Private ruling: Deduction for personal superannuation contribution
Date of advice: 26 May 2016
Published: July 2016
Ruling period: Income year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Can a person (Your Client) claim a deduction in respect of personal superannuation contributions made to a complying superannuation fund in the 2015-16 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: Your Client is over 18 and will be less than 75 years at all times during the 2015-16 income year. Your Client is a member of a complying superannuation fund (the Fund) and intends to make a personal contribution to the Fund in the 2015-16 income year. Your Client intends to claim a deduction in respect of the above personal contribution in the 2015-16 income year. During the 2015-16 income year, Your Client received a payment which relates to their employment in the 2014-15 income year. Your Client has not, and will not, undertake any employment activities in the 2015-16 income year. Your Client will lodge a valid notice with the trustee of the Fund and will ensure that they receive an acknowledgment of that notice. You confirm the proposed deduction for personal superannuation contributions will not add to, or create, a loss for Your Client.

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 | Superannuation Guarantee (Administration) Act 1992 Subsection 12(1)

Reasons for decision: Summary: Your Client satisfies all the conditions for deductibility, therefore they can deduct personal superannuation contributions up to $35,000 they make to the Fund in the 2015-16 income year. | Detailed Reasoning - Personal deductible superannuation contributions:: A person can claim a deduction for personal contributions they made to a superannuation fund for the purpose of providing superannuation benefits for themselves, (or their dependants after their death) under section 290-150 of the ITAA 1997. However, the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 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, a contribution will be made to a fund which is a complying superannuation fund. Therefore, this requirement will be satisfied. | Detailed Reasoning - 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 , then less than 10% of the total of their assessable income, reportable fringe benefits and reportable employer superannuation contributions for the income year must be attributable to those activities. You have confirmed that Your Client has not been employed, and will not be employed, during the 2015-16 income year. Consequently, section 290-160 of the ITAA 1997 does not apply in Your Client's case. | Detailed Reasoning - Age-related conditions:: For a person who is older than 18 years, 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. Your Client will be less than 75 years at all times during the 2015-16 income year, therefore they meet this 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 the person lodges their income tax return for the income year in which the contribution was made; or • the end of the next income year. In addition, the person must also have been given an acknowledgement of the notice by the trustee of the superannuation fund. In accordance with section 290-170 of the ITAA 1997, a notice will be valid if: • 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: • the person is 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 the person made the application has not rejected the application. You have advised that Your Client will lodge a valid notice with the trustee of the Fund and will ensure they receive an acknowledgment of that notice. Therefore, this condition is satisfied. | Detailed Reasoning - Deduction limits:: 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 deposits) from a taxpayer's assessable income. Thus a deduction for personal superannuation contributions cannot add to, or create, a loss in the relevant income year the deduction is to be claimed. You confirm that the deduction for personal superannuation contributions Your Client intends to claim under section 290-150 of the ITAA 1997 will not add to, or create, a loss in the 2015-16 income year. As all of the conditions for deductibility under section 290-150 of the ITAA 1997 have been satisfied in relation to the 2015-16 income year, Your Client may claim a deduction for the personal superannuation contributions made to the Fund in the 2015-16 income year.