Private ruling: Timing of contributions
Published: April 2014
Ruling period: 2012-13 income year | 2013-14 income year
Date scheme commenced: 1 July 2013

Ruling: Q1: 1. Has a concessional contribution been made by the company to the superannuation fund (the Fund) in the 2012-13 income year? 2. Has a non-concessional contribution been made by the individual taxpayer (the taxpayer) to the Fund in the 2012-13 income year? | A1: 1. No. 2. No.

Relevant facts and circumstances: The taxpayer is an employee of the company and a member of the Fund. The Fund is a complying superannuation fund for the 2012-13 income year. On 30 June 2013 the company instructed bank A to transfer an amount from a bank A account to the Fund's bank B account. The company intended this transfer to be a concessional employer contribution in respect of the taxpayer. On 30 June 2013 the taxpayer instructed bank A to transfer an amount from their bank A account to the Fund's bank B account. The taxpayer intended this transfer to be a personal, non-concessional contribution. You provided a copy of some bank A fact sheets, sourced from the bank-A website, concerning internet banking payments and transfers and cut-off times. These facts sheets state that transfers to another bank will usually take one business day to be deposited if submitted before 6pm on a weekday. On a weekend it will typically take two business days. Various bank statements were provided and show that while both payments were initiated on 30 June 2013 they were not deposited into the Fund's bank account until 1 July 2013.


Reasons for decision: Summary: A concessional contribution from the company was received by the Fund on 1 July 2013. Therefore the contribution is considered to have been made in the 2013-14 income year. A non-concessional contribution from the taxpayer was received by the Fund on 1 July 2013. Therefore the contribution is considered to have been made in the 2013-14 income year. | Detailed Reasoning - Detailed reasoning: Taxation Ruling TR 2010/1 titled 'Income tax: superannuation contributions' sets out the Commissioner's view on when a contribution is made to a superannuation fund, an approved deposit fund or a retirement savings account. Item 2 of paragraph 13 of TR 2010/1 states that if funds are transferred by making an electronic transfer of funds to the superannuation provider then the contribution is made when the funds are credited to the superannuation provider's account. In relation to when a superannuation contribution is made TR 2010/1 goes on to state at paragraphs 182 to 186: 182. A superannuation contribution is made when the capital of the fund is increased. As explained in paragraphs 183 to 210 of this Ruling, the contribution may be made when an amount is received, or ownership of an asset is obtained or the fund otherwise obtains the benefit of an amount. Contributions of funds 183. A contribution of funds as cash or an electronic funds transfer, is made when the amount is received by the superannuation provider or credited to the relevant account. 184. It has been suggested that a contribution made by electronic funds transfer may occur as soon as the contributor has done everything necessary to effect a payment. The Commissioner does not accept that is sufficient to increase the capital of the fund. 185. Electronic payment systems operate through contractual arrangements between the: • payer and payer's financial institution; • payer's financial institution and payee's financial institution; and • payee's financial institution and payee. 186. When a financial institution agrees to accept a payment instruction it notifies the receiving institution of the details of the payment. In Australia there are several different clearing systems for the transferring of information and netting of amounts to be transferred between institutions. The clearing rules of these systems bind the financial institutions but not the customers. Most small payments between institutions are not processed in real time but are subject to deferred net settlement which occurs overnight. As such, it is not until an amount is credited to a bank account of the superannuation provider that a contribution will be taken to be made. From the above, it can be said that a fund member is only taken to have made a contribution to their superannuation fund when the superannuation fund receives it and the capital of the fund is increased. Whether or not the intention (in good faith) was for the payment to be made by 30 June 2013 is not relevant. What is relevant is whether or not the contributions were received by the trustee of the superannuation fund by 30 June 2013. Fact sheets from bank A's website state that in the case of a transfer of funds from a bank A account to an account in another financial institution in Australia on a weekend or public holiday, the funds will be deposited into the payee's account within two business days in most cases. From the facts of this case, the company intended to make concessional contributions in respect of the taxpayer to the Fund on 30 June 2013 and the taxpayer intended to make non-concessional contributions to the Fund on 30 June 2013. It is noted that 30 June 2013 was a Sunday. As the transfer of the concessional and non-concessional contributions from a bank A account to a bank B account was initiated on 30 June 2013, which was a Sunday, the funds were deposited into the Fund's account with bank B on Monday 1 July 2013 (which was within two business days of the transfer being initiated). This is confirmed by a bank B Statement which stated that a concessional contribution was transferred by the company and deposited in bank B on 1 July 2013. Similarly a bank B Statement confirmed that a non-concessional contribution was transferred from the taxpayer and deposited in the Fund's bank B account on 1 July 2013. As mentioned above, if funds are transferred by making an electronic transfer of funds to the superannuation provider then the contribution is made when the funds are credited to the superannuation provider's bank account. In this case concessional contributions were credited to the Fund on 1 July 2013 and non-concessional contributions were credited to the Fund on 1 July 2013. Therefore it is considered that the concessional contributions were made by the Fund on 1 July 2013 (the 2013-14 income year) as that is the day that the contributions were credited to the Fund. Similarly, it is considered that the non-concessional contributions were made by the taxpayer to the Fund on 1 July 2013 (the 2013-14 income year) as that is the day that the contributions were credited to the Fund. | Detailed Reasoning - Conclusion: A concessional contribution has not been made by the company to the Fund in the 2012-13 income year. The contribution was made on 1 July 2013. A non-concessional contribution has not been made been made by the taxpayer to the Fund in the 2012-13 income year. The contribution was made on 1 July 2013.