Private ruling: Deduction for personal superannuation contributions
Published: February 2014
Ruling period: The year ending 30 June 2012 | The year ending 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Can your client claim a deduction for personal superannuation contributions incorrectly reported as employer contributions? | A1: 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. Your client is a sole trader who was a member of a superannuation fund (the Fund) for the 2011-12 and 2012-13 income years. For both income years, the Fund received employer contributed and personal contributed amounts. Your client received from the Fund an acknowledgement for the amount of their personal contributions in the 2011-12 and 2012-13 years. No acknowledgement was received from the fund for the employer contributions in the 2011-12 and 2012-13 years. During the 2012-13 year, your client rolled-over the Fund balance to a new superannuation fund (New Fund). After the rollover, your client became aware that the employer contributions were classified incorrectly as your client is a sole trader, and therefore they are unable to make employer contributions on their own behalf. Your client wrote to the Fund to request the employer contributions be reclassified as personal deductions to allow the contribution to be tax deductible. Your client was informed that the Fund was unable to reclassify and revise the original section 290-170 notices for the 2011-12 and 2012-13 years to include the employer contributions as your client has rolled-over their balance into another superannuation fund.

Relevant legislative provisions: 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. | Income Tax Assessment Act 1997 Paragraph 290-170(2)(c). | Income Tax Assessment Act 1997 Section 290-180. | Income Tax Assessment Act 1997 Subdivision 290-C

Reasons for decision: Summary: Your client is unable to provide a valid notice for the 2011-12 and 2012-13 years as they are no longer a member of the original fund. Your client cannot claim a deduction for the personal contribution payments incorrectly classified as 'employer contributions' made during the 2011-12 and 2012-13 income years as a valid notice can not be given and the Fund is unable to provide your client with an acknowledgement notice. The Commissioner has no discretion to allow a deduction where the requirements in the legislation have not been met. | 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. 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 certain conditions are met. The relevant conditions in this case are that 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 The facts state that your client did not receive from the Fund an acknowledgement of the notice for the employer contributions. The facts also state that during the 2012-13 year, your client rolled-over the benefits into a new superannuation fund. When your client attempted to vary the notice of intent, the Fund no longer held the contributions nor was your client a member of the Fund. As such, your client is not able to provide a valid notice to the Fund because at the time your client made the request, the Fund no longer held the contributions of your client. Having failed to provide a valid notice to the Fund for the employer contributions, there is no need to examine whether your client can vary the notice to include the employer contributions as personal contributions under the conditions in section 290-180 of the ITAA-1997 as your client must first satisfy all the conditions specified in section 290-170. | Detailed Reasoning - Claiming a deduction for incorrectly reported employer contributions made in the 2011-12 and 2012-13 income year: An individual 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), provided certain conditions are met. Subsection 290-150(2) of the ITAA 1997 states that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 of the ITAA 1997 must all 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'. As discussed above, your client cannot provide to the Fund a valid section 290-170 notice of intent to claim a deduction for personal contributions Therefore your client is unable to satisfy the requirements of section 290-170. Accordingly, a deduction cannot be claimed for the contributions incorrectly reported as employer contributions for the 2011-12 and 2012-13 years. | Detailed Reasoning - Commissioner's discretion: 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, subdivision 290-C of the ITAA 1997 does not give the Commissioner the power to exercise discretion to either: · vary a valid section 290-170 notice where any of the requirements of this provision have not been satisfied, or · allow a deduction where all the requirements of that were not met. Consequently, the Commissioner has no discretion to vary your client's original notice or order the Fund to amend their records and refund the tax withheld