun to pay a * superannuation income stream based in whole or part on the contribution; | d) before you gave the notice: | (iv) you had made a contributions-splitting application (within the meaning given by the regulations) in relation to the contribution; and | (v) the trustee or RSA provider to which you made the application had not rejected the application. | Subsections 290-170(1) and (2) of the ITAA 1997 have been satisfied in this case as you have provided a valid notice of intent to claim the deduction for the 2016-17 income year to the Fund and you have received the acknowledgment of receipt of the notice from the trustee of the Fund prior to claiming the deduction. | Deduction limited by amount specified in notice | Subsection 290-175 of the ITAA 1997 states that the deduction cannot be more than the amount covered by the notice given under section 290-170 of the ITAA 1997. | The amount of the deduction you will claim does not exceed the amount specified in you section 290-170 notice. Accordingly, you have also satisfied this requirement. | Deduction limits | Allowable deductions are limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions from a taxpayer's assessable income. Furthermore, allowable deductions cannot create or increase a loss to be carried forward. | You have advised that the deduction for the proposed contribution will not add to or create a loss for you. Accordingly you satisfy this condition. | Conclusion | As you have satisfied all the required conditions for deductibility under section 290-150 of the ITAA 1997, you can claim a deduction for the entire personal superannuation contribution made to the Fund in the 2016-17 income year.