Private ruling: Variation of notice made under section 290-170.
Published: December 2011
Ruling period: Year ended 30 June 2012.
Date scheme commenced: 1 July 2011.

Ruling: Q1: Can a notice under section 290-170 of the Income Tax Assessment Act 1997 (ITAA 1997) be varied to nil when a pension attributable to the contributions has commenced? | A1: No.

Relevant facts and circumstances: You opened a superannuation account with an entity (Entity 1) in the 2010-11 income year. You first received a superannuation income stream payment in the 2010-11 income year. You made a personal superannuation contribution to Entity 1 during the 2011-12 income year. On the same form, you notified Entity 1 of your intention to claim a tax deduction for the contribution and thus satisfying the requirements under section 290-170 of the ITAA 1997. In a letter, Entity 1 confirmed they received the contribution. As the above contribution was made whilst in receipt of a super income stream benefit, your entitlement to future superannuation income stream benefits was commuted to a lump sum and a new income stream benefit amount was calculated based on the total of the commuted lump sum amount and the contribution. Entity 1 acknowledged your request to claim a tax deduction for the abovementioned contribution. In the same letter, Entity 1 advised15% contribution tax on the contribution was withheld from your account. As you no longer wished to claim a deduction for the personal superannuation contribution you lodged a 'notice of intent to vary a deduction' form with Entity 1. Entity 1 responded advising they could not proceed with your request to vary the deduction as the funds were transferred to your pension account and could not be adjusted.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-170. | Income Tax Assessment Act 1997 Paragraph 290-170(2)(c). | Income Tax Assessment Act 1997 Section 290-180. | Income Tax Assessment Act 1997 Subsection 290-180(1). | Income Tax Assessment Act 1997 Subsection 290-180(2). | Income Tax Assessment Act 1997 Subsection 290-180(3). | Income Tax Assessment Act 1997 Subsection 290-180(3A). | Income Tax Assessment Act 1997 Paragraph 290-180(3A)(c). | Income Tax Assessment Act 1997 Subsection 290-180(4).

Reasons for decision: Summary: Your original notice of intent to claim a deduction, for personal contributions made in the 2011-12 income year, was valid. You will not be able to vary your notice of intent as the superannuation fund has begun to pay a super income stream based wholly or in part on the contribution. The Commissioner does not have the discretion to allow you to vary the original notice. | Detailed Reasoning - Notice of intent to deduct conditions:: Section 290-170 of the ITAA 1997 requires a person to provide a valid notice of their intention to claim the deduction to the trustee of their superannuation fund. The notice must be given before the earlier of: · the date you lodge your income tax return for the income year in which the contribution was made; or · the end of the income year following the year in which the contribution was made. · In addition, you must also have been given an acknowledgement of the notice by the trustee of the superannuation fund. · A notice will be valid as long as the following conditions apply: · the notice is in respect of the contributions; · the notice is not for an amount covered by a previous notice; · at the time when the notice is given: · you are a member of the fund or the holder of the retirement savings account (RSA); · the trustee or RSA provider holds the contribution (for example, a notice will not be valid if a partial roll-over of the superannuation benefit which includes the contribution covered in the notice has been made); · the trustee or RSA provider has not begun to pay a superannuation income stream based on the contribution; or · before the notice is given: · a contributions splitting application has not been made in relation to the contribution; and; · the trustee or RSA provider to which you made the application has not rejected the application. The facts state that you provided Entity 1 with your 'notice of intent' form together with the contribution. As such, when the form was submitted, the trustee had not begun to pay a superannuation income stream based on the contribution. The other conditions listed above do not apply. Further, you have provided a copy of a letter from the trustee of your superannuation fund acknowledging a valid notice under section 290-170 of the ITAA 1997 has been lodged with them. Consequently, your notice is valid. | Detailed Reasoning - Varying a valid notice of intent:: Section 290-180 of the ITAA 1997 discusses the conditions surrounding varying the notice of intent to claim a personal superannuation contribution deduction once it has been lodged with the fund. Generally, a valid notice can be varied before whichever of the following occurs first, the: · day the person lodges their income tax return for the year; or · end of the income year following the income year in which they made the contributions. However, once a valid notice has been provided to the fund, regardless of the circumstances, a member cannot vary their notice of intent if: · they are no longer a member of the superannuation fund; · the superannuation fund no longer holds the contributions; or · the superannuation fund has begun to pay a super income stream based wholly or in part on the contribution. The facts state that when Entity 1 received the contribution you already had a superannuation income stream in place. As such, your entitlement to future superannuation income stream benefits in the existing account was commuted to a lump sum. This commutation effectively resulted in the cessation of the existing income stream account and the creation of a new one consisting of the commuted lump sum and the contribution. The superannuation fund had therefore begun paying a new superannuation income stream benefit based wholly on the contribution before you lodged your 'intent to vary notice' form. In light of this together with the above provisions, you cannot vary your original notice of intent to claim a deduction. | Detailed Reasoning - Commissioner's discretion to vary the notice: The Commissioner can only exercise discretion when he is given that power under a law he administers. Unfortunately, section 290-180 of the ITAA 1997 does not give to the Commissioner the power to exercise his discretion to grant an extension of time for a person to lodge a variation of a valid notice of intent. Further, section 290-180 does not give the Commissioner the power to exercise discretion to vary a valid section 290-170 notice where any of the requirements of this provision have not been satisfied. In both cases this is regardless of the reasons those requirements were not met, or the extent to which those reasons were within or beyond a taxpayer's control. Consequently, the Commissioner has no discretion to vary your original notice.

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