Private ruling: Personal superannuation contributions
Published: April 2014
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is your client eligible to claim a deduction for personal superannuation contributions under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: Your client is aged over 65 and under age 70. For the 2012-13 income year your client was employed in a part-time capacity and received salary and wages from the part-time employment. Your client was previously employed in a position which terminated in the previous employment. In the 2012-13 income year, your client received a lump sum payment in respect of the previous employment that terminated in the 2009-10 income year. The previous employer advised your client that: • the lump sum payment arose from a pay discrepancy under the relevant employment agreement (the Agreement) • the audit of entitlements undertaken included the review of salary, penalty and overtime payments for the period of the Agreement. Your client made a contribution in the 2012-13 income year to a complying superannuation fund (the Fund) and intends to claim a deduction for this amount. The Fund acknowledged receipt of the contributions made in the 2012-13 income year and noted your client may be eligible to claim the deduction for the income year. You state your client meets the age related condition for deductibility under section 290-165 of the ITAA 1997. You also state the lump sum payment shown as shown on the PAYG payment summary for the 2012-13 income year is not attributable to your client's part-time employment for the purposes of the maximum earnings as employee condition under section 290-160 of the ITAA 1997 as the amount was in respect of your client's previous employment which terminated in the 2009-10 income year. Your client's total assessable income for the 2012-13 income year is advised as $X . There are no amounts of reportable fringe benefits or reportable employer superannuation contributions for the 2012-13 income year. You have advised that a deduction for the contribution will not add to or create a loss for your client in the 2012-13 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 Subsection 290-150(2). | Income Tax Assessment Act 1997 Section 290-155. | Income Tax Assessment Act 1997 Section 290-160. | Income Tax Assessment Act 1997 Subsection 290-160(1). | Income Tax Assessment Act 1997 Paragraph 290-160(1)(a). | Income Tax Assessment Act 1997 Paragraph 290-160(1)(b). | Income Tax Assessment Act 1997 Subsection 290-160(2). | 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.

Reasons for decision: Detailed Reasoning - Personal superannuation contributions made in an income year: A person can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997). However, subsection 290-150(2) of the ITAA 1997 provides that all of the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must be satisfied before the 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) entitled 'Income Tax: superannuation contributions' . | Detailed Reasoning - 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, that fund must be a complying superannuation fund for the income year in which you made the contribution. In this instance, your client made a personal contribution to a complying superannuation fund (the Fund). Therefore, this condition is satisfied. | Detailed Reasoning - Maximum earnings as an employee condition: Subsection 290-160(1) of the ITAA 1997 states that section 290-160 of the ITAA 1997 applies if in the income year in which a person makes the contribution, the person engages in any of the following activities: • holding an office or appointment; • performing functions or duties; • engaging in work; • doing acts or things; and the activities result in the person 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). In accordance with subsection 290-160(2) of the ITAA 1997, where the above is the case, to deduct the contribution, less than 10% of the total of the following must be attributable to a person's 'employment' activities: • the person's assessable income for the income year; • the person's reportable fringe benefits total for the income year; • the total of the person's reportable employer superannuation contributions for the income year. In TR 2010/1 the Commissioner has expressed his view on the application of subsection 290-160(2) of the ITAA 1997 and, at paragraph 62 of the taxation ruling, has stated that all amounts that are ' attributable ' to the 'employment' activity are taken into account as assessable income for the purposes of subsection 290-160(2) of the ITAA 1997. From the information provided, the lump sum payment was paid to your client in respect of the previous employment that ceased in the 2009-10 income year. Therefore the lump sum payment is not attributable to the part-time employment activity which is relevant for the purposes of determining the maximum earnings as employee condition in subsection 290-160(2) of the ITAA 1997 in the 2012-13 income year. As explained previously, to deduct the contribution, less than 10% of the total of the following must be attributable to a person's 'employment' activities: • the person's assessable income for the income year; • the person's reportable fringe benefits total for the income year; • the total of the person's reportable employer superannuation contributions for the income year. From the information provided regarding your client's income details for the 2012-13 income year, this condition is satisfied. | Detailed Reasoning - Age-related conditions: 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 your client was under age 70 at the time the contribution to the Fund was made in the 2012-13 income year, your client will satisfy the age-related condition. | Detailed Reasoning - Notice of intent to deduct conditions: Section 290-170 of the ITAA 1997 provides that your client must give to the trustee of the complying superannuation fund a valid notice, in the approved form, of his intention to claim a deduction in respect of the contribution, and he must also have been given an acknowledgment of receipt of the notice by the fund trustee. The notice of intent to claim the deduction must be given to the fund trustee by the earlier of the date the income tax return for the income year in which the contribution was made is lodged or the end of the income year following the year in which the contribution was made . Provided your client gives a valid notice to the Fund (as above) by the 30 June 2014, then this condition will be satisfied. | Detailed Reasoning - Deduction limit: You have advised your client's income details for the 2012-13 income year and that the deduction for the personal contributions will not add to or create a loss for your client in the 2012-13 income year. Therefore your client also meets the deduction limit requirement under subsection 26-55(2) of the ITAA 1997. | Detailed Reasoning - Conclusion: Provided, your client meets all the required conditions as outlined above, your client can claim a deduction in the 2012-13 income year for the personal contributions made to the Fund.