Private ruling: Deductibility of personal superannuation contributions
Date of advice: 18 July 2018
Published: September 2018
Ruling period: Income year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the taxpayer entitled to claim a deduction in respect of their personal superannuation contributions for the 2016-17 income year under section 290-150 of the Income Tax Assessment Act 1997 ? | A1: Yes

Relevant facts and circumstances: 1. Your client is aged between 18 and 75 years of age. 2. We received a private ruling application which provided the following information: ● Your client is a self-employed who also, from time to time, works for another employer on a casual basis. ● Your client’s work with the other employer is irregular. ● Your client did not work for the other employer during the 2016-17 financial year. ● Your client’s PAYG Summary for the 2016-17 financial shows a Reportable Fringe Benefits Amount ● This consisted of salary packaged in the years prior to 1 July 2016 and was received by your client via the other employer’s salary packaging administrator 3. Attached to the private ruling application was a copy of a letter from the Fund to your client acknowledging the receipt of the section 290-170 notice. 4. The Fund is a complying Australian Industry Superannuation Fund. 5. You provided (via email) a letter from the other employer stating that your client did not work or receive any earnings from them during the 2016-17financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-150 | Income Tax Assessment Act 1997 Section 290-155 | Income Tax Assessment Act 1997 Subsection 290-160(1) | Income Tax Assessment Act 1997 Subsection 290-165(2) | Income Tax Assessment Act 1997 Section 290-170

Reasons for decision: Summary: Your client is entitled to claim a deduction in respect of their personal contributions for the 2016-17 financial year as all of the conditions in section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) have been satisfied. | Detailed Reasoning - Detailed reasoning: Personal superannuation contributions for the 2016-17 income year A person can claim a deduction for personal contributions made to their superannuation fund for the purpose of providing superannuation benefits for themselves under section 290-150 of the ITAA 1997. However, subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must all be satisfied before the person can claim a deduction for the contributions made in that income year. 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 the contribution is made. As the Fund is a complying superannuation fund, your client has satisfied section 290-155 of the ITAA 1997. Maximum earnings as an employee condition Subsection 290-160(1) of the ITAA 1997 provides that the maximum earnings test will apply if, in the income year in which the contribution is made, a person is engaged 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 that person being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992). The operation of the maximum earnings as an employee test is discussed in Taxation Ruling TR 2010/1 Income tax: superannuation contributions (TR 2010/1). Relevantly, paragraphs 57 and 58 of TR 2010/1 state: 57. Those persons who are engaged in an ‘employment’ activity in the income year in which they make a contribution need to meet an earnings test if they are to deduct their contribution. 58. Those persons who have not engaged in an ‘employment’ activity in the income year in which they make a contribution, such as persons who although receiving workers’ compensation payments are not employed at any time during the year, are not subject to the maximum earnings test. You advised us that during the year ended 30 June 2017, your client did not engage in any work for the other employer. This was confirmed by the letter from the other employer which states that your client did not work or receive any earnings from them during the 2016-17 financial year. Therefore it is considered that your client did not engage in any activities which would make them an employee for the purposes of SGAA 1992; hence section 290-160 of the ITAA 1997 is satisfied. 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 aged between 18 and 75 years of age during the 2016-17 financial year, they would satisfy this condition. Notice of intent to deduct conditions Section 290-170 of the ITAA 1997 provides that your client must give the trustee of the Fund a valid notice, in the approved form, of your client’s intention to claim a deduction and receive an acknowledgement of receipt of the notice from the trustee by the earlier of: ● the date of your client’s income tax return being lodged or ● the end of the income year following the year in which the contribution was made. Attached to your application was a copy of a letter from the Fund acknowledging the receipt of the notice required under section 290-170 of the ITAA 1997 prior to your client lodging their 2016-17 financial year tax return. Therefore it is considered that your client has satisfied this condition.