Private ruling: Deductibility of employer superannuation contributions
Published: January 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 June 2013

Ruling: Q1: Is the employer entitled to claim a tax deduction in respect of the superannuation contributions made on behalf of the employee in the 2013-14 income year? | A1: Yes

Relevant facts and circumstances: 1. The Family Trust (the Trust) is controlled by the employee and the employee's spouse. 2. The employee is currently under 55 years of age. 3. The employee is a member of a constitutionally protected fund (CPF). The CPF is also an exempt public sector superannuation scheme and a complying superannuation fund. 4. You advised that the employee has derived income from part-time employment as an employee of the Trust during the 2013-14 income year. 5. The Trust is expected to derive income for the 2013-14 income year. 6. The Trust intends to make an employer contribution to the CPF for the benefit of the employee.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 290-60. | Income Tax Assessment Act 1997 Subsection 290-60(3). | Income Tax Assessment Act 1997 Section 290-70. | Income Tax Assessment Act 1997 Section 290-75. | Income Tax Assessment Act 1997 Section 290-80. | Income Tax Assessment Act 1997 Section 26-55 . | Superannuation Guarantee (Administration) Act 1992 Section 12 | Taxation Administration Act 1953 Section 359-20

Reasons for decision: Summary: 7. On the basis of the information provided, the Trust will be able to claim a tax deduction in respect of the superannuation contributions made on behalf of the employee in the 2013-14 income year. | Detailed Reasoning - Deduction for employer contributions to a superannuation fund: 8. The operative provisions dealing with the deductibility of contributions to a superannuation fund for the benefit of an employee are contained in subdivision 290-B of Division 290 of the Income Tax Assessment Act 1997 (ITAA 1997). 9. An entity is entitled to claim a tax deduction in respect of all superannuation contributions under section 290-60 of the ITAA 1997 if: · the contribution is made to a superannuation fund or a retirement savings account (RSA); · the contribution is made for the purpose of providing superannuation benefits for another person who is an employee of the entity when the contribution is made; and · the conditions in sections 290-70, 290-75 and 290-80 of the ITAA 1997 are also satisfied. 10 Subsection 290-60(3) of the ITAA 1997 states that the deduction can only be claimed in respect of the income year in which the employer made the superannuation contribution. This means that provided the entity made a superannuation contribution to a complying superannuation fund they will be able to claim a deduction for the income year in which they made the contribution under section 290-60 of the ITAA 1997. | Detailed Reasoning - Employee activity conditions: 11 In accordance with section 290-70 of the ITAA 1997, the person for whom the contribution is made must be: · an employee, or · engaged in producing assessable income of the employer, or · an Australian resident who is engaged in the employer's business. 12 Paragraph 290-70(aa) specifies that to deduct the contribution, the employee must be an employee (within the expanded meaning of employee given by section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA). 13 The term employee is defined in section 12 of the SGAA which states the term is given its ordinary meaning unless it is included in the expanded definitions in subsections 12(2) to 12(10). 14 In the present case, you have advised that the employee is an employee of the Trust. A deductible superannuation contribution is intended to be made from the Trust to a CPF in respect of your client for the 2013-14 income year. 15 Therefore, this condition will be met. | Detailed Reasoning - Complying fund conditions: 16 Under section 290-75 of the ITAA 1997 if the contribution is made to a superannuation fund, the fund must be a complying superannuation fund. 17 This condition will be satisfied as the superannuation fund is a CPF, an exempt public sector superannuation scheme and a complying superannuation fund. As the Fund is a complying superannuation fund consideration for remaining complying fund conditions is not necessary. | Detailed Reasoning - Age related conditions: 18 Section 290-80 of the ITAA 1997 requires that to deduct the contribution, the entity must have made the contribution on or before 28 days after the end of the month in which the employee turns 75. 19 In this case, as the employee is currently under 55 years of age, this condition will be satisfied. | Detailed Reasoning - Contribution limits: 20 Section 26-55 of the ITAA 1997 does not apply to limit the deduction for employer superannuation contributions.