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

Ruling: Q1: Are you entitled to a deduction in respect of personal superannuation contributions for the 2011-12 income year? | A1: Yes. | Q2: Is there a limit to the amount that can be claimed as a deduction for personal superannuation contributions? | A2: 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 over 50 years of age. You are retired at present, but were formerly employed. For the 2011-12 income year, you approximate your gross income and reportable fringe benefits to be $X, comprising of: § a retirement pension $A § rental income $B § employment income $C You state that you intend to make a contribution of $C in the 2011-12 income year to the Fund, a self-managed complying superannuation fund. You state that you do not have any employer superannuation contributions in the 2011-12 income year. You confirm that a valid notice under section 290-170 of the ITAA 1997 will be lodged with the trustee of your superannuation fund and that the trustee of your superannuation fund will acknowledge that notice. You confirm that the contributions will be made for the purpose of providing superannuation benefits to you or your dependants if you die before or after becoming entitled to the benefits. You confirm that the deduction claimed under section 290-150 of the ITAA 1997 will not add to or create a loss.

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 Subsection 290-160(1). | 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 Section 292-15. | Income Tax Assessment Act 1997 Subsection 292-20(2). | Superannuation (Excess Concessional Contributions Tax) Act 2007 Section 4. | Superannuation (Excess Concessional Contributions Tax) Act 2007 Section 5. | Superannuation Guarantee (Administration) Act 1992 Subsection 12(11). | Income Tax (Transitional Provisions) Act 1997 Subsection 292-20(2).

Reasons for decision: Summary: As all the required conditions have been satisfied, you are entitled to claim a deduction for the personal superannuation contributions made to a complying superannuation fund in the 2011-12 income year. | Detailed Reasoning - 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 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 must also be satisfied for the person to claim the deduction. | 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, it must be made to a complying superannuation fund for the income year of the fund in which the contribution is made. In this case, you intend to make a contribution to the Fund, a self-managed complying superannuation fund. Therefore, this requirement is satisfied. | Detailed Reasoning - Maximum earnings as an employee condition:: The condition in section 290-160 of the ITAA 1997 requ i re s 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 their assessable income and reportable fringe benefits must be attributable to those activities. 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 has not been enacted). From the facts provided, you are employed in the 2011-12 income year. The work you engage upon defines you as an employee for the purposes of the SGAA during the 2011-12 income year. Consequently, section 290-160 of the ITAA 1997 applies to you in the 2011-12 income year. Where section 290-160 of the ITAA 1997 applies to a person, subsection 290-160(2) of the ITAA 1997 states that: To deduct the contribution, less than 10% of the total of the following must be attributable to the activities: (a) your assessable income for the income year; (b) your reportable fringe benefits total for the income year; (c) the total of your reportable employer superannuation contributions for the income year. This means that in order to satisfy the condition set out under section 290-160 of the ITAA 1997, your total assessable income and reportable fringe benefits attributable to your employment must be less than 10% of your total assessable income and reportable fringe benefits for the 2011-12 income year. Consequently, the expected payment of $C to be received by you in the 2011-12 income year is income attributable to your employment activities for the purposes of the maximum earnings as employee condition in section 290-160 of the ITAA 1997. Your total assessable income, exempt income and reportable fringe benefits have been estimated to be $X for the 2011-12 income year. This includes a retirement pension ($A), gross rental income ($B), and income attributable to employment ($C). On the basis of the facts provided, your total income amount of $C to be received from activities that result in you being treated as an employee for the purposes of the SGAA, will be less than 10% of your estimated total assessable income (that is $X) for the 2011-12 income year. Therefore, as you will receive less than 10% of your estimated total assessable income in that year from employment, you will satisfy the requirements set out under section 290-160 of the ITAA 1997. Please note that the requirement for income to be attributable to your employment activities does not require that the income to be the subject of superannuation support. As such, payments that do not attract the superannuation guarantee charge count towards the 10% total. | 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. You meet the age-related condition. | 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: o you are a member of the fund or the holder of the retirement savings account (RSA); and; o 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); and; o the trustee or RSA provider has not begun to pay a superannuation income stream based on the contribution; or § before the notice is given: o a contributions splitting application has not been made in relation to the contribution; and; o the trustee or RSA provider has not rejected the application. You confirm that a valid notice under section 290-170 of the ITAA 1997 will be lodged with the trustee of your superannuation fund and that the trustee of your superannuation fund will acknowledge that notice. | Detailed Reasoning - Deduction limits:: From 1 July 2007 the previous age based limits on deductions for personal superannuation contributions have been abolished. As a result a person can claim a full deduction for the amount of the contribution made. However, the allowable deduction is limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions (excluding previous years tax losses and any deductions for farm management losses) from a taxpayers assessable income. Thus a deduction for personal superannuation contributions cannot add to or create a loss. You confirm that the deduction claimed under section 290-150 of the ITAA 1997 will not add to or create a loss. | Detailed Reasoning - Contribution limits:: Concessional contributions made to superannuation funds are subject to an annual cap. For the 2011-12 income year the concessional contributions cap is $25,000. The age based limits on deductions that existed for these contributions no longer apply. The concessional contributions cap is indexed to upward movements of average weekly ordinary time earnings (AWOTE) in $5,000 increments (subsection 292-20(2) of the ITAA 1997). Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions claimed as a tax deduction by a person. A person will be taxed on concessional contributions over the cap at a rate of 31.5% (section 292-15 of the ITAA 1997 and sections 4 and 5 of the Superannuation (Excess Concessional Contributions Tax) Act 2007 ). The superannuation fund can be asked to release money to pay this excess contributions tax. Between 1 July 2007 and 30 June 2012, a transitional concessional contributions cap will apply for people aged 50 or over. As a result of changes announced in the May 2009 Budget, the annual cap is $50,000 for the 2011-12 income year , (subsection 292-20(2) of the Income Tax (Transitional Provisions) Act 1997 ). If a person has more than one fund, all concessional contributions made to all their funds are added together and count towards the cap. Amounts in excess of the concessional contributions cap are also counted towards the non-concessional contributions cap. | Detailed Reasoning - Conclusion:: As all the required conditions have been satisfied, you are entitled to claim a deduction under section 290-150 of the ITAA 1997 for the personal superannuation contributions made to a complying superannuation fund in the 2011-12 income year.

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.